Depositing a Business Check Into a Personal Bank Account

Published 12/15/07 (Modified 3/9/11)
By MoneyBlueBook

Although I work a regular full time job, I also run a few fledgling side ventures on the side. As I mentioned about a month ago, I am currently attempting to establish a trade name and open a business bank account in the business' name to better keep track of venture earnings and assets.

However, I'm currently unable to establish a business bank account because the state agency hasn't processed and sent me my approved trade name certificate yet. I did not file for expedited service (*snapping fingers in a darnnit motion* ) so it's taking much longer than expected. Banks will not usually allow an individual to establish a business bank account that doesn't contain the applicant's name in the account title without a valid trade name or fictitious business certificate. So for now, I'm stuck without the services of a proper business bank account. However, meanwhile my side businesses have continued to generate income and now I have several business checks made out to my fictitious business name that I am unable to deposit immediately. It has been weeks and the business checks continue to sit on my desk gathering dust and looking quite lonely.

Ideally, business funds should not be co-mingled with personal funds since the Internal Revenue Service (IRS) will require the tax filer to account for his/her business income and expenses on a separate form, although both business and personal income will ultimately be treated as the tax filer's ordinary income. However, my checks have been sitting around un-deposited for some time and I am getting to the point where I want them in bank accounts and generating interest.

So Am I Permitted to Deposit Business Checks Into My Own Personal Bank Account?

I am tempted to just go ahead and deposit my business checks into my regular checking or savings account at Citibank. I am the only owner and operator of my sole proprietor business so there wouldn't be stakeholder problems. The pickle is whether my particular financial institution will permit the deposit or not.

Perhaps my deposit will be more willingly accepted by my bank's ATM machine than by a live teller. There are some readers out there that have indicated that an ATM made deposit will be more readily approved by the bank than one made at the counter since ATM transactions are mostly computerized. The idea is that so long as I properly endorse the back of the check with signatures containing the business name and my own name, the bank will likely accept it as valid, particularly if the check's numerical amount is not too significant. I'm just not certain on where the business checks go if the deposit into my personal account is denied and rejected.

There are no specific laws governing such deposits that I am aware of and it appears to be a policy decision governed and made by individual financial institutions. In general, business accounts involve higher sums of money with greater transactional frequency, thus demanding more of the financial institution's attention. This probably explains why many banks tend to require higher maintenance fees for business accounts than personal bank accounts. Because of the higher transactional costs and blanket policy reasons, some banks simply may not be willing to allow this sort of practice and may require business check depositors to open business checking account if they want to deposit a business check made out to the business' name.

Interestingly, online services like Google Adsense and a few others have permitted me to create direct deposit relationships with my own personal banking account, even though the checks were made payable out to my business name. I'm not sure if these were merely oversights or indicative of more flexible policies, but I wish there was more overall uniformity on the issue.

I think I may ultimately wait this out until my trade name certificate gets cleared since it should be approved in a few more weeks, but I wonder if anyone knows the answer for this question?