Very OT: Banking question - help needed

[Kitaman]

I deposited a check for my company over the weekend (which I've done more than 30 times). Went to the ATM machine for deposit. The check is made out to my company c/o my name. Never had an issue depositing it into my personal account.

Well my bank deposited the check then reversed the deposit. When I contacted them they say it was done because the check was made out to my company (first line) and therefore requires a corporate account for processing.

I smell bs. I never needed one and don't see why I have to have one when my name is on the check. By the way I was traveling and went to a different branch. Well I am going to pick up the check and either go to another bank I have an account with or just re-deposit it locally where its always been accepted.

My question is; is that true in terms of the payee 'policy' concerning 1st line company, 2nd line c/o? Any bankers out there?

 

[Gringo]

If the check is written to you personally they should write "or" then your name instead of "c/o."

If you try a different bank they might cash it, but technically the bank did the right thing.

This should probably help.

http://ths.gardenweb.com/forums/load/finance/msg081550122605.html?7

 

[Kitaman]

If the check is written to you personally they should write "or" then your name instead of "c/o."

If you try a different bank they might cash it, but technically the bank did the right thing.

This should probably help.

http://ths.gardenweb.com/forums/load/finance/msg081550122605.html?7

Good to know. I picked it up and then took it my other bank (TD Bank) and they accepted it. Kids behind the teller window, I guess. Never had that happen before, but I wasn't knowledgeable about the rules.

The original bank (Peoples) had always accepted it, however I went to a different branch out of town, on the weekend, using an ATM machine. I guess they 'inspected' it Monday, and noticed that the customer was not local and used their discretion. I will change it to 'or' when I renew the contract.

 

[Strummer]

What is your company structure (LLC, Partnership, Sole Prop., Corporation, et cetera)?

For next time, or anybody reading this, remember that a check is a negotiable instrument. That means that it can be transferred if endorsed properly.

I get checks written to my business all the time. I simply write, "pay to the order of [my name]," sign it in my business capacity, and deposit it into my personal account. Most tellers have no idea that this is okay, so ask to speak to a manager and make a fuss if you need this done and they won't do it.

 

[gtcam]

a check made payable to the name of a company, no matter the structure, should never be cashed and must be deposited into an account titled with that business name.
if handled in any other manner the bank is taking a risk.
not shooting from the hip- 30 plus years in the banking industry, retail and commercial management

I get checks written to my business all the time. I simply write, "pay to the order of [my name]," sign it in my business capacity, and deposit it into my personal account. Most tellers have no idea that this is okay, so ask to speak to a manager and make a fuss if you need this done and they won't do it.

Count yourself fortunate your bank allows you to do so - not at all a normal or legal practice - the right of offset has been impaired legally.

There are reasons why businesses open and operate financial transactions under business accounts and individuals open consumer accounts

 

[Strummer]

a check made payable to the name of a company, no matter the structure, should never be cashed and must be deposited into an account titled with that business name.
if handled in any other manner the bank is taking a risk.

. . .

Count yourself fortunate your bank allows you to do so - not at all a normal or legal practice - the right of offset has been impaired legally.

What the hell man. I love it when people tell me something is illegal, or, in your case, not a "legal practice."

Checks are negotiable instruments. The payee of a check can negotiate the instrument.

If that's "illegal," then cite me the statute that makes it so, and I'll acknowledge I'm wrong. Otherwise you're just a bloviating ex-banker blowing wind up everybody's skirt.

The "right of offset" is simply a bank seizing money from one account to pay off debt owed by the account owner - has got nothing to do with negotiating a check.

If a bank refuses to accept a negotiated check, it's because they either don't know what --- they're doing, or, more likely they want to limit their exposure to as close to zero as possible, and so they do things like vaguely quote "illegality."

But you really admit it, right? "The bank is taking a risk." They should put every banker making more than 6 figures in this country on trial for treason for what they've done to this country.

 

[Kitaman]

What is your company structure (LLC, Partnership, Sole Prop., Corporation, et cetera)?

For next time, or anybody reading this, remember that a check is a negotiable instrument. That means that it can be transferred if endorsed properly.

I get checks written to my business all the time. I simply write, "pay to the order of [my name]," sign it in my business capacity, and deposit it into my personal account. Most tellers have no idea that this is okay, so ask to speak to a manager and make a fuss if you need this done and they won't do it.

LLC. I will try 'pay to the order of (my name)' and then sign. It just seems weird that the check and business is mine and I have to add language to deposit it.

I do think that many tellers are unaware of this and simply accept the check for deposit. The bank also froze my wife's account (totally separate/independent) because of this transaction. She spoke to the manager and they admitted to making a mistake. I had to educate my wife that it was not a mistake, but deliberate action taken by the bank. It actually scares me to think that although accounts can be separate, if the address and/or name is the same on another account they can play around with your money.

I know the history of banks (% cash on hand vs loan) and that they can be very sneaky, especially to 'regular' clients. However the level of greed and liberties taken are astounding. I have horror stories (hence my using ATMs for deposits and primarily using online banking) but I can't keep changing banks or opening new accounts.

I always wonder if a local savings bank is a better choice than a commercial bank.

 

[Hoophound]

LLC. I will try 'pay to the order of (my name)' and then sign. It just seems weird that the check and business is mine and I have to add language to deposit it. I do think that many tellers are unaware of this and simply accept the check for deposit. The bank also froze my wife's account (totally separate/independent) because of this transaction. She spoke to the manager and they admitted to making a mistake. I had to educate my wife that it was not a mistake, but deliberate action taken by the bank. It actually scares me to think that although accounts can be separate, if the address and/or name is the same on another account they can play around with your money. I know the history of banks (% cash on hand vs loan) and that they can be very sneaky, especially to 'regular' clients. However the level of greed and liberties taken are astounding. I have horror stories (hence my using ATMs for deposits and primarily using online banking) but I can't keep changing banks or opening new accounts. I always wonder if a local savings bank is a better choice than a commercial bank.

It is widely considered safer to use a local bank rather than a large, national one. I had repeated theft and security breaches from my bank accounts with a very large bank. The bank told me over and over that my home or office network was being hacked but both the local sheriff and the Social Security Admin were certain it was an inside job. I eventually figured out what was going on and it was clear that a bank employee in Texas was the culprit.

I later switched to a small local bank where the VP told me, "if anyone is stealing your money, they are going to be in this building." That feels safer, even though it comes with many other risks. The other key point is that big banks gamble with your money far more than a stable credit union ever will. They generally make money in banking rather than reinvesting your money in tricky instruments that no one understands.

 

[Matt (Chicago)]

I always wonder if a local savings bank is a better choice than a commercial bank.

I use a local bank out here in Chicago (they serve both businesses and individuals) and have had a MUCH better experience in terms of customer service, handling any type of complex transaction etc than I did previously when I was with B of A.

 

[Strummer]

LLC. I will try 'pay to the order of (my name)' and then sign. It just seems weird that the check and business is mine and I have to add language to deposit it.

Actually, it does make sense. You have an LLC. When you say, "it's mine," there is no way for anybody out there in the world to know that. You are, I'm guessing, a single member LLC, or SMLLC. But you can change that by simply amending your Operating Agreement (if you have one, and you should). You can add 5 other members, or 50. When a banker sees a check payable to ", LLC," they can't be sure that you are the owner. In any event, you're not the payee on the check, and if the payee does not match the account, of course the bank should not accept the check, notwithstanding a "care of" line, which should not even be there as it serves no purpose.

When you negotiate the check to yourself, you then ARE the payee on the check, and it would then be appropriate for a bank to deposit the check into your account.

The only interesting legal matter is whether the endorser (you as LLC member) had authority to negotiate the check to another party. I can't imagine why the bank would care in any case - I've never had an account where a bank would "cash" a check with bank money in any case. If your bank will let you "cash" a $500 check drawn on another bank when presented and with you having zero in your account, then butter my butt and call me a biscuit and tell me the name of the bank because I'd like to open an account.

 

[sledog]

persoonally, the 'cash it or Vito will slit your throat' method always works.

 

[gtcam]

What the hell man. I love it when people tell me something is illegal, or, in your case, not a "legal practice."

Checks are negotiable instruments. The payee of a check can negotiate the instrument.

If that's "illegal," then cite me the statute that makes it so, and I'll acknowledge I'm wrong. Otherwise you're just a bloviating ex-banker blowing wind up everybody's skirt.

The "right of offset" is simply a bank seizing money from one account to pay off debt owed by the account owner - has got nothing to do with negotiating a check.

If a bank refuses to accept a negotiated check, it's because they either don't know what --- they're doing, or, more likely they want to limit their exposure to as close to zero as possible, and so they do things like vaguely quote "illegality."

But you really admit it, right? "The bank is taking a risk." They should put every banker making more than 6 figures in this country on trial for treason for what they've done to this country.

I am not a ex banker and you are far from the expert on every facet of sports, life and business as you claim to be in a large portion of your sometimes "bloviating" statements.
Unless you are in the banking industry or have a legal background in the financial industry, don't try to be an expert.
Every banker who makes over 6 figures? Quite a closed minded and ridiculous statement. I've done nothing but serve my clients honestly and effectively - a testament to my longevity in the industry.
You make good points in many of your postings but again, an expert in all - you are not - and neither am I

 

[Strummer]

I am not a ex banker and you are far from the expert on every facet of sports, life and business . . .

Ah yes, but like the dozens before you, you have 1. made a claim that something is "illegal" and then, when challenged to produce the statute that makes it so, 2. Failed to produce the statute.

So then we return to why you would even throw out there that depositing a check that had been negotiated from a business payee to a person into that person's account is "illegal," and the obvious conclusion is that you don't know what the hell you are talking about.

So maybe you're right and I'm a bloviating about all things under the sun. Maybe.

But this I know - I called your bluff and you folded, so choke on that.

 

[Husky25]

I deposited a check for my company over the weekend (which I've done more than 30 times). Went to the ATM machine for deposit. The check is made out to my company c/o my name. Never had an issue depositing it into my personal account.

Well my bank deposited the check then reversed the deposit. When I contacted them they say it was done because the check was made out to my company (first line) and therefore requires a corporate account for processing.

I smell bs. I never needed one and don't see why I have to have one when my name is on the check. By the way I was traveling and went to a different branch. Well I am going to pick up the check and either go to another bank I have an account with or just re-deposit it locally where its always been accepted.

My question is; is that true in terms of the payee 'policy' concerning 1st line company, 2nd line c/o? Any bankers out there?

The bank did the proper thing. It may not be illegal per se, but it is best banking practices to disallow a check made out to a commercial entity to be deposited into a personal account or cashed. You should really keep you personal finances separate from the business anyway. As a former public accountant, this is an incident likely to be called out in the Management letter. In terms of a potential bankruptcy law suit, co-mingling of funds would be a legitimate weapon your creditors would use to pierce the corporate veil. LLC or not, your liability would not end at the threshold or the store front.

Strummer's advice is shaky as well. That falls under improper segregation of duties. I would certainly lower my tolerable error if I saw an endorsement of that nature.

 

[Strummer]

The bank did the proper thing. It may not be illegal per se . . .

Once again, I call BS. What do you mean by "illegal per se"? I've never heard a Judge use those words. It's either illegal or it's not. In this case, not only is it not, it's not even near the point of being arguable.

You should really keep you personal finances separate from the business anyway.

Absolutely agree.

As a former public accountant, this is an incident likely to be called out in the Management letter.

Does that go on our permanent record? This guy runs a single person LLC. There likely isn't even an Operating Agreement. He probably hasn't elected S-Corp tax treatment, and so he's probably treated by the IRS as a disregarded entity, which means his business income is included in his schedules, and he does not file a separate return for his LLC. Surely you don't really think that his negotiation of a check from his single member LLC to himself is an issue that would raise an alarm? If so, why, specifically, other than it's outside of your comfort range?

