Endorse a Check to Your Business

Business Check Endorsement
Include your business name, your signature and title, and any restrictions (optional). View larger image. Justin Pritchard

Believe it or not, your customers still want to write checks (and you might even prefer checks, considering the costs of processing credit card payments and the possibility of chargebacks). You’re probably used to depositing checks made out to you personally, but what about business checks? The process of endorsing is not much different – you’ll just add a few steps because the check is payable to your business.

Endorsing the Check

To endorse the check, go to the endorsement area on the back of the check. This is the short section at the top where it says “Endorse Here.” Your entire endorsement will ideally fit in this area above the line (although there is some wiggle room), so plan ahead. A few hurdles to keeping everything compact include:

  • You’ve got a long business name
  • Multiple signatures are required
  • Any restrictions that you add take up extra space (see below)

Now, to complete the endorsement:

  1. Write the business name
  2. Sign your name
  3. Write your title (President, Owner, etc.)
  4. Restrict the check – if you want to

If you accept a large volume of checks (more than a few per day, for example), you might get sick of all that writing. You can also endorse your checks using a stamp (available from check printers and office supply stores). Ask your bank about any requirements before ordering a stamp – they may have instructions that help keep things moving smoothly.

Restricting the Endorsement

When you endorse a check, you authorize whoever has it to collect the money. That’s usually just fine, because your bank will collect the money and deposit those funds to your account. However, if a check is lost or stolen after it’s endorsed, a thief could potentially cash the check or have those funds deposited to a different account.

restrictive endorsement reduces your risk. You can limit what happens to the funds after you endorse (for example, you can prevent the check from being cashed). The most common restriction is to write “For deposit only to account 123456” (using your own account number, of course), which means that check must be deposited to the account you specify.

Cashing the Check

You’ll probably have to deposit most of the checks made out to your business. But what about cashing those checks – is it possible to cash checks made out to a business? It is, but it’s challenging. Your best bet for getting cash is using your own bank (where you have your business checking account) after your account has been actively used for a while.

What’s the problem? Checks made out to a business are more complicated. If a check is made payable to you as an individual, it’s simple: the money is yours, so the bank just needs to verify your identity to cash the check. But businesses are legal entities, they may have multiple owners, and they may require the approval of multiple people to withdraw or spend money. Unless you’re at your own bank, a teller or customer service representative won’t know who is authorized to get cash from the business account – which is the same as cashing the check; for all they know you might be authorized, but you could just as easily be a disgruntled employee or a thief who stole the check from the mail.

As an alternative to cashing checks, you might get more certainty about getting paid with a check guarantee program that’s part of a check verification service. Before you accept a check, you provide bank account and routing numbers from customer checks to your check verification provider. If those checks are known to bounce, you’ll be alerted. Some services also guarantee that you’ll get paid even if a check bounces (although the service will tell you to reject risky checks and will not guarantee those checks).

Acting like a Business

You’re doing the right thing if customers write checks to your business. You’re acting like a legitimate business, and – assuming you’ve been doing everything right and avoiding personal guarantees – you can limit your personal liability if something happens to the business.

However, dealing with business checks brings added expenses and inconvenience, so you might be tempted to have customers make checks payable to you (as an individual). You might even be tempted to deposit business checks into your personal account; you’re already at the bank, and the money will eventually come to you anyway – so what’s one more check?

Banks aren’t supposed to deposit those business checks to your personal account (unless you sign the check over, which is also unlikely to be approved). But in many cases, nobody notices and you can get away with it. If the bank does notice, things can get complicated (and expensive), so it’s best to avoid this practice.

Even if you are able to get business checks into your personal account, it is really best to use a business checking account for your business income. Using your personal account puts your personal assets at risk, and there might be other consequences. If you need more reasons, and some tips on how to get an (affordable) account open, see our page on opening a business checking account.