- A business check comprises a few core components, including the date, the payee's name, the check amount in numbers and words, a memo line (if applicable) and your signature.
- It is possible to write a check to yourself from your business, wherein you are the payee, even as the business owner.
- It is important to keep a record of the business checks you write, so you have an accurate snapshot of your business finances.
When you need to pay for goods or services as a business owner, you have a few options, depending on how your payee would like to accept payment. While some businesses may use online banking services from a financial institution to pay for expenses, other businesses and vendors may prefer getting a physical check instead.
You already may be familiar with personal checks; despite some similarities between writing a business check and a personal check, business owners need to be aware of some specific considerations when filling out a business check. Understanding the parts of a business check, and how to write a business check, will help you make payments with efficiency.
Parts of a business check
Familiarize yourself with the different parts of a business check before filling out one. These are the same fields as a personal check, but from a business account instead of a personal one.
- Current date: The date on which you are writing the business check, including month, day and year (it is generally "today’s date"; postdating, or writing a check for a future date, is also possible)
- Payee (pay to the order of): The name of the recipient of the business check
- Payment amount of the check in numbers: The dollar amount of the business check, written out numerically
- Payment amount of the check in words: The dollar amount of the business check, written out in words
- Memo line: A reference note for the business check, such as a purpose for the payment, generally located in the bottom-left corner
- Signature line: The account holder's signature to authorize the business check, generally located in the bottom-right corner of the check
- Routing number: The nine-digit number that identifies your financial institution
- Account number: The number on the payer’s business bank account
- Check number: The unique identification number on the business check, generally located in the upper-right corner
Once you understand the parts of a business check, you can begin the steps to write a business check.
Step 1: Determine the payee
The first step when writing a business check is determining the payee. If you are sending the check to another business, you should ensure you are making the check out to the right company.
If you need to make a payment to yourself as the business owner, you have the option to write a check to yourself from your business.
|How to Write a Check to Yourself from Your Business|
|Writing a check to yourself from your business is the same as writing a check to another recipient. On the payee line, you will write your own name instead of the name of another vendor. The payment will still originate from your business checking account, even if it is written out to you as the business owner personally.|
Step 2: Fill out check details
Once the payee is determined, you need to fill out the rest of the details of the check.
Many business owners write out the check longhand from a checkbook, but if your business uses accounting software, you can fill in the check details on the computer, put a blank check in a printer and have the details of the check printed on the actual check.
Payroll checks can be more complicated because they often include tax withholdings. If you are trying to write out a payroll check, you should add any additional steps a payroll check might need. (Some businesses choose to outsource payroll checks to outside agencies, as an alternative, to handle complicated steps, such as tax withholding.)
Once your check is written, you should double-check for any potential errors. If you identify any mistakes, you will need to void the check and start over. If the recipient experiences any problems with the check after receiving it, they may not be able to cash it, even once they endorse the check.
Step 3: Sign the check
Once all the information is on the check, and you’ve reviewed it to ensure it’s correct, sign the check. The signature needs to match the account signature card given to the bank and be in the name of the account holder. If your business also chooses to require two signatures, you need to get both signatures before sending out the check.
Step 4: Record the check
Once the check is completed and sent off, you need to record the check in your check register or in your accounting software. This is important for budgeting, so you don’t lose track of how much money you’ve paid and need to clear.
The record must have the following information included:
- Check amount
- Payment reason
If writing a payroll check, the gross payment amount, net payment amount and applicable withholdings also should be recorded to help simplify tax time.
Now that you know how to write a business check correctly, be aware of one more step. Many financial experts generally recommend separating business and personal expenses to simplify small business bookkeeping and personal finances. This can help you streamline your process around tax time and help you avoid mistakes, as well as keep your finances organized, to help grow your business.