by John Burnett: If this question has been posed to us once, it's been asked a thousand times.
Assuming that John Doe Trucking is a sole proprietorship and that John Doe is the owner of that business, a check payable to the business is payable to John Doe, and could legally be endorsed in the name of the business by Mr. Doe and negotiated by him.
However, other than in the smallest of towns in which a bank's tellers know everyone and everything about them, how would you ensure that John Doe really is the owner of the business, and that it is actually a sole proprietorship, not a separate legal entity? If John Doe has in reality formed an LLC or corporation and simply continues to do business under the name of John Doe Trucking, his cashing of checks payable to the business could be a breach of trust or outright fraud.
There's also the difficulty of establishing and training tellers on a bifurcated policy that says that they cannot cash checks payable to a business except for those payable to sole proprietorships. Frankly, it's a lot simpler to have a single policy covering all checks payable to businesses.
It's not too much to ask that all business customers deposit checks they receive. Doing so provides better business records and eliminates any need for tellers to determine the legal form in which a business is held.
by Ken Golliher: When the sole proprietor complains that you will not cash checks payable to his business even though he insists "the other bank does," point out that he is the master of his fate. He can simply tell his customers to make their checks payable to him personally - you will cash those. Of course, that would mean his customers, not just his bank, would know he was, er, trying to manage his income tax liability.