Should We Allow Cash Back on LLC Deposit?

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Question:

A corporate (LLC) business owner wants to take cash back out of his deposit into the business' checking account. Is it sufficient to just have him sign for the cash on the signature line on the deposit slip that reads "sign here for cash if required"? Or should we require him to deposit the whole check and write out a check for the cash?

Answer:

First, let's separate LLCs from corporations, even though my response won't change regardless of which type of business organization we're discussing. An LLC is a different form of business from a corporation -- a sort of hybrid that enjoys some of the benefits of a small business and some of those afforded corporations.

That said, I am in the camp of those that argue against allowing businesses to use "less cash" or "cash back" when depositing checks, whether the business is General Motors or Sam's Shrimpboat LLC. I think your tellers deserve to have a consistent rule, and the only way to be safely consistent is to ban cash back on business deposits.

First published on BankersOnline.com 12/05/05