Check my cheque

February 1, 2006 10:28 PM

What do I do if the wrong name is on a business cheque (check)?

I run a small business and I met with a new client today. To my surprise, they gave me a cheque for the full amount of our project. (I was just expecting a deposit.) When I got home, I noticed that the cheque is made out to my company and not me.

For the past 8 or 10 years, all my business payments have been made out to me. However, about a year and a half ago, I formally registered my business under a name, although the only place I usually use that name is in contracts. This new client took the business name from the contract and used that for the cheque.

The problem is that, due to a complicated pregnancy and maternity leave, I haven't had a chance to set up a business account yet. All the work I've done in that time (a scant amount) has been made out to me, as opposed to my business, so I wasn't too worried. I was very busy with more pressing issues. And my accountant said it was silly to set up a bona fide business acccount when I only use my personal account for cashing cheques from clients anyway and a business account would be one more thing to track and pay for. (He said that the government doesn't care whether I have a business or personal account as long as I keep proper books.)

So...short of making an appointment with a bank and dragging my baby to the bank to open a new business account, is there any way I can cash this cheque? The contract does say my name d.b.a "ABC Company". I'm guessing the bank would refuse to cash the cheque unless I open a business account. But I honestly don't have much time to do that right now and I'd hate to pay for a business account when I am really not planning to do much work in the next year.

(Yes, I know I could call the client and ask them to re-issue the cheque in my own name, but that would look profoundly unprofessional.) Thanks.

posted by acoutu to Work & Money (24 answers total)

Call your bank. They would have the answer. Maybe if you show your paperwork that has you business name and acutal name together?
posted by nadawi at 10:43 PM on February 1, 2006

From your spelling of "cheque" I'm guessing you're British or Canadian or live in some other place where they spell it that way. So this may not apply, but I'm going to give you the US answer anyway.

I've been told that some banks will let you get away with simply signing a new signature card with the business name and adding that to your account. Tell them you sometimes sign your name a different way and then write the business name on the signature card. Then you should be able to deposit checks made out to that name into that account. (This may no longer be valid in our paranoid post-9/11 world.)

If that doesn't work, look around for a bank that offers a free small business checking account. If there's a Washington Mutual in your area they have one. You'll probably need a fictitious name certificate (DBA) to open it; in most places this is filed at the county clerk's office unless it's a corporation, in which case you'll need to file articles of incorporation at the state level. For sole proprietorships, like your business, you'll probably just want the DBA; I wouldn't bother incorporating if you just want to cash a check without hassle. There will be a small filing fee for the DBA, but since you just need it to open the checking account, you don't really have to renew it, so it's a one-time fee.

You should definitely call your bank, but hopefully this will help you know the general direction you're headed even if you're not in the US.
posted by kindall at 11:20 PM on February 1, 2006

Best answer: Honestly, the times I've had this come up, and it has, I've just deposited the check. Since the business is under my name, and the account is under my name, if they require proof of business ownership or some such, you might be keen to bring it, but otherwise, don't worry.
posted by disillusioned at 12:07 AM on February 2, 2006

Speaking as an independent contractor, I don't think it's at all unprofessional to ask your client to reissue the check. Something like "It was lovely to meet with you and I'm looking forward to beginning our work together. As you'll see on the invoice I'm sending you to reflect your initial payment, I ask clients to make checks payable directly to me. Would it be possible to have this check reissued?"
posted by judith at 4:21 AM on February 2, 2006

I would go into the bank and ask the manager.
posted by Izzmeister at 4:32 AM on February 2, 2006

I second Izzmeister.

See what the bank says first. If it's a problem, it's not like the bank is going to impound your check.

Then, if it's a problem, talk to the client. The script that judith gave is perfect.
posted by Wild_Eep at 5:17 AM on February 2, 2006

I work in a bank, but with kindall's caveat -- in the US, where banking regs are almost assuredly different. But FWIW, over here, the short answer is no, technically you're not allowed to cash a check made out to a business, if for no other reason than that they need indisputable proof that you own that business and have a right to the check. The best proof of course being that you own an account with that business name's title on it.

