You may not write checks often, but chances are that you may get one now and again. Maybe the IRS sent you a physical check for your tax refund or maybe a company mailed you a refund as a check. Either way, you now need to cash it or deposit it. Knowing how to endorse a check plays a crucial role in successfully converting your check to cash.
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What Are the Benefits of Endorsing a Check?
The immediate benefit of endorsing a check is that you get to access the funds. You may do so in person at the bank or at a check-cashing business. An even more convenient option is to use your bank’s mobile app to complete the process.
Here are some benefits of accepting your payment via check:
- No fees if you cash your check through your bank
- Difficult for thieves to use without your endorsement
- Easy to trace or cancel the check
- Compels you to budget better
- Safer to mail than cash
Who Would Endorse a Check?
The person responsible for endorsing a check depends on who the payee is. For instance, the check may be payable to an individual or a business.
Organization
Only authorized parties can endorse a check on behalf of the organization. When endorsing a check on behalf of an organization, do the following:
- Write the organization’s name, which should be the same as the payee.
- Sign your own name.
- Add your work title.
- Include restrictions, if applicable.
FBO
When checks are written for the benefit of another individual, the first payee should endorse the check. An instance of this is when someone writes a check to deposit money in a trust. The trustee would endorse it, in this specific situation.
Multiple People
Some checks become issued to two people, such as when the IRS sent stimulus checks to married couples. Whenever the names are joined by the word “and,” all parties need to sign.
One Individual
If the check comes only to you, then only you need to endorse it. Even if you decide to sign the check over to someone else as payment, you add all the details yourself.
When Should You Endorse a Check?
You may feel tempted to endorse the check immediately after receiving it. However, it is recommended to wait until you are about to cash or deposit it, just in case it gets into the wrong hands. Note that anyone can cash an endorsed check. Here are some of the more common situations when you may receive a check and need to endorse it:
- A physical check as payment from your employer
- A check in the mail from a grandparent for Christmas
- A personal check as payment for goods or services
Examples of How To Endorse a Check
Example 1
Peter owns a business that creates custom furniture for clients. His main supplier for materials allows him to pay at the end of every month. Halfway through the month, Peter gets an expensive custom order. The first half of payment also happens to be his current amount due. He writes the following:
- Peter Ramsay Carpentry
- Peter Ramsay
- Business Owner
- Pay to the Order of Smith’s Lumber.
This endorses the check. It also makes it payable to his supplier.
Example 2
The IRS issues a paper check to Cindy and her estranged husband. Because it has the word “and” between both names, she drives to her husband’s workplace on her day off to ask him to sign. She endorses the check as well, cashes it and sends his share via Cashapp.
Steps for How To Endorse a Check
To endorse a check, simply sign your name on the back before attempting to cash or deposit it. You may also include instructions that may affect how it is deposited. This sounds simple enough, but if you have never endorsed a check before, you may feel confused. These steps can help.
1. Know Where To Sign
The section to sign your name is on the back of the check and is not usually very large. You may only have a section about 1.5 inches wide to write in. Be sure to read the instructions on the back of the check, which may warn you against writing in other areas.
2. Match the Names
Typically, all you need is a signature. However, if the individual spelled your name incorrectly, sign the back of the check using the incorrect and then the correct spelling. You may indicate which one is correct.
3. Add Restrictions
If you need to mail the check or later realize you may not be able to cash it immediately, add restrictions. For instance, you may put the account number of your account to indicate that it may only go to that account. You may also note on the check that only the payee may deposit it.
Quick Questions
No, some banks allow you to deposit checks without endorsing them. This may help you to keep some information private, because the person who issued the check may have access to the final image once processed.
Even banks that allow you to deposit without endorsements may take a longer time to process the check. If the payee name does not match, the bank may require additional information.
You may need to endorse a check even when depositing from your phone. Your bank may ask you to note that it’s a mobile deposit, but it rarely penalizes you for skipping this part of the instructions.
Now that you know how to endorse a check, find out more about checks and banking at our blog. Let BankingMash help you boost your money management skills.
