Skip to content

Husband & Wife Joint Sole Proprietorship Account

Answered by: 

Question: 
We have a husband and wife who are farmers in our area that want to open sole proprietor deposit accounts to operate their farm. Can they open a joint account? They do not want the ownership limited to one person as they are equals. I don't see how this can be done within a sole proprietorship, but they say "they've always been able to do that." Can we do this?
Answer: 

This really comes down to state law and the definition of a "partnership". The FRB has issued the following pertaining to husband and wife sole proprietors:

A husband and wife operating a profit-making business as individuals, but not as a partnership or other financial business organization, may maintain a NOW account at a member bank, since it is impracticable to distinguish between funds that are used in their business and other funds of those individuals. [Federal Reserve Staff Opinion January 23, 1979]

A husband and wife partnership is not eligible to maintain a NOW account at a member bank. Eligibility for NOW accounts is established by 12 USC 1832(a), which authorizes institutions to offer NOW accounts. Paragraph (2) of that section specifically excludes for-profit partnerships. Although a husband-and-wife for-profit partnership cannot maintain a NOW account, a husband and wife are permitted to maintain a joint NOW account for their non partnership purposes. [Federal Reserve Staff Opinion October 16, 1986]

First published on BankersOnline.com 3/26/07

First published on 03/26/2007

Filed under: 
Filed under operations as: 

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics