What are the rules about depositing checks as they pertain to the name of the payee (speaking of companies, specifically)? I understand that it probably varies from bank to bank, but in general:
Company name is Smith & Sons Investment Inc.
Can check made payable to
Smith & Sons
Smith Investment
Smith Investments Inc.
Smith Inc.
or any other such variation as might be commonly used be deposited? How about if a sole practitioner (John Smith) was operating under a registered trade name of Smith Investments. Can he put a check made to Smith Investments into his business account, even though the account is actually in the name of John Smith?
Yes, as long as all Business and Personal names are related. “Smith Company” may be a problem, but if John Smith has a good reputation and is a customer in good standing with the Bank, the Branch Manager should allow it to be deposited, requesting that John Smith ask his customer to use a more preferred “payable to” name going forward.
Once upon a time I stuck the check for MasterCard in the American Express envelope and vice versa. Amex returned the check. MasterCard just went ahead and deposited the Amex check in the MasterCard bank account! I’ve never quite figured out how they managed to do that…
Checks should be made payable to Smith & Sons Investment Inc. if that’s the name of the buiness. The bank can reject checks that deviate from that. If the customer is in good standing, the likelihood of the bank rejecting a check where the payee is reasonably close is small.
On the sole proprietorship thing, usually, accounts will be set up as “John Smith dba Smith Investments”. The bank will require a ficticious name statement registered with the county to acknowledge the name of the business. Once the bank has this on file, checks payable to John Smith or Smith Investments can be put into the account.
Wire transfers are more strict, as the potential for fraud is much greater. With common names such as “Smith & Co.”, unless the wire comes in near perfectly, it may be returned.
This may be a jurisdictional or banking thing (and Morkfromork, I see that you’re from Calgary, so my banking information will probably pertain to you too), but when I ran my own sole proprietorship (let’s say, for the same of illustration, I’m John Smith and my company is “Smith Associates”), I could deposit cheques made out to Smith Associates into the business account that I set up in that name at the bank.
What I could not do was to deposit cheques made out to Smith Associates into my “John Smith” account. This doesn’t quite answer your question, but it does show that the payee as rendered on the cheque and the account holder must be pretty much the same. And yes, I found this out the hard way.
Mork, I’d recommend that you keep your business and personal accounts separate. You can transfer between them as much as you like (heck, I did when I was a sole proprietor), but deposit business cheques in your business account and deposit personal cheques in your personal account. That doesn’t confuse the bank and cause cheques to be rejected for such things as the payee not being the same as the account holder.
Why? Here’s a frinstance: If I owed only a little bit to AMEX, and they deposited the humongous Mastercard check, then there’s a whole bunch of my money in AMEX’s hands, and I need it because Mastercard is gonna charge me late fees. etc etc etc.
I cashed a check made out to “Dad” once. It was not my bank, the teller glanced at the check and my ID, verified my signature matched my ID, checked the account balance and gave me the money. And the writer of the check was not my daughter, it was a friend of hers.