Want to know how to endorse a business check? As a business owner, you have to make it easy for your customers to pay you fast. While many people prefer to pay with cash or credit cards, some people may prefer only checks.
This is not a bad idea; it’s a normal business procedure to cash into your business account. The cost of processing credit card payments and the possibility of credit card chargebacks often make checks an expensive way to pay.
However, the process of approving checks in your company is a bit different than approving personal checks.
Let’s learn what information you need to approve a check for your business:
How to approve business checks
To approve the check, go to the endorsement area on the backside of the check. This is a short section at the top where it says “Endorse Here.”
Complete the endorsement using a pen:
- Write the name of the business, which will match the payer on the front of the check.
- Signing up your name
- Write your title (President, Owner, Treasurer, etc.)
- Add any restrictions to the check you need
If you receive a large number of checks (more than a few per day, for example), you can also approve your checks using stamps. Online check printer and office supply stores let you fly through the necessary approvals, can create stamps with all the necessary information.
Ask your bank for any specifications before ordering the stamp. They may have broad requirements, and it is best to follow those guidelines to avoid delays in payment processing.
Your entire endorsement is locating above the check’s backside (although there are some wiggle areas). Some of the things you need to keep away from fitting in this area might include:
- A particularly long business name
- Multiple signatures required
- No restrictions on your joining
Restricting on approval
When you approve a check, it means you approve the person who has it to collect the money. This usually does not a problem because your bank will collect the check and deposit those funds into your account.
However, if a check is stolen after the approval, the thief can cash in. So if stolen, then manage the deposit in another account or inform your bank with the check number. You can reduce your risk by limiting what happens to funds after you endorse the check with a limited authorization. For example, you can protect the check from being cash in. There will always be a paper trail that shows where the money is going.
So the most common restriction is “to deposit only to #XXX accounts” (use your personal account number). This means the check must be credited to your specified account and not possible to cash by others.
Cash to pay for your business
Banks are often hesitant about cash checks for business, so you will probably have to deposit most of the checks with your business name. It is possible to cash a check made out of a business, but it is challenging. Because cashing a check is equivalent to withdrawing money.
Businesses can have multiple owners and require the approval of several individuals to withdraw or spend money. Banks often hesitate to cash business checks if they do not know that the person holding the check is authorized to spend that money.
If you have to cash a business check, your best bet is to use your own bank (where your business has a checking account) after actively using your account for a while.
Acting like a business
It is wise for customers to write checks for your business instead. In addition to displaying it as a legitimate business, it helps limit your liability if something happens to the company.
Using a personal account
Dealing with business checks brings additional costs and inconvenience. So use your persoanl account so that customers make checks payable to you (individually). You may even tempt to deposit a business check into your account.
However, banks are not supposed to deposit personal checks into your account unless the check-over is signed, which is less likely to get approval. This is true even if you are the sole owner and employee. If you notice to the bank that you are trying to deposit a check given to a business into your account, you run the risk of being delayed and other complications.
Even if you can get business checks in your account, using a business checking account for your business income limits your liability. Using your account puts your assets at risk and blurs the line between your personal account and your business account for tax purposes. Find an affordable business checking account to keep your personal and professional account separate.
Other ways to pay
If the checks are too heavy for your business, you can use other payment methods:
Cash: If spending is your primary concern, cash is the least expensive option. However, it can create security concerns, operational processes, and logistical challenges.
Plastic: Credit and debit cards are a favorite tool for consumers but can be expensive for merchants due to transaction fees. Be aware of the rules for adding surcharges to credit card purchases.
Electronic Payment: For more affordable payment processing, try raising funds directly from customers’ bank accounts. ACH (Automated Clearing House, a U.S. financial network) payments often cost less than card payments.
Fintech Payments: Businesses can use PayPal, Square, Stripe, Amazon Pay, Apple Pay, Google Pay, and many more to facilitate online payments. In general, these platforms enable fast, non-friction transactions with reliable security systems and lower fees than credit card processing.
Read also: 3 tips for more efficient Global Payments.
FAQ: How To Endorse A Business Check
How do I support a check given to my business?
- If a check is payable to a business, an authorized person must support the check on its behalf.
- Sign the business name as it appears on the pay-to-line.
- Write your name.
- Enter your title with the company (owner, accountant, etc.)
- Add a restriction like “for deposit only.”
Which stimulus check do you support?
Approval instructions: You have to sign in behind your check-in to deposit (or cash). Make sure your member number is on the back of the check. Each name you should mention on the front of the check before you sign on the back.
How do you support a two-way business check?
Notice that “Party A and Party B” or “Party A or Party B” is bilaterally checking. There is a big difference between them. The quick answer is if two name checks say “to” and “give the order of the line,” then everyone must support the check.
How do I support a check for a deposit only?
You can store Snap on your iPhone or Android™ device. Due to the new banking controls, all checks are depositing through a mobile service. “For mobile deposit, only” The signature put below in the endorsement area behind the check. Otherwise, the authority may reject the deposit.
Can I submit a check made for my business?
Yes, anybody can deposit a business check into the company’s business checking account. You don’t need to be the owner or an authorized signatory to the bank account because the person depositing the check does not make a profit by doing this, which is not the case instead of cashing the check.
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