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Personal Finance

How to Cash a Business Check

Cashing a business check may not seem very different from cashing a personal check written out to you. But depending on the circumstances, it can get complicated, and you may not be able to cash it at all.

To cash a business check, you'll need to understand the difference between cashing and depositing the check, as well as the requirements of bank or check-cashing services. If you've received a check made out to your business, here's what you need to know.

What Is a Business Check?

A business check is a check that's written against a business checking account, which means it's based on a company's assets rather than an individual person's. For example, if you receive a payroll check from your job instead of a direct deposit into your bank account, that's a business check.

But business checks can also get more complicated than that, especially if they're written to other businesses. For instance, businesses may use checks to pay suppliers and vendors, or to creditors to whom they owe a debt.

Depending on the type of business check, cashing it can be easy, or it can be a little more difficult.

What Is the Difference Between Cashing a Personal and Business Check?

If someone writes out a personal check to you in your name, cashing the check won't be too difficult. You can easily do so if you have a checking account, but even if you don't, you can cash it with the bank that issued the check or at a check-cashing store or retailer that offers to cash checks as a service.

The only issue you may run into is if a personal check is made out specifically to you and another person.

In contrast, business checks—excluding payroll checks—can be more difficult to cash, even if you're the owner of the business. This is primarily the case when the check has been made out to your business rather than to you as the business owner.

If you receive a business check made out to your business, it's important to understand your options.

How Cashing a Business Check Works

Before we dig into the details, it's important to understand that cashing a business check is different from depositing it. Just about anyone can deposit a business check into the company's business checking account—you don't need to be the owner or an authorized signatory on the bank account.

That's because the person depositing the check doesn't receive any benefit from doing so, which is not the case with cashing the check instead.

Not all banks allow you to cash business checks made out to your business. You may be able to, however, with the bank where you have your business checking account. Who can cash a business check depends on how your business is structured.

If you're a sole proprietor, for instance, only you can cash checks made out to your business. If your business has an official name, be sure to add a "doing business as," or DBA, designation to your business checking account so that you can cash checks made out to both you personally and your business.

If your business is a partnership, limited liability company or corporation, anyone who is a signatory on the business checking account can cash a check made out to the business—that is, of course, if your bank allows it.

If it does, you'll need to sign the back of the check with your name and title, and your signature must match the one the bank has on file for the account. You'll likely also need to provide a driver's license, state ID or some other acceptable form of identification to prove your identity.

If your bank doesn't allow the cashing of business checks made out to a business, one way to get around it is to deposit the check, then make a withdrawal for the same amount from the account. This only works, however, if there are enough available funds in the account at the time. Depending on the size of the check, the full amount may not be available immediately.

How to Cash a Business Check Without a Bank Account

If you don't have a business checking account for your business yet, there are other ways to cash a check made out to your company.

For example, Money Services, which partners with retailers like Kroger, Fred Meyer, Ralphs, Smith's and more, cashes checks made out to businesses.

Also, you may be able to do a quick online search of check-cashing stores in your area, many of which may offer to cash business checks. Just keep in mind that, unlike banks, check-cashing services aren't free. You may end up paying a flat fee or a percentage of the check amount, so compare multiple options to make sure you maximize the amount you take for your business.

Make It a Priority to Have a Business Checking Account

Having a business checking account isn't only good when you need to cash a check; it can also help you separate your business and personal expenses, which will make a huge difference at tax time and make your business more official.

Not all business bank accounts are created equal, though, so take some time to research several options and compare features, fees and limitations to find the best fit for your business.