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Should A Bank Cash Check Made Payable to Corp?

Question: 
Should a bank cash a check made payable to a corporation or any business?
Answer: 

by Randy Carey: No - asked and answered dozens of times.

Answer: 

by John Burnett: I totally agree with Randy. Cashing checks payable to a corporation, LLC or other entity is a bad business decision. It can be a breach of the fiduciary obligation of the cashing individual to the entity, for which the bank can be placed on notice by law (§3-307 of the UCC). It is very unlikely to be a transaction authorized by the governing body of the entity. It can place the bank at risk of having to produce "copies of all checks payable to XYZ Corp. cashed by the bank" in response to an IRS or state tax authority. The bank can be sued by creditors of the entity for conversion of assets. The list goes on. So, we "just say NO!"

First published on 10/14/2018

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