Employer requires opening personal accounts for business use.

[hahayepyep]

Thanks.  I "fired up" google before I came here.  Doesn't appear that many other people have encountered this sort of issue (or at least they've not posted much about it)....it's not exactly like this is a well known/frequent problem for which there is a wealth of knowledge....or I assume someone would have volunteered links...

I'm waiting on a call back from WF regarding the T&C.

[cflowers0115]

Regardless of their terms and conditions this seems to be a blatant IRS no-no.

[peaceonearth]

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@hahayepyep wrote:

So, I'm not sure if anyone here will know the answers to this, but I'll throw it out there anyhow.  If anyone knows of another forum for which this topic is better suited, feel free to PM me a link.

My employer (very small business; less than 10 employees, based in MN) is requiring that the employees each open a consumer checking account in our own names with the owner of the company as a joint holder.  The owner of the company will then transfer money from company accounts to this account as needed to make necessary purchases.  We were asked to submit applications for these accounts last Friday, and as of yet, I haven't been asked to sign any sort of agreement or use policy so I'm a little unclear as to what's going on, exactly.  I was informed that there would no longer be any reimbursements for expenses and that all expenses are to be run through this new account.

This seems like a highly unusual method for funding business expenses, doesn't it?  I was told that they would not HP me, but would SP and run ChexSystems on me.  The application form said (Consumer Checking Account Application -- Joint Account with Survivorship).

Prior to this, I was asked to open a prepaid account (Green Dot) in my name and was given MoneyPak reloads to fund purchases (which I also thought was unusual).  Many of my expenses are hotel and rental car, so the Green Dot was difficult to use and I just used personal cards and submitted for reimbursement.  Some months back a new hire had pressured for actual company issued CREDIT cards and we we're told that they were coming and all he had to do was pick them up when he had time, but then the owner kept stalling and the cards never appeared.  The topic was brought back up by employees again lately, and this scenario is the result.

I'm not sure if this matters, but I've had this job for a little over a year and in that time, I have been noticing more and more signs that my employer has credit/money problems.  I also have come to know that the company was recently audited by the IRS (and I believe there was a tax levy, but there's a great deal of secrecy around it).  I feel like if this company wasn't in financial/credit trouble, they would simply issue company credit cards, right?

Does anyone have any insight on if this is a legitimate practice?

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If I were you I'll begin looking for a new JOB.

[bettercreditguy1]

HIgh Folks, it could be legit too. Tax liens (sometimes not always accurate) are filed even during a disputing process. It can be hair pulling to the owner and create operating nightmares especially if the bank account was levied.Taxing entities are fast to levy these days even if a report was late. However it can take several months or years to clear the slate after a minor hiccup. As a small business owner, I can confirm from actual events in my 25 year plus business that these things can occur. You will know in time if it is a situational problem (temporary,  cash flow) or a more intense/major problem. Be cautious and not overly concerned. However, do not place your name on financial accounts unless it is for your pay check or reimbursed sales/travel/operating type expenses like materials you have purchased to complete a project.  This way you always know that "business money" will only flow in. Then keep a nominal amount in that account to keep it active/open. I would not use it for a savings/holding account  for other purposes. You can CHECK your local Business Journal, usally printed weekly or monthly if you are in a large city. Tax, payroll, and IRS liens are public information and usually are reported here. A final thought is cash flow problems. Perhaps a large or serveral accounts are slow pay, even growing pains can stress the best cash management methods.