In terms of a potential bankruptcy law suit, co-mingling of funds would be a legitimate weapon your creditors would use to pierce the corporate veil. LLC or not, your liability would not end at the threshold or the store front.

What is a "potential bankruptcy lawsuit"? Do you mean a civil lawsuit for breach of contract against the owner of the LLC based on the argument that the LLC was not properly structured and run? Certainly co-mingling of personal and business assets would be grounds for such an argument. But negotiation of a check to another person is not co-mingling under even the loosest interpretation of "co-mingling." This is a loser argument that wouldn't make it past a motion for judgment on the pleadings.

The usual course would be to deposit the check payable to the LLC into an LLC checking account and then transfer the money to the personal account. By negotiating the check to the individual, the deposit-then-transfer step is skipped. Unless you can cite a legal source that says that this reduces or eliminates the liability protection offered by the LLC, then you are, again, afraid of goblins and just bloviating because you don't know the law and it's easier to give advice that you know is "safe" then to take the time to learn what the law is and give advice that might be more useful to [your clients].

Strummer's advice is shaky as well. That falls under improper segregation of duties.

Jesus man, he's a single member LLC. It's impossible to have a "segregation" of duty for internal control. Wow.

 

[elduderino]

Quick question for my own info. Do people on this board/thread actually believe there is enough paper money, US cash dollars, on the planet to cover all of the financial transactions in the American economy?

 

[Strummer]

Quick question for my own info. Do people on this board/thread actually believe there is enough paper money, US cash dollars, on the planet to cover all of the financial transactions in the American economy?

No, but why would it matter? The chickens will be coming home to roost soon enough. The day of the dollar is almost over. It will be fascinating to see what they come up with next, and how it impacts all current obligations.

 

[elduderino]

No, but why would it matter? The chickens will be coming home to roost soon enough. The day of the dollar is almost over. It will be fascinating to see what they come up with next, and how it impacts all current obligations.

The answer is simple, and in America, readily available, bullets. Some pretty interesting ideas regarding modern economic and monetary theories seem to be floating around lately. Personally I think a lot of people should be unplugging their talk radio and news channel tv and renewing their library cards.

 

[Kitaman]

For the record it is a single member LLC. I have had about 10 in my lifetime, some with corporate bank accounts others merged with personal. This particular one is seasonal, and I just didn't want to open a new company account.

It may be wise for me to consider a company account, especially if my checks become a challenge to negotiate.

 

[Strummer]

The answer is simple, and in America, readily available, bullets. Some pretty interesting ideas regarding modern economic and monetary theories seem to be floating around lately. Personally I think a lot of people should be unplugging their talk radio and news channel tv and renewing their library cards.

I'd say that you can save yourself the gasoline getting to the library. You can learn all you want to know about the state of the world's economy from a handful of websites. I've been following this one for several years and their predictions have been very accurate. Who are you going to believe? Fed Bankers who "didn't see it coming" in 08?

www.zerohedge.com

 

[Husky25]

Once again, I call BS. What do you mean by "illegal per se"? I've never heard a Judge use those words. It's either illegal or it's not. In this case, not only is it not, it's not even near the point of being arguable.

It's not illegal in that there is no law against it, but it's not best practices in a commercial setting, as I clear indicate after the portion of my post that you quote. The bank is clearly and correctly protecting their interests.

Being a single member LLC has exactly zero to do with internal financial controls or segregation of duties. It only indicates ownership share. You assumed a lot about this particular business before it was confirmed after the fact. I presented my advice assuming nothing. I don't know how large the check is for, the number of people the LLC employs, revenue level, profit, if there are plans for expansion, plans for a loan or line of credit, etc. etc. etc. If this company requires an audit or review and I am the firm he/she hires, this perks my ear and I am going to investigate a little further. Things fall through the cracks sometimes, even for the most well intentioned. What if this check fails to make it into the financials? The accounting firm not only have a duty to serve the client, but all the potential users of the report. If the result is no big deal, great. It's still something I'll make note of.

