What are the risks if any, of allowing someone to deposit a check made payable to them personally into their business account? Let's say it is an LLC

If they want to do so, they need to endorse the check over to the business prior to the check being deposited. Otherwise, the bank cannot warrant that the person entitled to the money (named payee) received the money.

Do you mean they would endorse as follows?

John Doe
Pay to ABC LLC?

I believe without the bank's endorsement on the check you may have trouble collecting as well if it would come back, but maybe that's just our best practice?

John Doe
Pay to the order of ABC LLC

Then it would be endorsed by the LLC. I cannot think of a sinister reason for doing this (that's kind of odd for me). However, if I did a job for someone and they unknowingly made the check payable to me rather than my LLC, the other members would expect me to endorse it over to the LLC as is being done here.

Thank you

Not original anon here. Picking this thread up...we try to enforce the endorsement rule but are running off business customers because of other banks practices of jus taking the checks without verifying endorsements. We actually verify each endorsement and request proper signatures. It's really tough to make these business people do it right...they get really ugly in the lobby or drive through especially when the business owner is not the one presenting the deposit...example: office manager. It's always the same...Big bank never had a problem with my checks...what is your problem. Then we continue to require proper endorsement and they move their account back to Big bank. Frustrating!

Well the big banks also have big pockets, so as a small bank if you want to assume the risks involved, have at it.

...and to quote Gregory House. "Everybody lies!" I've occasionally compared notes with the bank banks down the street from me. I'm amazed at the things that their customers tell them that my bank allows.

Of course they do! Depending on the circumstances, your bank may be interfering with their income tax planning; i.e. they were not planning to pay any.

At my last bank, customers were not allowed to get "ugly". Management had the attitude of "Be Good or Be Gone". Every banking relationship was treated as a professional business relationship. One party gets ugly, the other party immediately walks away from the table (i.e., accounts get closed). In this speccific case, the bank makes the rules as they are the one taking the risks.

Lol

Love it!

My experience with customers who insist on depositing their personal checks into ther business accounts is that they are usually trying to avoid having any assets in their own names. A little bit of poking around in public records usually reveals their reasons...

Exactly. I work for a bigger bank and when I was in the branch I was constantly being told that "little bank" and "local credit union" never worried about proper endorsements and negotability issues and that we shouldn't be so bureaucratic etc. Funnily enough when I asked my contacts at those banks they usually just laughed and told us that they were being told that we let everything through.