I have run into a few customers of late that have opened sole proprietorship accounts DBA their business name, who also have active legal entities in the same business name. They don't have the legal entity account at our bank, just the sole proprietorship.
For example:
Mike Smith has an account here for "Mike Smith DBA Mike's Donuts". And at the same time, "Mike's Donuts Inc." is an active legal entity in our state, but doesn't have an account here in that name.
I have instructed branch staff to tell the customers to choose one structure or the other, but have received some pushback. Is there any reason why this should be permitted? I can't think of a good reason for it, especially in the same exact name. It seems like they could be avoiding the beneficial ownership form, or trying to keep some income off the books.
I get that customers sometimes transition from one to the other, but the recent customers want to have it both ways. One even deposited a few checks made out to "Mike's Donuts Inc." to the sole proprietorship, which I instructed the branches to prohibit in the future.