{"id":4403,"date":"2016-04-04T10:47:30","date_gmt":"2016-04-04T15:47:30","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-finances\/accepting-cash-and-checks.html"},"modified":"2024-06-06T03:47:09","modified_gmt":"2024-06-06T08:47:09","slug":"accepting-cash-and-checks","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/accepting-cash-and-checks.html","title":{"rendered":"Accepting Cash and Checks"},"content":{"rendered":"\n
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Payment and Collection Options for Your Small Business<\/h1>\n
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Created by FindLaw’s team<\/a> of legal writers and editors<\/i><\/p>\n\n | Last updated\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Should your business<\/a> accept personal checks, debit cards, or mobile payments? What kind of identification can you ask customers to show when making purchases? How does the law regulate the acceptance of large sums of cash?<\/p>\n

Establishing payment and collection policies<\/a>, and understanding the laws that regulate them, are indispensable steps toward protecting the financial health of your business. Here at FindLaw we have outlined several key issues surrounding your business’s payment and collection policies.<\/p>\n

Accepting Large Sums of Cash<\/h2>\n

While most business owners love the idea of receiving $10,000 in cash, it tends to make the IRS nervous. To help ease their jitters, the IRS requires that merchants use Form 8300 for such large transactions, which includes the name, address and social security number of the buyer. The same rule applies to cash equivalents such as traveler’s checks, bank drafts, cashier’s checks and money orders.<\/p>\n

ID for Check Transactions<\/h2>\n

Some states have laws regulating the kinds of identification customers may be asked to show when writing checks. Requiring a photo ID such as a driver’s license is generally legal, but requiring customers to show a credit card<\/a> as a condition for writing a check is often forbidden.<\/p>\n

Check Policies<\/h2>\n

Creating and adhering to a check policy may help avert legal hassles. Common policies require that checks be written and signed in the presence of the seller, drawn from local banks, not written for more than the purchase price<\/a>, and various other stipulations.<\/p>\n

Cashing Old Checks<\/h2>\n

The Uniform Commercial Code<\/a> (UCC), which governs banking practices in most states, declares that banks may refuse to honor checks dated back six months or more. It’s best to cash checks as quickly as possible.<\/p>\n

Bounced Checks<\/h2>\n

What do you do if a check is returned because a customer’s account is closed<\/a>, or because the customer has insufficient funds to pay for the transaction? Calling the customer is a first step, though several states have laws specifying what kinds of threats can be made, the hours during which calls can be made to debtors, and other methods of phone-based collection. Writing a collection letter, contacting the bank, going to small claims court<\/a> and using a collection agency are all common secondary steps.<\/p>\n

Dissatisfied Customers<\/h2>\n

Occasionally, customers will stop payments on checks if they believe the products or services bought did not live up to expectations<\/a>. If true, customers are entitled to a refund or a reduction of the amount owed.<\/p>\n

Mobile Payments<\/h2>\n

The days of exchanging paper money and metal coins for valuable goods and services is ending. Mobile payment mechanisms are on the rise. Consumers are carrying less cash and are relying more upon their mobile phones to pay<\/a> for everything from coffee to rent. To keep your business competitive, you will want to strongly consider the benefits of services such as Square, Google Wallet, Apply Pay, and PayPal. Consumer will likely be willing to spend more than they would simply with cash.<\/p>\n

Get Expert Legal Advice<\/h2>\n

Debit or credit? Check or PayPal? Deciding which form of payment your small business is willing to accept requires time and research. There are benefits and drawbacks to both. Consult with an experienced business and commercial law attorney<\/a> to learn more about payment and collections.<\/p>\n

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