You can think of it like signing for parcels and packages that you receive, except in this case, it’s money you’re collecting. For businesses, the only person who can endorse a check is the company’s owner, unless another employee weighted average: what is it how is it calculated and used has been authorized to manage the business finances. If you don’t endorse a check, the bank won’t be able to process it. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.
- An incorrect or fraudulent endorsement can lead to serious repercussions, including legal disputes, financial loss, and, in some cases, criminal charges.
- Once that check is signed, anyone in possession of it could attempt to cash it.
- Bank reconciliation, or balancing your checkbook, can help you track checks and other transactions each month.
- We’re happy to skip all the fat-cat banking ideas and complex financial terms, so we can provide you with the best options for your business.
- If the instrument is lost or stolen, it can be cashed or deposited by the finder.
- Hold onto the check until you know it has cleared and the funds are deposited into your bank account.
This refers to a type of endorsement on a check where the payee’s signature appears on the back of the check without specifying a specific recipient. Next time you take an old school check in your hand, review its purpose and determine the proper endorsement. Your kids might ask, “where do I sign a check,” and you can enlighten them using this information. Knowing how to endorse a check is part of personal finance management.
Unfortunately, other than asking the check writer to void this check and write another, the only way around this issue is to copy their incorrect spelling in your endorsement. Then you can provide your correct name in your official signature. You must specify the financial institution and intend to deposit the check remotely. Before you endorse it, you must ensure that the original check has the correct date, amount, and payee name.
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Types of Check Endorsements
When someone writes you a check, you typically need to endorse it so that you can cash the check or deposit it. Endorsing a check helps the bank verify you as the recipient and authorizes the bank to make the transaction. With a restrictive endorsement, you have control over which bank account the check ends up in.
- Typically, a representative of the business writes the business name, their title and then signs, confirming the deposit into the business account.
- Instead of depositing or cashing the check yourself, you can sign a check over to another person.
- Basically, instead of signing the name of the recipient on the endorsement line, the phrase “For deposit only” is written on the back of the check.
- Any discrepancies like a misspelled name or amount would require a countersignature.
- Others require specific language and additional information for a valid endorsement.
However, defer to any check endorsing instructions that appear on the screen. In most cases, “endorsement” simply means that you need to sign the back of the check before you can deposit or cash it. Sometimes you may receive a check that has no endorsement line or box on the back.
Checks to Your Business
Essentially, you’re transferring the check’s funds to someone who is neither the person that wrote the check (the first party) nor the original payee (the second party). But even in these modern times, many people and businesses use paper checks. And when you’re paid by check, you need to endorse it before you deposit it. You’re the only person who can legally collect money from the check writer’s account.
Be Careful When Signing Checks Over to Someone Else
Simply sign in the usual spot you would on the back and deposit it as you normally would. Ideally, you should wait to endorse a check until just before you deposit it. That’s the best way to prevent someone from fraudulently depositing a check made out to you. If you do endorse it early, be sure to add a restriction such as “for deposit only” under your signature.
Money for here, there and everywhere
Usually when there is only one payee explicitly stated in the bank check, the right and responsibility for endorsing the bank check is reserved only for that payee. When more than one payee has been listed on the bank check, the ownership would be dependent on how the check was written by the remitter. When it came time to go car shopping, my dad and I got the money out of the bank in the form of a money order. We didn’t endorse it right away because we weren’t sure which dealership we were going to purchase the car from.
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If your intention is that either one of the parties should be able to cash the check, then use or instead of and or and/or. Reserve the use of and to only those transactions where you specifically require all payees to endorse the check jointly. If you want to tie the validity of a check to a certain condition, you’d write out the condition after stating who the check is payable to.
Consult with your bank about its processing policy if you receive a check like this. And you can make life easier for them by writing “John OR Jane Smith” if you’re making out a check for a couple. Sometimes a check will be made out to a business rather than to an individual. An authorized individual must endorse a check on behalf of the company in this case. If there is a discrepancy in the written-out and numerical amounts, or if something is illegible, the check may not be honored. The recipient can only cash the check if the information on the front of the check is correct.
To protect yourself from fraud, ensure the fund amount in the right-hand box in numbers matches the amount written out on the second line in the middle. Endorsing a check is straightforward if you’re the only person listed on the “pay to the order of” line. The process becomes a little more complicated if two or more people’s names appear there. In the 21st century, only a few of us often go into a bank to deposit checks.