How Does an LLC Receive Checks?

By Salvatore Jackson

After official formation, an LLC needs to establish a bank account so that it can operate as an income-generating business. After establishing an LLC bank account, checks written to the LLC can be deposited in the LLC's bank account similarly to how an individual would deposit a check written out to him.

LLC Bank Accounts

To open an LLC checking account, most banks require an LLC to present a copy of its articles of organization, a certificate of good standing issued by the state agency responsible for registering business organizations and a copy of the LLC's operating agreement. Additionally, any members or managers authorized to deposit checks written out to the LLC must provide their name and address, and sign an agreement with the bank.

Writing a Check to an LLC

If someone wants to write a check to the LLC, he simply needs to put the name of the LLC in the recipient field of the check. Any LLC member or manager who has signed with the bank may deposit the check in the LLC's checking account. Depending on the bank, this individual may need to sign her name on the back of the check.

Ready to start your LLC? Start an LLC Online Now

LLC Accounts vs. Personal Accounts

A checking account in the name of an LLC is fairly similar to a checking account for an individual. Banks may be willing to offer a more generous interest rate to businesses that open a checking account for an LLC. Additionally, banks may offer features in a business checking account not present in a bank account for an individual, including payroll and expense tracking. However, business accounts generally carry a moderate monthly charge, while checking accounts for individuals are generally inexpensive or free.

Warning

There may be serious consequences for LLC members if the LLC does not have its own bank account. Not maintaining a bank account for the LLC is a sign of not complying with the formalities of an LLC, and a creditor of the LLC may be able to pierce the corporate veil and hold the LLC members personally responsible for any LLC debts. Additionally, an LLC member that deposits a check written out to the LLC in his personal checking account may be guilty of conversion, which is a crime in all states, and may be held civilly responsible and be forced to pay financial damages to the LLC.

Ready to start your LLC? Start an LLC Online Now
How to Create an LLC for Investments
 

References

Related articles

Sole Proprietorship & Investment Accounts

The sole proprietorship is a very common form of small business, and beyond running their underlying business, sole proprietors are free to make investments and hold assets in investment accounts. These accounts can be used to augment savings for the business, to speculate on specific investment opportunities or to offset financial risks encountered in the sole proprietorship's business operations.

What Is an LLC Annual Report?

An LLC, or limited liability company, is generally governed by the requirements of the state in which it is registered. These companies do not have to comply with the same formal reporting requirements as do corporations, but some states require LLCs to file annual reports to remain in good standing. Large LLCs with more formal operations may voluntarily adopt additional reporting requirements to keep all members updated on the financial status of the company.

Can You Include Returned Checks in Chapter 7?

When a debtor files for Chapter 7 bankruptcy, he must inform the court of all of his liabilities, including returned checks. Returned checks represent the debtor's unpaid debts. As such, they are dischargeable in bankruptcy, unless the creditor can prove fraud on the debtor's part.

LLCs, Corporations, Patents, Attorney Help LLCs

Related articles

How to Find a Company's EIN

An Employer Identification Number for a business entity is analogous to a Social Security number for an individual. The ...

How to Take Distributions From an LLP

In a limited liability partnership, or LLP, the owners are entitled to take distributions from the company. A ...

How to Open a Bank Account for a Non-Profit Association

Nonprofit associations, like businesses, generate revenue and expenses. It is essential for nonprofits to maintain a ...

Can I Use a Bank Account After Dissolving an LLC?

Using your limited liability company's bank account after dissolution is essential to wind up the affairs of the LLC, ...

Browse by category
Ready to Begin? GET STARTED