Think of the process as Charlie Brown buying the check..............

Step 1----------You give check to Payee.

Charlie gives cash to Payee in exchange for the endorsed check.

Charlie then takes check to his bank, and deposits it.

Machines don't know anything except they deposit the check, post the credit to Charlies's account, and then put the check into the clearing process.............to be sent to whatever bank you have your account at.

Clearing system clears check, and sends it to your bank............and your bank's machines post it against your account.

Now..............merely substitute you for Charlie.

............and, note that Payee walks away with ONLY the cash, which in amount is equal to the check.

Now........one could stop there............Payee has cash, and you are out cash.

But.........we want the documentation so that Payee cannot later say he was not paid, or was not paid the correct amount.   Or, your bookkeeper and software are geared to puttting things into the 1099-memory module for issuing 1099's at the end of the year, but only if checks are keyed in.     

In addition, the cancelled check functions as proof of payment for IRS   (still have to have documentation as to REASON for the transaction, with enough description to show IRS that the payment is reasonable and ordinary to your business.........but at least the proof of payment issue is taken care of)

So...............you deposit the check to your account--------------it has been endorsed by Payee to you, otherwise you could not deposit it, just like anyother check.

Bank's machines take no notice of the account against which the check is drawn that you are depositing, anymore than the machines look at someone else's checking account when you deposit their check.

The machines then put that deposited check into the clearing system, just like anyother check..............so it gets sent back to your bank, and gets posted against your account............just like anyother check.

Now you have the documentation for having paid the person, plus the IRS income tax, plus the IRS 1099 if applicable...............your bank account has not changed-------and it should not, since you paid cash from your pocket (or withdrew the cash by another separate transaction).............and the transaction becomes part of your records automatically, including using your bank statement as a second bookkeeper in order to help maintain accuracy over your "bookkeeping at home".

Now if you REALLY want to get creative------------years ago, when there was say, a week between the time a check was deposited and when it cleared thru the system---------you could draw against your own account, make a deposit to that same account, and the few days of "float" would get the account over, say, a few days of overdraft.......................example, say your wife goes on an unexpected shopping trip, and............well, you get the idea!

However, in today's environment, the clearing system will clear checks in a matter of hours.........so the float is nearly non-existent.

When my wife and I were in college, and for about two years after graduation----------I found it necessary more than once to use a bank account in California that we had, to keep the account in Tennessee (where we lived at the time) in a positive balance------------and, there were even days when the bank account we had in our home town in Iowa came in handy if the "float" needed was of longer duration..............same theory applies to "buying" a check, except only one account is used.

Cannot do that anymore--------------friggin' system clears too fast!

EDIT********************

Let me add a more frequent situation.

You're at an auction, or at Charlie's place..................and you want something.

But the payee does not really want your check................or, you have your personal check, but   not    the business check book.

So, you give the person cash, or your personal check.

You get home...............and tell the bookkeeper to have the business (or corporation) reimburse you, so that the item gets put into the business records in the normal course of events.  (We suggest the reimbursement method to our clients all the time, so that they do not have to handle the items separately for end of the year data for the tax returns.)

Business issues you a check, you deposit it to your personal account, check clears the business account--------all at the same bank.

Same situation for a check being deposited against the account against which it is drawn...........the machines don't know the difference...........the deposit process is handled physically separate from the check clearing process.