Answer:
I can read your question to mean two things. So I'll offer two entirely different responses.
Response No. 1:
It happens all the time. Consider a payroll check, for example. It could be signed by the business owner and payable to him or her. In the case of a partnership or corporation, it could be a payroll check for the bookkeeper who signs payroll checks. There are thousands of businesses in this country that are so small as to have only one signer on their deposit accounts. Surely that individual is entitled to get paid in such cases! There are also, unfortunately, a lot of businesses with more than one signer who aren't as familiar as they should be with the concept of internal controls. For example, one excellent internal control in such a business would be that no one signs a check payable to himself or herself. However, unless there is something else about a transaction that seems untoward, I see nothing inherently wrong with cashing a check payable to and signed by the same individual on a business account, assuming the individual is authorized to sign on the account.
Response No. 2:
Suppose, however, the individual wants to cash a check payable to him or her (not drawn on your bank) and the individual happens to be a signer on a business account at your bank. Can that individual cash the check on the strength of that business account? Your bank may decide that the individual is honest and resourceful enough to reimburse you if the check to be cashed bounces. However, you cannot rely on the business account as a source of repayment if you cash the check and it turns out to have been a bad decision. The business won't owe you the money; the individual will.
First published on BankersOnline.com 10/29/07
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