What is a "potential bankruptcy lawsuit"? Do you mean a civil lawsuit for breach of contract against the owner of the LLC based on the argument that the LLC was not properly structured and run? Certainly co-mingling of personal and business assets would be grounds for such an argument. But negotiation of a check to another person is not co-mingling under even the loosest interpretation of "co-mingling." This is a loser argument that wouldn't make it past a motion for judgment on the pleadings.

Potential: (adj) Possible, as opposed to actual
Bankruptcy: Iz gotz no more dolla billz
Lawsuit: is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy.

On the contrary, the action of depositing money meant for a commercial business into a personal account is the very definition of comingled funds. Again, what if the transaction is never recorded in the financials? You're not going to catch it in your business account rec. The money never hit it. If an individual makes a personal check out to you and you endorse it over to another individual, knock yourself out. It's a practice that I would strongly discourage in a commercial environment.

The usual course would be to deposit the check payable to the LLC into an LLC checking account and then transfer the money to the personal account. By negotiating the check to the individual, the deposit-then-transfer step is skipped. Unless you can cite a legal source that says that this reduces or eliminates the liability protection offered by the LLC, then you are, again, afraid of goblins and just bloviating because you don't know the law and it's easier to give advice that you know is "safe" then to take the time to learn what the law is and give advice that might be more useful to [your clients].

See: Funds, Comingling thereof, above.
Yes, as an industry, most public accountants tend to be conservative, but my bloviating has nothing to do with what is safe. It has to do with what is generally accepted in a commercial environment and best practices vis a vie internal controls.

Jesus man, he's a single member LLC. It's impossible to have a "segregation" of duty for internal control. Wow.

You didn't know that until 3:42 and no it's not. As I said before, a single member LLC does not indicate number of people on the payroll.

FYI, there are still best practices for a sole proprietor...

 

[Strummer]

On the contrary, the action of depositing money meant for a commercial business into a personal account is the very definition of comingled funds.

Depositing money "meant" for a commercial business into a personal account is "THE VERY DEFINITION of commingling"?

Oh Lord. You just keep getting wilder.

It's really very, very simple, like most things in life.

At the moment the check is negotiated to the individual, the money is no longer company money - it is personal money. Depositing personal money into a personal account is not commingling. It's what people do every day.

Again, what if the transaction is never recorded in the financials?

Who cares? It's completely irrelevant to the negotiation of the check. If all of the money that comes into the LLC isn't reported as income, then the LLC has an issue with the IRS. But that has nothing to do with the negotiation of the check, or what happens to the check.

You're really quite wild with your worry. I guess maybe it's something that goes along with being an accountant. You don't understand the law and you recognize that there is a "best way" to handle funds, so you view somebody doing something perfectly legal as wrongful simply because you don't understand it and/or you're outside of your comfort zone.

Guy gets 40,000 in income in the form of checks to Joe Schoe's LLC. He negotiates every one of the checks to his wife and she deposits them into her bank account. The guy reports 40,000 income on his 1040. No issues. He's good to go.[/QUOTE]

 

[Husky25]

Do you get you panties in a wad every time someone is the least bit critical or just on an anonymous chat board? Take a Midol and let it kick in.

At no time did I say the practice was illegal. In terms of this situation, it is not best practices and the bank took steps to properly cover themselves. Period. The End. Class Dismissed.

You are only arguing with yourself on anything else that you introduced because you said the exact same thing:

The usual course would be to deposit the check payable to the LLC into an LLC checking account and then transfer the money to the personal account.

Any further inferences on this situation is self serving and will fall on deaf ears (on my end at least) because I don't have the time, nor inclination to argue straw men with you. Kitaman asked a specific question. I answered it. He can make up his own mind about what he wants to do. If you want me to "admit" that you are right, you won't get it, because I never said you were wrong.