How to Endorse a Business Check

How to Endorse a Business Check

Learn the proper steps to endorse a business check—including blank, restricted, third-party, and multiple endorsements—to avoid processing delays.

Endorsing a business check is not much different from endorsing a personal one. Therefore, if you have prior experience with personal checks, endorsing a business check should be straightforward. Even so, it is still important to review the proper procedures. A simple mistake can often result in an unprocessed check. Keep these steps in mind when endorsing your business check:

Blank Endorsement

• Check the reverse side of the check. On the back of the check, you will find an instruction that says "sign below this line" or something similar. This is where you need to provide information about both the business and yourself.
• Provide the necessary information. Write the complete and correct business name and affix your signature below it. However, if a customer has incorrectly written the business name, write it exactly as misspelled on the back of the check, and then write the correct name beside it. Your signature should follow below the business name as usual.

Restricted Endorsement

• Sign the check. Write the business name along with your signature in the usual manner on the back of the check.
• Add the account number. A restricted endorsement is used if you prefer to deposit the check rather than cash it. Therefore, on the back of the check, add the phrase "For Deposit Only" right below your signature. Another way to complete a restricted endorsement is to write "Deposit to Account" followed by the account number.

Third-Party Endorsement

• Write the third party's name. A third-party endorsement of a business check means you are transferring it to another person or business. That person or business representative will have the option to deposit or cash the check themselves. To do this, write the phrase "Pay to the order of" on the back of the business check, along with the third party's complete name.
• Affix business details. As with other types of endorsement, write the business name and affix your signature below the third party's name.

Multiple Endorsements

• Use an endorsement stamp. This is helpful if your business receives a high volume of checks regularly. However, before ordering a stamp, consult your bank. The stamp must meet the bank's requirements to ensure you do not encounter any issues endorsing business checks in the future.
• Stamp the check. Apply the stamp to the back of each check that needs to be endorsed. However, you must use caution with an endorsement stamp. It is best to limit its use to restricted endorsements so that, even if the stamp is lost or stolen, your business checks remain secure.

Although quite similar to personal checks, there are minor differences when endorsing a business check. To ensure your business avoids future problems, always keep these steps in mind.