Settlement Check to Closed Business?

I closed my small business in October 2018. I just received a small settlement check resulting from a class action lawsuit, payable to the business name. I no longer have a business checking account. The letter attached to the check has both my name and the business name.

The check is only for $31.50. It will be void 90 days from July 1.

One line in the attached letter states “Please note that any request to have the check reissued in the name of a different payee must be made in writing, referencing your check number, and requires supporting documentation showing the desired new payee is the successor in interest to the class member.”

Should I try signing the check and depositing it in my personal checking account? I was sole proprietor of the business and I was the only owner on the business checking account.

Are there any tax consequences of cashing this check? I am an early retiree with no earned income.

Should I just run it through the shredder and forget about it? Is it worth contacting the Settlement Administrator?

HHP

I once got a six figure settlement check from an insurance company, this was several years after I closed my business. The check had my name and the name of the business. I was now living in another state. My current local bank would not cash the check. Fortunately, although I closed the business bank account, I still had a personal account at the same bank where I had my business account. I mailed them the check and had it deposited in my personal account with no problem.

Sandywater

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I expect your business had a banking relationship – take the check to them.

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The check is only for $31.50.

Use an ATM or your bank’s app on your smart phone to deposit the check. I don’t think a real human actually looks at the name on the check when deposited that way. It’s all automated.

The only person who could complain about it is your business. And it’s not going to complain. (You don’t have a multiple personality disorder, do you? That could cause problems. )

If it were a larger amount, I’d suggest endorsing the check from your business to you (write “pay to the order of HHP” in the endorsement area on the back then sign it with the business name, and sign again with your name).

The last thing I’d point out is that since you operated as a sole proprietor, legally the business IS you. You were just doing business under a fictitious name. So the money, whether payable to the business or to you is still your money either way.

–Peter

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These days most checks can be deposited at an ATM to any account you have an ATM card for. My bank has me check that the amount is correct. And some even accept iPhone photos of the check.

They are untouched by human hands and probably cause no problem unless someone objects.

Taking check to the tellers window is the only way to have a human look at it.

They tell stories of people signing checks with names like George Washington. Again rarely noticed. Highly automated. Untouched by human hands. Not sure if they would take an unsigned check. Maybe?

Endorsements ever checked? Only when someone objects.

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A friend send his DMV check to PG&E and his PG&E check to DMV. DMV returned the check probably because it didn’t match the registration amount. PG&E deposited the check made out to the DMV. It cleared.

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Thanks Sandywater. My personal checking account is with the same bank that held my business account so I will deposit it there and see what happens.

HHP

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Thanks GWPotter. I still have a relationship with the same bank. I will deposit and see what happens.

HHP

Use an ATM or your bank’s app on your smart phone to deposit the check. I don’t think a real human actually looks at the name on the check when deposited that way. It’s all automated.

The only person who could complain about it is your business. And it’s not going to complain. (You don’t have a multiple personality disorder, do you? That could cause problems. )

If it were a larger amount, I’d suggest endorsing the check from your business to you (write “pay to the order of HHP” in the endorsement area on the back then sign it with the business name, and sign again with your name).

The last thing I’d point out is that since you operated as a sole proprietor, legally the business IS you. You were just doing business under a fictitious name. So the money, whether payable to the business or to you is still your money either way.

–Peter

Thanks Peter. I think there is only one of me “in here”, so I don’t expect any complaints.

Are these little settlement checks taxable? If so, would it go under “Other Income”?

HHP

Thanks pauleckler,

I will deposit at an ATM where I held the business checking account. No one other than myself to complain about the endorsement.

HHP

Thanks vkg. I will deposit it and see what happens.

HHP