Liability for check signing
I am doing bookkeeping for a company where they want me to be an authorized check signer. I have heard that I could have considerable liability if I do this. What can you tell me about that?
Thank you
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Read More Answered By: Matthew Nahrgang |
Re: Liability for check signing You are absolutely correct that the ability to sign checks for a business could give rise to liability on your part. That can happen in at least two ways.
If the company fails to pay withholding taxes for payroll, the check signers who had knowledge of such failure will likely be assessed for the tax. This is true even if the signer has no financial stake in the company.
The second issue arises if the company fails to pay its debts and the creditors assert personal liability. If the company is incorporated, the creditors will have to pierce the corporate veil. That means the corporate fiction will be disregarded and the owners will be personally liable. If the company is not incorporated, the owners are personally liable for all debts anyway.
The fact that you may be a signer could lead a court to conclude that you are indeed an owner or at least agreed to be responsible for paying the company's debts.
I trust this has been helpful, but feel free to call or e-mail with any questions on a free initial basis.
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