If your business is a sole proprietorship (and not a corporation, for example), you should be able to get your account changed to have a "doing business as" title attached to it. It would read something like "John Johnson DBA Johnson's World of Stuff Emporium" on the account title. However, doing this will only be slightly less time-consuming than going and opening a new account. If you have a DBA account, the bank will feel a little more comfortable about just directly cashing the check, though they may still ask you to deposit and withdraw back out when the funds are available.

But as judith said, there should be no problem with going back to the client and asking for a new check made out in your name, which in your case will almost certainly be the path of least resistance.

One more thing -- for the sake of your bank teller's sanity, if this is a large check (more than just a few thousand dollars/pounds/whatever), call ahead and let them know that you want to cash it so they can be sure to have the cash in and, if necessary, order it for you. Walking through the door and demanding to cash a check for fifteen grand could really fuck things up for them in the vault if they're not ready for one customer to take that kind of cash.
posted by middleclasstool at 5:30 AM on February 2, 2006

If you've already asked other clients to make out cheques to your personal name, I don't understand why it's so 'unprofessional' to ask this latest one to do the same.
posted by chrismear at 6:09 AM on February 2, 2006

Someone correct me if I'm wrong, but I don't think you'd be able to cash the checque even if you had a business account. You'd just be withdrawing the sum against your account until the cheque cleared.

If your name is on the checque but it just says "dba so and so" after it then I don't think you'd have a problem depositing in your regular account. I've done it (in US) but I've never tried cashing one.

On the other hand, if you go into this bank on a regular basis and the tellers or manager know you or your face and recognize you as a loyal customer, they might make an exception this time or somehting.

Either way, you have to make a trip to the bank to cash or deposit the cheque anyway so I don't understand...
posted by eatcake at 6:13 AM on February 2, 2006

Someone correct me if I'm wrong, but I don't think you'd be able to cash the checque even if you had a business account.

I only know for certain that this is how it's *supposed* to be in the US. But ultimately, it's six of one, half dozen of the other anyway. You hand them a check, they hand you cash. And yes, if they know you and you have a good account history, they'll likely make an exception, particularly if it's a smaller bank (they tend to be more flexible).

But that won't apply to the questioner -- every country has different banking regs. But regardless of what country you live in, the bank's going to need proof that you have a right to cash this check, and without a business account there, you're going to have trouble.

Either way, you have to make a trip to the bank to cash or deposit the cheque anyway so I don't understand...

True, but setting up a business account can take well over half an hour. Cashing or depositing shouldn't take more than five minutes, all things being equal, and can be conducted through the bank's drive-through.
posted by middleclasstool at 6:37 AM on February 2, 2006

Best answer: I'm with disillusioned. Just endorse it as deposit to acct#, and deposit it. If it fails, just say, "OOps, didn't notice that" and you can still go through all the above rigamarole. But it's very likely to just get deposited.
posted by theora55 at 7:09 AM on February 2, 2006

I deposit checks made to my NiceMirror business in my personal account; I see no reason to further enrich the bank with more monthly fees for a dedicated account. Have yet to be a problem, though most checks are under $500.
posted by phearlez at 8:30 AM on February 2, 2006

Response by poster: Thanks for all your suggestions.

Setting up a business account requires an appointment, a longer trip (there's no way I'm willing to pay the $20/mo my regular bank charges -- this cheque is only for $300 and the bank charges would eat through it, when I have few plans for other work in the year ahead), and the time to open the account. Just depositing the cheque through an ATM is something I can do when it suits me.

So what's the consensus? Should I try depositing the cheque to my regular account through the ATM and then, if it doesn't go through, offer to bring over my company papers and the contract? WOuld they make me pay a penalty. I'm in Canada, if that helps.

FWIW, although I've always asked other clients to make cheques out to me, that was before I gave my sole proprietorship a company name. Now I'm "ABC Company". I would have noted on the invoice that the cheque should be payable to me, but this company issued the cheque for the full amount before I even got to the invoice stage. Even though I could follow Judith's lovely script, I think it would still leave the impression that I'm not very well organized or bona fide.
posted by acoutu at 8:47 AM on February 2, 2006

ATM deposits are a crapshoot. On the one hand, they're scrutinized a little more closely, but on the other, the teller's going to have to go through the pain-in-the-ass of calling you to tell you that (s)he can't run it, so the teller may run it anyway. Depends on who you get. But for $300, the odds are in your favor.

