Question about endorsing a cheque

[Jimmy Stang]

Even though I worked at a cheque remittance centre while in high school, I'm not sure of the regulations regarding endorsing a business cheque to an individual.

Here's the scenario: I have a small business on the side that occasionally receives a cheque for payment, although more often than not, I am encouraging email money transfers simply out of convenience. This business has a legal name and a business account at TD. I haven't written a business cheque in years.

I do all of my personal daily banking at places like President's Choice and ING Direct because I have no use for a branch. I quite enjoy not having to pay fees and online and ATM banking fits perfectly with my style. They do not offer business accounts, however. The only thing that I seem to gain from my TD account is the ability to cash cheques made out to my business name, although this may be possible in a personal account if the cheque is endorsed over by the business (me) to the individual (also me).

Cut to the chase: Could I theoretically receive a cheque made out to "ACME Widget Company" and endorse it over to me personally and deposit it into an account that's technically a personal one being used for my business? What would that endorsement have to say? Could I theoretically cut my ties (and fees) with TD?

Go ahead and call me cheap, but for the amount of banking I actually do, I'm paying too much in fees.

[amorak]

No - That would be the easiest way in the world for someone in accounting to deposit company cheques into their own account.

I know at least 2 of the big banks dont allow this - I'd be surprised if TD does. I know CIBC does not, so I don't think you can do it at PC Fin as that is CIBC-regulated.

[Jimmy Stang]

Originally Posted by amorak

No - That would be the easiest way in the world for someone in accounting to deposit company cheques into their own account.

I know at least 2 of the big banks dont allow this - I'd be surprised if TD does. I know CIBC does not, so I don't think you can do it at PC Fin as that is CIBC-regulated.

Thanks for the response. I'm not questioning your knowledge on the issue, but I'd like to try and wrap my head around it a little more.

So, in a strictly personal sense, if I understand it correctly, it is OK if Amorak wrote Jimmy Stang a cheque, I could sign that over to Fotze for brokering an evening with his mom. All that it would require of me would be to endorse the cheque over to Fotze. Kind of old school, but still legal, right?

The business scenario isn't really any different on the surface. If a vendor made a cheque out to Jimmy Stang's Widget Company (a sole proprietorship), and the company signed that cheque over to Jimmy Stang the individual directly, that's not allowed? I understand that if a vendor wrote a cheque to a large company and a fraudulent employee with signing authority endorsed that over to themselves, that could create some trouble. But I would think that would be enforced under fraud laws quite seriously. In my case, the company is a sole proprietorship so in essence, the company is me. I'd be endorsing it from myself to myself simply to get around actually having a traditional business account.

In fact, it seems like a personal endorsement is sketchier because the money is changing hands from A to B to C, whereas the business scenario (in my case) goes from A to B to B (legally).

Again, just trying to find a way to cut the cord with my traditional business account.

[squiggs96]

You can't endorse a business cheque to an individual because of income tax and money laundering issues. Business to business is fine and person to person are both fine. I changed the name of my consulting company to just my name in order for me not to have a business account at National Bank of Canada.

[8sPOT]

I work at one of the big banks and while I don't deal with cash or cheques I am certain that a cheque payable to a business must be deposited to a business account.

However, a cheque written to a person can be deposited to a business account if endorsed by said person.

[Jimmy Stang]

So it looks like my options for getting rid of business banking fees are:

- Set up an additional, free PC Financial account and ask vendors, if they are going to make a cheque out, to just make it out to me personally. My business is photography, so I usually have a one-on-one relationship with clients and vendors anyway. Interac email money transfers are getting more and more popular anyway, and cheques are rare for me. The disadvantage is a slightly less professional appearance, but as mentioned, I'm not sure that's a big concern for my type of business.

- HSBC has a "Business Direct" account that doesn't charge for typical banking done via ATM and online and allows for a few deposits and cheques per month. Perfect for the weekend warrior like me except for one thing - HSBC doesn't do Interac email money transfers. I love those things as they are just too convenient.

- Suck it up and pay the $150/year and write it off as an expense (as I have been doing). In the coming months, however, life will be changing (for the better) for me and I think that my side business will be taking more of a back seat, so I'll probably not go this route as my level of banking will be decreasing along with my business revenues.

Thanks for all of your replies - much appreciated!

[bizaro86]

Originally Posted by Jimmy Stang

- Set up an additional, free PC Financial account and ask vendors, if they are going to make a cheque out, to just make it out to me personally. My business is photography, so I usually have a one-on-one relationship with clients and vendors anyway. Interac email money transfers are getting more and more popular anyway, and cheques are rare for me. The disadvantage is a slightly less professional appearance, but as mentioned, I'm not sure that's a big concern for my type of business.

This is what I've done in the past in similar situations, and what I'd recommend. People hiring a photographer probably won't be surprised to make the cheque payable to you personally, and if anyone questions it you can just explain that it saves you on bank fees.

[bc-chris]

it is OK if Amorak wrote Jimmy Stang a cheque, I could sign that over to Fotze for brokering an evening with his mom

wow!!!!

[Jimmy Stang]

Originally Posted by bc-chris

wow!!!!

I'm here all week.

[amorak]

Originally Posted by bc-chris

wow!!!!

We all know this is an unrealistic situation


...Fotze's mum doesn't charge!