How to close a business bank account properly: checks, late deposits and the state's clock

Short answer. Before you shut a company account, let every written check clear, point incoming payments at the replacement account, and settle any overdraft or hold. Then ask for the closing in writing and save your statements. After the closing date, Chase may turn away any check still in circulation.

Under the Uniform Commercial Code, a bank may turn down a check older than half a year. Under the Chase deposit agreement that took effect on June 14, 2026, it may turn down any check written against your business account from the day that account shuts, whatever date the paper carries. Both rules can apply to one check.

The gap between those rules explains why learning how to close a business bank account properly takes more than one form. The request itself is short. The effects last for months. In Delaware they can last 5 years: checks still in the mail, customer payments aimed at old account numbers, a balance that can end up with the state, and tax records you must keep after the account is gone. I think the Chase rule from June 14, 2026 matters most here, because it is the one people forget. You should keep it in mind from step 1.

I read the documents behind each point: the Chase Deposit Account Agreement, UCC § 4-404, the unclaimed property laws of California, New York, Texas and Delaware, and the IRS guidance on closing a business. The Chase contract runs to 30 pages. It covers personal and business accounts alike. Words in quotation marks are theirs, not mine.

Outstanding checks when closing an account

An outstanding check is one you wrote that the other side hasn't cashed yet. The money still sits in your account until it does. I would treat every one of them as live money for at least 6 months.

UCC § 4-404 is short enough to quote almost in full. A bank "is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date." The second half counts too. The bank "may charge its customer's account for a payment made thereafter in good faith." So an old check is optional for the bank. It is not dead, and the bank may still pay it. I found that second half surprising, and probably most owners would too.

Chase copies both halves into its own contract. Then it adds more. It "may choose to pay or not to pay a stale-dated check (dated more than six months before it is presented), regardless of how old it is." If it pays, "you will be responsible for the check." Writing "Void after 180 days" on the check changes nothing. The agreement says Chase has "no duty to discover, observe or comply" with notes like that. So the contract is stricter than the code. That difference between 6 months and 0 days is easy to miss.

After the closing date, the age of a check stops mattering. "After your account is closed, we have no obligation to accept deposits or pay any outstanding checks," the contract reads. Chase also takes "no liability for refusing to honor any check drawn on a closed account." A supplier who deposits last month's check a week later gets it back unpaid. That sentence deserves a second reading before you close anything.

That makes your list of uncleared checks the real timetable. Each one can end well in 2 ways. It clears while the old account still holds money. Or you pay the same sum from the replacement account and tell the payee in writing that the earlier check is void. Put the date each check was written next to its amount, since a check sitting in a drawer for seven months fits neither ending. The reverse timing, how long a bank may hold a check you deposit, is covered in our piece on deposit holds. Dates matter as much as amounts here.

When the bank can refuse to close

Closing an account is a right both sides share. Chase states that "either you or we may close your account at any time for any reason or no reason without prior notice." It then lists the situations in which it isn't required to act on your request: That cuts both ways for an owner.

• transactions are still pending;
• the balance is below zero;
• a court or creditor has started legal process, which the agreement names as garnishment, attachment, execution and levy (in plain terms, orders that let a creditor reach money in the account);
• a hold sits on the money, with a collateral hold given as one example.

Pending items post on their own, so they need no action from you. The other three need your action. A negative balance carries its own risk in the same document. If you don't repay it, Chase "may report you to consumer reporting agencies, close your account, or both," and it warns that this "could affect your ability to open accounts in the future." I would clear a negative balance first, since it is the cheapest fix on this list.

Legal orders and holds are easy to miss from a banking app alone. A short written question to the bank, sent before the closing request, gets you a dated answer about any hold, levy or garnishment. I think that email pays off even when you feel sure nothing is pending. It probably takes 10 minutes to write.

Money that arrives after the closing date

Payment processors, marketplaces, clients paying invoices and the odd tax refund keep using the details they have on file. Our guide to switching business banks lists who usually needs the new details, and the Chase agreement leaves the bank free to pick when such a payment lands. It has "no obligation to accept deposits." It also "may reopen your account if we receive a deposit." A reopened account is simply open again. Its monthly fee comes back with it. The agreement mentions no request from you.

Chase pays out the leftover money "less any fees, claims, set-offs or other amounts if the balance is greater than $1." That clause only covers balances above $1. A set-off means the bank keeps money you owe it. Money the bank cannot return or move "may be considered abandoned under state law." That $1 line looks odd at first glance. Below $1 the clause says nothing.

