FDIC Insurance for Corporate Accounts
Posted by: admin under Accounting
Copyright (c) 2009 Jeffrey Matsen
Recently, upheavals in the lending industry and bank failures have led many depositors to be concerned over the safety of their bank accounts. As most people are aware, a large number of banks and credit unions are covered by the Federal Deposit Insurance Corporation (FDIC), which insures accounts up to $100,000.00 (Credit unions are insured by the National Credit Union Administration [NCUA]). For many individuals, a $100,000.00 insured amount is more than sufficient coverage for their personal accounts, although all of your single accounts at the same insured bank are added together and the total is insured up to $100,000. For example, if you have a checking account and a CD at the same insured bank, and both accounts are in your name only, the two accounts are added together and the total is insured up to $100,000. For greater protection, you can always split amounts greater than $100,000.00 among multiple banks.
However, corporate accounts often hold amounts greater than $100,000.00. Under the FDIC Rules and Regulations, corporate accounts are also insured up to $100,000.00 combined, even when a corporation has separate accounts for divisions or units which are not separately incorporated.
One of the largest and most important account held by a corporation is the payroll account. Protection of a payroll account which exceeds $100,000.00 in deposits takes special planning which our office can assist you with.
Some banks may offer a service where they reciprocate accounts amongst other banks. When the account goes over the FDIC limit, they automatically open an account at another bank for the overflow, as many times as needed. You may wish to speak to your banking institution to see if they offer this service. Your payroll company may be able to draw from separate accounts and therefore allow you to open separate accounts at separate banks. You could then, for example, have multiple payroll accounts at separate banks, all insured separately, and all under the $100,000 limit.
Secondly, under the FDIC Rules & Regulations
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