[cflowers0115]

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@bettercreditguy1 wrote:

HIgh Folks, it could be legit too. Tax liens (sometimes not always accurate) are filed even during a disputing process. It can be hair pulling to the owner and create operating nightmares especially if the bank account was levied.Taxing entities are fast to levy these days even if a report was late. However it can take several months or years to clear the slate after a minor hiccup. As a small business owner, I can confirm from actual events in my 25 year plus business that these things can occur. You will know in time if it is a situational problem (temporary,  cash flow) or a more intense/major problem. Be cautious and not overly concerned. However, do not place your name on financial accounts unless it is for your pay check or reimbursed sales/travel/operating type expenses like materials you have purchased to complete a project.  This way you always know that "business money" will only flow in. Then keep a nominal amount in that account to keep it active/open. I would not use it for a savings/holding account  for other purposes. You can CHECK your local Business Journal, usally printed weekly or monthly if you are in a large city. Tax, payroll, and IRS liens are public information and usually are reported here. A final thought is cash flow problems. Perhaps a large or serveral accounts are slow pay, even growing pains can stress the best cash management methods.

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I don't see how circumventing the IRS can ever be legit. Which to me, seems to be what is happening here. You are taking something that should be running through the business tax id, and deferring it to your employees TINs. Regardless of the reason.. you can NOT run a business through personal accounts. Which is exactly what is being done here. He's avoiding putting the business tax id number on here, and this also requires all payments to this account to be made out to one of the two individuals on the account. 

This is an audit mess for you if you ever got audited. Everything will show under a personal account to you as deposits. Most banks will NOT, nor should they, accept business checks into a personal account.. for starters, they have no way of verifying that you have the authority to cash that business check. 

This is a violation of so many banking industry rules it's silly. 

If the bank I work for found this.. I can assure you our bank would exit the entire relationship (not just this account) for all parties involved, I've had to deal with very similar situations in the past. 

[Tmac22]

Fishy. In fact, fishier the more I find out about it. I worked for (ran, actually) a small business for a man who owned two businesses and was a pastor of all things. He refused to do things right, creating accounting nightmares. His business partner eventually sued him for dissolution of the partnership, then his Church booted him for reasons I'm still not privy to, then one day after my paycheck was late for a month, he remotely changed the password to my home computer. That's when I found out he hadn't been paying my payroll taxes, and still hasn't 4 years later. I've fought long and hard for the lost pay checks and tax refunds, let alone SS deposits and tax due the IRS, to no avail (yet).

When people act shady, generally, they ARE shady.

[hahayepyep]

Thank you, bettercreditguy1, for your perspective on this. I'm certain everyone on this forum can agree we are often faced with financial problems that aren't always due to fault of our own and are rarely cut-and-dry. Anyone on this forum certain can appreciate that correcting mistakes in reporting is frequently a knock-down-drag-out process. I am confident that there is no malice involved here, not any attempt to access my personal finances and that this is probably an earnest effort to do what he can given whatever limitations/challenges he's up against.

THAT BEING SAID, I know for a fact he's sloppy in his book keeping, has had tax trouble, and is the sort to forge ahead with plans whether or not they're a good idea, align with best practices, or are even legal.

I'm positive that he's not trying to scam me, but I wouldn't be surprised if he's trying to pull something with the bank, creditors, or IRS. My primary concern is that I do not want to be on the ship when it sinks (or simply gets audited again).

The reason I'm torn over this is that this practice simply isn't right, but for me to challenge it, I risk losing my job. It puts me in quite a bind as I want to act quickly on this, but do not have a job lined up yet.

Not that this is a valid argument at all, but it simply isn't fair for me to potentially lose my income because the owner hasn't learned his lessons yet about book keeping. If I quit and don't find a job, I'm SOL with unemployment since I would have quit voluntarily.

[cflowers0115]

I would check with an employement attorney, but I'm 99.8% sure that he can not terminate you for refusing to do something that is questionable at best, legally. 

[hahayepyep]

cflowers, if this practice were taking place at your bank, how would one approach bringing it to the attention of the appropriate people?

The owner arranged for a banker to come collect all our info and sign the paper work. That individual knows that the owner added himself as a joint holder. Why would that bank allow this to happen? I'm wondering if the banker was told one story, and we were told another.

[coldnmn]

Just throwing it into the discussion how about contacting your state attorney generals office and find out the legality of the situation and what are you responsible for if it goes south.