So the order of steps is simple and fixed. Send fresh payment details to every payer first. Keep the old account running for at least one full statement cycle after the last payer confirms the switch. A client who pays a quarterly invoice may not touch your details again for three months, and may keep sending money to the number on the last bill. That is true even for small sums. One dollar is a tiny threshold, but the abandonment clause is serious: undelivered money starts moving toward the state, where the clock runs 3 years in California, New York and Texas and 5 years in Delaware. One cycle is the minimum, not the target.

Dormant business account rules

An account can also fade out without any request. The owner stops using it, leaves some money behind as a spare and forgets about it for a year or two. Chase counts time from the last activity you start yourself. Two dates matter: month 24 and month 30. That leaves 6 months between the first warning status and the freeze. To me a gap of 6 months is short.

A dormant account at month 31 can't fix itself either. The agreement lists deposits and digital access among the things that stop working, so nobody can top up the spare to cover a fee. Other banks set their own dormant business account rules in their agreements, and the section on inactive accounts in yours holds the dates that apply to you. Month 31 is too late to act.

When the state takes the balance

Escheat is the legal name for a state taking over money nobody has claimed. The National Association of Unclaimed Property Administrators explains it this way: after a dormancy period with no activity or contact, the holder must by law hand the property to the state. Checking and savings accounts top its list of common cases. Uncashed payroll checks and refunds are on it too. The word sounds old, but in 2026 the effect is current.

Every state picks its own waiting period by law. The spread runs from 3 years to 5. Three of the four states in the table below use three years, and only Delaware waits 5 years before the balance moves to the state.

California's rule covers deposits "held or owing by a business association." The clock stops if the owner changed the balance, wrote to the bank electronically or on paper, or showed interest in some way the bank recorded. Owners who held another account at the same bank during those three years fall under an exception. New York likewise leaves out money that went up or down within 3 years, not counting interest, and the version of § 300 on the state senate site dates from a 2014 revision. Texas wants a pair of conditions, both lasting over 3 years: the holder can't locate the owner, and the owner hasn't claimed the money or acted as its owner. The details differ more than the periods.

Delaware's section is the longest of the four. Its five-year period for deposits sits beside other five-year clocks that affect a business winding down: wages, bonuses and reimbursements an employee never collected, money owed to retail customers, and property a company hands out while it dissolves. Start with Delaware if your company was formed there.

Chase commits to "send you a letter in advance" before it hands account money to the state. That letter goes to the address on file. For a company that moved, dropped its old mailbox or dissolved, the old address may reach no one, so updating it belongs on the closing list too, next to the statements, the list of uncleared checks and the written closing request. That problem is easy to fix today.

The IRS side

The IRS treats a closed bank account and a closed business as different events. Payroll carries most of the paperwork. Its page on closing a business starts with a final return for the year the business ends. Employers then tick the closure box on the last Form 941 and enter the date of final wages on line 17, or on line 14 of Form 944. They also attach a statement naming the person who keeps the payroll records and the address where those records will sit. Form 940 for the year of final wages gets box "d" to mark it final. Form 941 is the quarterly return, and Form 944 is its annual counterpart. In my reading, payroll is where the real work sits. Each form has its own box to tick.

Bank statements count as tax records, and the IRS page on how long to keep records sets the periods. The general rule is 3 years. Employment tax records need 4. Underreporting more than 25% of gross income stretches the period to 6 years, and a loss claim on worthless securities or a bad debt deduction stretches it to 7. Banks keep their own files for five years under the Bank Secrecy Act rule in 31 CFR § 1010.430. Those files belong to the bank. The statements you download before the closing date are yours, and keeping them for the full 7 years makes sense whenever you feel unsure about a loss claim or a bad debt.

Order of operations

Questions people ask

Does closing the bank account also close my EIN?
It doesn't, because the IRS calls the EIN "the permanent federal taxpayer identification number" for a business. You can close the IRS business account behind it by letter, with the legal name, EIN, address and reason, sent to Internal Revenue Service, Cincinnati, OH 45999. The IRS adds: "We cannot close your business account until you have filed all necessary returns and paid all taxes owed."

Can Chase move my business balance into another account?
Yes, it can do that. The agreement lets it transfer leftover money "to any other open account with at least one common owner," so a personal account at the same bank can receive it.

Does interest earned keep a spare account active at Chase?
The bank counts only activity the customer starts, and interest is something the bank posts on its own, so a small transfer you make yourself is the safer way to reset the clock.

How is an automatically renewing CD treated in Delaware?
Section 1133 treats it as matured on its first maturity date unless the owner agreed to the renewal in a record the holder keeps. The five-year clock then runs from that point.

Where can a business look for money a state already holds?
Each state runs an unclaimed property search, and NAUPA notes that searching for your own money is free.

This is general information, not legal or tax advice. State unclaimed property rules and bank agreements change over time, and a qualified professional can apply them to your situation.