Business Banking

How to cash a business check

Cashing a business check differs from cashing a personal check. Learn how to cash business checks with or without a business bank account.

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Cashing a check should, without a doubt, be a simple and stress-free procedure. However, things can get a little complicated if it's a business check and you do not have a business bank account.  

How you cash a business check will depend on the business classification; whether it's a sole proprietorship, a partnership, corporation, or an LLC. While cashing a business check for a sole proprietorship is straightforward, it can be a little complicated for partnerships, corporations, and LLCs.

In this article, we'll walk you through how and where to cash a business check with or without a bank account and explain the differences between how to cash a personal check vs. a business check.

What is a business check?

A business check is a check that is written specifically for your business. This means that it's based on a business's assets and has nothing to do with you as an individual. In other words, a business check is written against a business checking account and is based on the company's assets and not on an individual's assets.

Let's put this into perspective. When you write a business check, the money is withdrawn from your business banking account, not from your individual account. The same applies when it comes to cashing a business check in the sense that the money belongs to the business and not to you as an individual.

Types of business checks

Here are two types of business checks:

  • Laser checks - These are perfect checks for businesses that want to maximize the use of accounting software such as Sage and QuickBooks. Laser means that they're computer compatible, so you can electronically track the check's details.
  • Manual checks - Easy and convenient to use, manual checks are the most common type of business checks. They come in a wide range of styles and options and are perfect for businesses that want a portable way of tracking their expenses.

Cashing a personal check vs. a business check

Unlike a business check, a personal check is meant for personal use. In other words, it's connected to your personal bank account and has nothing to do with your business. 

Needless to say, cashing a personal check should be straightforward as long as the personal check is accurately written out to you and in your name. You can easily cash a personal check if you have a checking account. But even if you don’t have a bank account, you can simply cash it with the issuing bank or at one of the many check-cashing stores or one of the retailers that provide cash check services.

The only issue that you may face cashing a personal check is if your name isn’t written correctly. It can also be a challenge if a personal check is written out to you and another person. 

That said, the main difference between a personal check and a business check is that a personal check is written out to you in your name while a business check is written out to your business. As far as the difference on how to cash is concerned, it's important to keep in mind that cashing a personal check is always straightforward. 

On the other hand, cashing a business check can be a bit complicated even if you're the owner of the business. This is especially the case if the business check is written out to your business rather than to you as a business owner.

How to cash a business check with a business bank account

When it comes to cashing a business check, one of the most important things to understand is that not all banks will allow you to cash the check if it's written out in the business name and not in your name as the business owner. Although this can be a challenge, it's not the end of the road. The best option is to cash the business check with a bank where you have a business checking account.

But even with that option, how you cash a business check will depend on your business classification. Let's look at how you can cash a business check based on the type or classification of your business. 

Sole proprietorship 

Running a sole proprietorship business means that you and your business are the same entity. As such, cashing a business check for a sole proprietorship business should be straightforward just like a personal check. In this scenario, it's only you, the business owner, who can cash the business check written out to your business.

Things can be a lot easier if you have a business checking account and you add a "Doing Business As" (DBA) to your account. This is essential in helping the bank confirm that you and your business are the same entity, so you can cash the business check that is written out to your business.

Partnership, corporation, or LLC

Cashing a business check can be more complex if your business is a partnership, corporation, or limited liability company (LLC). While a sole proprietorship may not require a special authority to endorse and cash a business check, this could be the route if your business is a partnership, corporation, or LLC. In other words, you'll need to have a signature authority that allows you to act and cash the business check on behalf of the business.

This means that the signatories indicated on the account must be present to successfully endorse a business check so that it can be cashed. This, of course, will also depend on whether the bank allows it.  

If the bank allows the signatories to cash a business check, they'll have to sign the back of the check with their names, titles, and signatures. It has to be similar to the ones the bank has on file for that particular account. The signatories may also be required to provide an ID, driver's license, or some other form of acceptable identification to prove their identity. 

Note that the bank will typically withhold a percentage (or all) of the check's value for a period of time before making the funds available in your account once the check has cleared.

How to cash a business check without a bank account 

According to a survey by the FDIC, 8.4 million households consisting of 14.1 million adults in the United States do not have bank accounts. If you don’t yet have a bank account for your business, you still have a few options for cashing a business check.

However, note that it generally takes more time, will cost more money, and involves more risks than cashing a business check at a bank where you're an account holder. Let's look at how and where to cash business checks without a bank account.

1.  Cash the business check at the issuing bank

Many banks and credit unions aren't allowed to cash checks for non-customers. But even so, banks are allowed to cash a business check written by an account holder at the bank even if the check is payable to a non-customer.

The payer must have enough money in his/her account to cover the costs of the check. As a payee, you must show proof of identity, which can include:

  • US-issued passport
  • US driver's license
  • Military ID
  • State-issued ID
  • Resident alien ID
  • Tribal Nation ID

You as the payee must also pay a check-cashing fee, which is normally around $8. 

2.  Cashing your business check at a retailer

Several major retail stores in the country including Walmart, Kmart, and Kroger can be a good option to cash your business check if you do not have a bank account.

The fees that they charge for check cashing may vary. For example, Walmart charges $4 to cash checks up to $1,000 and will charge up to $8 for checks higher than $1,000. Others charge fees that range between $3 to $6.

3.  Load funds into a prepaid debit card

If you do not have a bank account but have a prepaid debit card, you can deposit the business check into the prepaid debit card and access the cash. The idea here is that prepaid debit cards are similar to checking account debit cards, apart from the fact that your spending is limited by the amount that is available on the card.

Some prepaid debit cards have apps that enable you to snap a picture of the check to load it into the card while others allow you to directly deposit the check before the money is automatically loaded onto the card. 

Consider a business checking account

Opening a business checking account makes depositing business checks quick and easy. While there are options available for cashing checks without a bank account, they are less convenient, less secure, and can come with a fee. 

At Nearside, our Business Checking Account is designed specifically for your small business. With no monthly fees, no NSF fees and no minimum deposit, you can save money and run your business more efficiently. Tired of dealing with physical checks? Send money with ease using checks sent from your Nearside Dashboard.

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