Answer:
There are DBAs and there are DBAs.
"DBAs" are simply businesses that are operating under assumed names (it stands for "doing business as"). The term should not be confused with "sole proprietorship" ("SP") because SPs aren't the only persons eligible to use it. Consider, for example, the business that's known as "Subway" sandwich shops. The company is actually a corporation, "Doctors Associates, Inc." and it does business as "Subway Restaurants." Many of its franchisees are also corporations or LLCs that use the assumed name "Subway Restaurant" under their franchise agreements with Doctors Associates, Inc.
I think you'd agree that cashing a check payable to a business that is a corporation or LLC is risky. Your bank probably forbids the practice. That doesn't change if the business happens to use "DBA" and an assumed name.
Although it's certainly less risky to cash a check for an SP DBA, how can your tellers know for certain that the individual in front of them is a sole proprietor? Lots of individual business people set up LLCs and corporations for liability management purposes, but still refer to them as "my business." For that reason (and others), I strongly recommend that banks require that checks payable to a business be deposited to accounts in the name of the business, and not cashed.
First published on BankersOnline.com 4/25/11
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