Check Writing and Members of the LLC

CynthiaCynthia subscriber Posts: 2
edited September 2006 in Accounting and Financial Management
I have what I would consider a dumb question, but I am going to ask it anyway. As a member of an LLC, can the member write themselves checks? For example, Sally and Joe have an LLC and each have 50% ownership of the profits and losses.  The LLC earns $100 and Sally and Joe are each given $50. Both have access and can write checks from the LLC`s bank account. Can Sally write herself a check for $50?
Thanks for the feedback.
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Comments

  • OhhBoyOhhBoy subscriber Posts: 5
    To the best of my knowledge (and having done this without consequence) and assuming that both are signers on the account members can infact write check to themselves.  However, from a governance perspective this is not a good idea.   Concern would comes from large sums and that can be mitigated by requiring multiple signature on checks over certain amounts. 
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  • OnlineSidingJamesOnlineSidingJames subscriber Posts: 2
    Yes. I write checks to myself as "draws", to reimburse expenses, etc. If I am the only officer present, I also sign the checks. I always make sure I have paper to prove my transaction for audit purposes.

    From my banking experience, as long as you are a signer on the account you can write checks to yourself and anyone else you please (this applies for personal and business accounts).

    Let me know if you have any other questions!
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  • NuevolutionNuevolution subscriber Posts: 30 Bronze Level Member
    Yes. I write checks to myself as "draws", to reimburse expenses, etc. If I am the only officer present, I also sign the checks. I always make sure I have paper to prove my transaction for audit purposes. From my banking experience, as long as you are a signer on the account you can write checks to yourself and anyone else you please (this applies for personal and business accounts). Let me know if you have any other questions!
    yes this is true. I am not sure if you have to do corporate minutes and resolutions for an LLC, but in my case. When we had to open the bank account I made sure that "Just for Audit purposes" two of us have to sing the check in order to be valid. This helps establish a mutual agreement and if the other person down the road decides to say he wasn`t aware... Well his singature proves different.
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  • OnlineSidingJamesOnlineSidingJames subscriber Posts: 2
    yes this is true. I am not sure if you have to do corporate minutes and resolutions for an LLC, but in my case. When we had to open the bank account I made sure that "Just for Audit purposes" two of us have to sing the check in order to be valid. This helps establish a mutual agreement and if the other person down the road decides to say he wasn`t aware... Well his singature proves different.

    Nuevolution,

    Good suggestions, internal control is definately something to keep track of.

    Typically LLCs do not need minutes or resolutions, but a bank may require them when opening the account.

    Also note that banks do not (always) monitor all checks to verify that there are two signatures. The only time they would normally catch this is if it was actually presented to a teller in a branch. Most banks provide a liability waiver that you must sign on this subject. Nonetheless, it is a good practice if only for internal control purposes!

    JamesOnlineSidingJames2006-9-6 21:3:36
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