No, they wouldn't make you pay a penalty, as far as I know. They'd make you take the check back. Don't worry about fines or legal troubles.

You might just phone and ask if the bank can just add a DBA to your existing account's title. They'll probably try to sell you a new account, but if you're clear that you don't want/can't afford a second account, they may say yeah, no problem, and have it done in no time. If they won't do it, time to shop for a new bank.

But seriously, for $300, unless you have very low balances there, I think you can get a manager or CSR to approve cashing it. No need for sneaky-sneaky.
posted by middleclasstool at 10:45 AM on February 2, 2006

Response by poster: Okay. Maybe I'll just take my papers with me. There's no way I'm paying $20 a month for a business account when I'm on mat leave.

I suppose that my reluctance to go see the bank in person stems from the letter I wrote them after this post. I'd prefer to avoid the bank manager right now. :)
posted by acoutu at 11:30 AM on February 2, 2006

$20 a month

Holy cow! I know those are Canadian bucks, but the banks up there still seriously charge you just to have an account? They need to get with the '90s...
posted by kindall at 1:41 PM on February 2, 2006

I would say it's fair to say MOST banks charge, Kindall, though a number have dodges where you can pay more indirectly (by keeping X dollars in a non-interest or low-interest bearing account and getting fucked by various different fees). However business accounts are always more expensive and if they have those kinds of dodges the limits are usually higher.

I'd definately just deposit it if I were you, acoutu. Just endorse it as usual and drop it in. If they have an issue they'll call you and you can bring proof of business ownership and if they still balk you can ask the client to re-issue the check. I'd say this is a definate case where presuming success ahead of time is more likely to get you what you want.
posted by phearlez at 3:11 PM on February 2, 2006

Response by poster: I'm thinking I'll try the ATM. If they call me, I'll say, "Oops! Didn't even notice!" (And I wouldn't have noticed except that I was stunned to see the full amount on the cheque and I glanced over the rest.) And then I can just bring in my docs and emphasize that I am unlikely to have any other business cheques and their insistence on making me open a business account will result in me simply opening a business account at a credit union. I will report back to y'all.
posted by acoutu at 3:53 PM on February 2, 2006

In the US, a bank is not supposed to CASH a check made out to a business, even if you are the sole proprietor of the business, and even if you have a great account relationship and know the tellers personally. You can only cash checks made payable to you, and you are not the business.

I'd say getting DBA Whatever Corp. added to your account title is the easiest thing to do, and might even be accomplished via a phone call if you know the staff at your branch and it's a slow day.
posted by Rock Steady at 4:50 PM on February 2, 2006

I double-checked with a CSR at my bank, acoutu, and she told me that getting a DBA line added to your existing account only requires you filling out a new signature card. Same account, nothing changes.

I'd be surprised if it's different up there, so if you do wind up having to take your papers to the bank, you might go ahead and do it to save future headaches.
posted by middleclasstool at 7:30 PM on February 2, 2006

Response by poster: Hmmm. Thanks. I'll try depositing it tomorrow. If they refuse to cash it, couldn't I then simply write "Pay to " and the account number and sign my name, creating a third party cheque which I could then cash?
posted by acoutu at 10:45 PM on February 2, 2006

No matter what is written on the back, the bank I work at will NOT cash a check made out to a business. We don't cash double-endorsed checks at all, unless there are some extenuating circumstances. The problem is, we can't verify that the signature of the first party is valid.

You may be more likely to be able to deposit your check if you endorse it over to yourself, but it will really only take 5 minutes to change the title on your account, and you will never have to worry about the situation again.
posted by Rock Steady at 4:05 AM on February 3, 2006

Response by poster: Rock Steady, I'm sure the bank would make me have a business account to add DBA. And I don't want to pay $20 a month for an account I'm barely going to use this year.

I deposited the cheque through the ATM. It's been six days, which is long enough in Canada for a cheque to have gone through. I don't see a hold on the money. I'm guessing they cashed it. However, I'll wait a few more days before moving the money.
posted by acoutu at 1:42 PM on February 9, 2006

Response by poster: Okay, two weeks have passed. I'm marking best answers based on the fact that it worked, although there were many other good suggestions in the thread.
posted by acoutu at 9:24 AM on February 16, 2006