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Professional Association - NOW Account Eligibility

Answered by: 
John Burnett

Question: 
I have a commercial customer who has inquired about changing his current business account to an interest bearing checking account. I stated we offer a business NOW that is an interest bearing account, but that the account is limited to sole proprietors, non-profit organizations, governmental units and funds held by a fiduciary. He is an Optometrist and the account is a professional association. Will this qualify for a NOW account or is that considered a form of corporation?
Answer: 

In our experience, professional associations are special forms of corporations permitted under the laws of many, but not all states. This form of organization is typically allowed for professionals only (the types of professionals are enumerated in the applicable state laws) and provides liability protections for the individual professional that are much like those afforded to corporations. Because the applicable state laws give professional associations status as separate legal entities, you have to treat them as you would a corporation for the purposes of determining whether they qualify as holders of a NOW account. A professional association is not eligible for a NOW account unless it is a qualified non-profit organization (most unlikely) or is holding funds in a fiduciary capacity on behalf of persons eligible in their own right.

First published on BankersOnline.com 12/01/08

First published on 12/01/2008

Filed under: 
Operations
Filed under operations as: 
Fiduciary
Interest
IT

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