How to Endorse a Check: Checks Written to a Business

If you have a business, you need to endorse your business check correctly if you want to redeem it with the bank. The proper endorsement on the back of a check is important whether you are making a mobile deposit or a deposit with the bank teller at your financial institution.

Although the signature should mimic the payee line on the business check, it goes beyond that. Different types of checks may need you to endorse them in different ways. So, if you don't want a hassle at the bank, it's good to know what type of endorsement you need.

To endorse the back of the check, go to the front of the check and note how the check writer wrote the payee's name. Your bank or credit union will want the endorsement to match the payee line. The steps to endorse the business check for deposit into a business checking account or savings account include:

• Go to the back of the business check.
• Look for the endorsement area on the back of a check. It will say "endorse check here."
• Sign the name of the business as it is written on the payee's name line.
• Sign your name.
• Write your title with the company (owner, business manager, etc.) under your name.
• If it is "for deposit only," you can list that as well under the title.

This procedure is followed whether you are using a mobile banking app or depositing it in person.

The name of the person on the endorsement area of a business check can vary depending on the type of business it is. For example, a small business may have the business owner sign the company name and her name.

But that's only one type of endorsement. Another type of endorsement is used when the payee is an FBO, or "for the benefit of." An FBO is made out to the business but also says FBO and a name. This is used if the check writer is making a payment on behalf of someone else.

The business is the custodian of the funds and endorses the check on behalf of the named individual. In some cases, the bank or credit union will require signatures from both the business and the named individual before they allow the check to be deposited into the business's bank account.

Another type of endorsement is a restrictive endorsement. An example of a restrictive endorsement is writing "deposit only" on the back of the check. The bank account number usually follows. This restricts how the business check can be deposited.

A blank endorsement happens when there isn't a designated payee. Anyone can endorse the back of the check. And therefore, anyone can deposit it. This is an unsafe method of writing a business check or any check.

If you are operating a legal entity or business, it should be separate from your personal account. For example, a small business or any business should have its own checking account and savings account.

A business checking account works the same way as a personal account. You can write business checks under your business name.

You'll also be able to make ACH transfers. In other words, you can receive and send funds directly through your checking account. ACH transfers are typically more affordable than using a credit card or a debit card.

A business checking account allows you to make wire transfers. Like ACH, you can send funds from bank to bank.

And finally, you'll still be able to make debit card purchases in the name of your small business.

It's not good for personal finance to merge your personal account with your business account. Talk to an accountant before you set this up. It will save you a big hassle at tax time if you keep your business account and personal account separate.

Endorsing a business check may seem complicated, but knowing the steps takes the mystery out of the process. Here are some FAQs.

An authorized signatory is anyone in a small business or any business who is authorized to endorse a check. For example, it could be the business owner, director of the company, accountant or someone else.

Writing a restrictive endorsement like "for deposit only" ensures that the business check will only go into your small business account.

A member of the LLC can endorse a check made out to the LLC. They should sign the company name, "member check" and the member's signature on the business check.