Topic: Sole Proprietorships
-
Some customers ask to add their sole proprietorship’s “doing business as” name to their personal checking account. We know of a recent case of fraud at a different bank where a person deposited checks into their personal account for a business that did not exist. What documentation should we require in order to verify that the individual’s “business” really exists?
—
by
We recommend obtaining the assumed name certificate issued by the county clerk where the business is located. The Assumed Business Name Act requires every person who does business under a name other than their own to file a certificate with the county clerk and publish notice in a local newspaper for three weeks. For resources…
-
We have a customer with several business and personal accounts. He recently opened a business checking account for a single member LLC, using his individual SSN instead of an EIN. The customer wants to access all of his accounts through online banking, which would allow him to transfer funds between the personal and business accounts. Should we treat the LLC as a sole proprietorship?
—
by
No, we would not recommend treating the single member LLC as a sole proprietorship. Although the LLC has only one owner, it is a business entity that has a separate existence from its owner.
-
We have a commercial farm loan, and the farmland securing the loan has been the subject of litigation due to title issues for several years (the bank, the title company and the borrower are all parties in the lawsuit). The borrower now has stopped making payments, and we would like to file a foreclosure action. The borrower is a sole proprietor, and his primary residence is located on the land securing the loan. Are we precluded from sending a cure letter to the borrower because of the ongoing lawsuit? Also, are we required to send the homeownership counseling notices?
—
by
Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. We are not aware of any prohibition against sending a cure letter to a borrower who also is involved in litigation involving title to the property. While…
-
Our auditors told us that a “Doing Business As” (“d/b/a”) checking account was subject to Regulation E because it is held under the sole proprietor’s social security number, not a business tax ID. Is that true? Also, if we offer our consumer Internet banking product to business customers, would that make those business accounts subject to Regulation E?
—
by
No, Regulation E does not apply to a business customer. Regulation E applies only to accounts “established primarily for personal, family, or household purposes.” It would not apply to an account established for a business, regardless of the tax identification number used for the account. Also, a business operating under a fictitious d/b/a name is…
-
We received a citation to discover assets for any accounts in which one of our customers “has or had an interest.” The citation lists a “John Doe, d/b/a John’s Auto Repair,” with the individual’s social security number. Should we freeze funds in a sole proprietorship account under the “John’s Auto Repair” name, even though it has a separate TIN and does not use the individual debtor’s social security number?
—
by
From the information you have given us, the citation to discover assets is seeking a sole proprietorship account owned by the judgment debtor. Because the judgment debtor is the sole proprietor of the “John’s Auto Repair” business, the business account should be considered the debtor’s assets and should be frozen. (Note that a sole proprietorship…
-
Are there any Illinois laws that would prevent a sole proprietorship account holder from naming a payable-on-death beneficiary?
—
by
If a sole proprietorship owns a deposit account, we don’t believe that the Illinois Trust and Payable on Death Accounts Act would prevent the owner from designating a payable-on-death beneficiary. The law allows account owners to designate payable-on-death beneficiaries for any “account,” defined as “any account, deposit, certificate of deposit, withdrawable capital account or credit…