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Check Cashing: How to Do It Without a Business Bank Account
February 07, 2022

Check Cashing: How to Do It Without a Business Bank Account

Cashing checks is an essential task for businesses and consumers. While online payments are popular, people don’t always trust this option, so having a business bank account is critical. However, some business owners prefer to operate without involving banks.

This post will review how to cash checks without a business bank account. In addition, we’ll explain why we recommend opening a business bank account.

What Happens When You Receive Business Checks?

Your business is likely tied to your personal checking account if you’re a sole proprietor. However, there’s no protection of personal assets from a legal standpoint.

Receiving checks becomes a more significant issue when you have a different business form, such as an LLC or corporation. Customers will likely address the check to your business’s name. Without an account, it will be challenging to retrieve the funds.

Are There Different Types of Checks?

Personal and business checks are used the same way; both are drawn from an account holder’s bank account for the amount displayed on the checks.

However, one difference is that personal checks are usually the size of dollar bills and can fit easily in wallets. Business checks are larger, which helps banks recognize that it’s a business check.

For a check to be valid, it must contain several items:

  •  Account number
  • Bank name
  • Routing number
  • Valid date
  • The amount as a number and spelled out
  • Registered trademark of the bank that issued the check
  • Signature

Business checks will often contain security features not found in personal statements. For instance, many business checks have holograms or watermarks to help banks reduce fraud.

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Common Issues with Cashing Business Checks

There are certain situations where cashing business checks without a bank account can cause problems.

For example, let’s say that you receive a check from a customer, and it’s made out to your business’s name. However, you have yet to open a business checking account. What will happen with this transaction?

Unfortunately, without a business checking account, you may be unable to get the check cashed. The best course of action is to open a business banking account. Your other options are:

  • Ask the customer for a credit card number
  • Accept a wire transfer (which will be costly for your customer)
  • Ask the customer to write a new check to your personal bank account
  • Seek out a check-cashing option that doesn’t require a bank account

check-cashing

Check Cashing Without A Business Bank Account

If you have a business bank account, cashing a check is easy. However, without a business bank account, it becomes more complicated.

If you can’t open a business bank account, here are your options for cashing business checks:

1. Walmart and Other Retail Stores

Most Walmart stores offer check cashing services. Businesses can present their checks to the Money Center or Service Desk, although check cashing isn’t available in every state.
The company charges fees based on the transaction type, and you can receive the money in cash or via a Walmart MoneyCard (which may come with additional fees).

In most cases, Walmart won’t cash checks for amounts greater than $5,000. However, you can cash multiple checks when each check amount is below that limit.
To cash a check, Walmart will ask for valid government-issued identification and may also require additional verification.

Other retailers, such as supermarkets and drugstores, offer check-cashing services, but they may not accept business checks.

2. Check Issuing Banks

Usually, if you go to the issuing bank to have your check cashed, they can verify that the account is legitimate. However, you may be charged a processing fee depending on the bank. This fee may be waived if you decide to open an account at this bank.

If you can find a friend or family member who has an account at the issuing bank, you may be able to avoid fees. The bank could use this person’s account to back the check for your business. However, this option shouldn’t be used as a long-term solution, as this person will need to be available for every check cashed.

3. Specific “Money Centers”

Money centers are usually willing to cash business checks, but they typically come with fees and require an application.

When utilizing money centers, you’ll receive cash quicker than you would if you went to a bank. However, the fees charged are higher because that’s how the centers make money.

4. Checking Cashing Stores

You’ll likely see stores in small neighborhoods that offer check cashing services. They’re usually lenient when cashing business checks but can be expensive.
The fees charged are usually based on a percentage of the check amount and can be 5 percent or more.

These fees may not seem like much for smaller checks, but the costs will add up if you use this service often.

5. Prepaid Debit Card Transfer

By opening a prepaid debit card, you can easily cash business checks.

Mobile apps such as InGo allow you to scan your business checks and add cash to your prepaid debit card, minus a fee. If you’re willing to wait ten days, the company may waive the fees as long as the check clears.

It’s important to note that prepaid cards expire eventually, but your funds remain safe. If this occurs, you must open a new prepaid debit card and transfer your funds (which comes with a fee).

Check-Cashing-Infographic

Conclusion: Consider Why a Business Bank Account Is Important

Opening a business bank account shows your customers that your business is legitimate and makes depositing checks more manageable. Although there are in-store and online check-cashing services that don’t require a bank account, they typically aren’t recommended as a long-term financial solution.

Editor’s Note: This post was updated for accuracy and comprehensiveness in February 2022.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].