Cashing checks made out to corporation

You may be President, but you are not legally the same as the corporation. The bank would be violating its agreement with the corporation if it gave you the money.

Don't know if it is law or not. I do know most banks want it this way. It lets them ding you for an extra fee for an extra item. I'm sure if you need cash there is a way to get it. You might ask them about that. Perhaps a check made out to cash rather than the name of the company?

Since the Corporation and you are separate persons how could they give any cash to another person during a deposit.

Pretend the other person is your friend. You take a cheque, made out to your friend, to the Bank to deposit in your friends account, using one of your friends pre-printed deposit slips.. Now tell the Teller "please give me some cash from the deposit to my friends account".

I've got a situation for you. I'm joe super market company. I need change. Just how do you think I get it? Cash back on a deposit? No that doesn't generate maximum fees for the bank. After all today all banks are Bank of Fees and Thieves. Nope, got to do two transactions. Deposit it all. Then cash a check. That is two separate items the bank can charge a per item fee on. That's how it works. Oh, some banks have a cash swap form, but they charge their item fee on that too!

If you need change, doesn't that imply you have some bills? Can't you get change for those?

And how much is this "transaction fee?"* Fifteen cents? It's got to cost the bank more than that to fiddle with cashing a check.

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*I'm guessing here. My bank doesn't charge "transaction fees." In fact, they don't charge me anything for a company checking account.

Your anger about the gouging on customer transactions is fully justified however, it has nothing to do with giving somone money that does not belong to them.

So then, a customer of a corporation can't pay cash? After all they would be handing a mere employee money that actually belongs to the corporation.

BTW, the banks I have delt with would not hand over cash on a cash back on a deposit ticket, however would be happy to cash a check made out to the corporation (withdrawal).

My daughter worked in a small town bank. Partner A of a retail business made the daily deposits and always took some cash back. When partner B made the deposit one day, she asked if he wanted the usual cash back. Surprise to partner B. End of partnership, beginning of litigation. Banks have policies against cash back so they don;t get caught up in situations like this. I think it is good accounting practice to deposit all receipts in total. Any needed cash should be done with a check.

Macy

I am _very_ surprised that a retail business in a small town does not deposit any cash. If it does, there is no need for cash back.

You described them as Partners, not share holders of a corporation. Since as a Partner they are jointly and severally responsible for the bank account, I cannot see any reason why the bank would not allow a cash back. They are not giving one person (the depositor) money that belongs to an other person (the corporation).

You are mixing up a few things here. The employee of the corporation receiving the cash from a customer can NOT keep the money for himself. It muse either be deposited or recorded and put in a cash drawer or petty cash box.

That _is_ the proper way and you should appreciate that this will leave a proper audit trail to 'follow the money'.

corporation

And that is the part that bothers me to no end. When pressed on the issue, at least two representatives of the bank (a manager and a teller) responded in terms of a "paper trail," and the term "IRS" was mentioned at least once. This is ridiculous. When did banks get in the business of policing the relationship between companies and their tax obligations?

I was aware of - and find some validity in - the explantion concerning the legal distinction of a corporation and an employee of a corporatinon. However, there are legal and completely valid ways to establish financial rules for that relationship. The interesting thing to me is that these types of considerations were not mentioned in my conversations with the bank employees. It's clear that their primary motivation has to do with making sure the appropriate paper trail is established. I find this reprehensible. The United States IRS is plenty powerful. It has now fortified that power by virtue of the enlistment of banks to implement policies that have nothing to do with their core business.

jm

We'll never know, but it could just be that the teller found it so much easier to say IRS, expecting no one to question their authority, then to go into a lengthily discussion with a disgruntled customer as to why they are not permitted to give cash to a person from an account that does not belong to that person. So many Presidents of one man operations incorporate to obtain the tax advantages but then run their business as if it were a sole Proprietorship, thinking it is MY company, I'm the only shareholder, I can do what I want with MY money. Except, it is not MY money it is the money belonging to the corporation. I cannot really blame a Teller in a small town bank who has to deal with this unreasonable customer for tying to blame it on the IRS because s/he is liable to run into that man in church, come Sunday.

I am sure that with all the accountants on this list each and everyone could tell horror stories as to how clients have run their corporations as if they were their personal savings account.

Arno:

You are dead wrong. It is a bank thing, because they can. Try it with a "business" type of account and a sole proprietorship. With a sole proprietorship there is no question who the money belongs to is there? You can't do it at any bank in the USA. It has nothing to do with who the money belongs to. It has everything to do with the bank being able to charge another fee. They may give you some bunk about the IRS but it is all about charging another fee!

It's the law. For example:

"The Office of Thrift Supervision (OTS) is proposing to issue a regulation requiring savings associations to develop and maintain Know Your Customer programs to deter and detect financial crimes.

"The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency are proposing substantially similar rules in separately published notices.

"The proposed regulation would reduce the likelihood that savings associations will become unwitting participants in any customer's illicit activities by requiring savings associations to determine the true identities and legitimate activities of their customers.

"The proposal would require each savings association to determine the identity of its customers, to determine normal and expected transactions for its customers, to determine its customers' sources of funds, to identify transactions that are not normal or expected transactions for the customer, and to report suspicious transactions under existing suspicious activity reporting requirements. "

And other Google entries under: "Know Your Customer" regulations.

If, for example, you sell your car for, say, $20,000 in cash and deposit same in your account, you can expect a visit from someone wearing sunglasses.

Interestingly, you can buy 100 postal money orders, each for $200, and send them to an offshore bank and no one cares.

I'll ask again: How much is the fee? Fifteen cents? (I ask because my bank does not charge any fee for any transaction, no matter how many).

It's got to cost the bank more than than the fee to process another transaction -- they'd be ahead to compress the actions into one event.

I don't see how it could be a "law," inasmuch as QB gives you the opportunity to supply a "less cash" amount on a bank deposit.

Here's a trick. If you have some spare funds available for investment, BUY STOCK IN YOUR BANK. You'll get an adequate dividend (usually better than a CD), but, more importantly, you'll never pay another fee, you'll get loans at prime, and all mannter of other perks.

You are thinking way to small. Think of a big account that has thousands of transactions a day. Those fees add up. I've seen places in the merchant cage that have several deposits each day. Each deposit slip is a fee, and every check on the slip is a fee, and if you hand cash over there are fees for taking that too. Yes those tiny little numbers add up when you can up the multiplier into the thousands.

They don't lose anything on any transaction. They pay the teller the same if they do one transaction or ten, or even just stand there waiting for the next customer to come in. Once it's past the teller, the process is so automated that human hands don't touch it.