Whether you’re founding or operating a Limited Liability Corporation, we’ll show you how to sign and who may sign on your behalf.
What you’ll discover:
Who may sign papers on an LLC’s behalf?
How can I delegate permission to someone to sign on behalf of an LLC?
How can I sign as an LLC representative rather than as an individual?
If you own an LLC (“limited liability company”), you presumably already know that it is legally regarded the same as a person. You also understand that the LLC isn’t a live, breathing entity, so you’ll need a real person to sign paperwork on its behalf. This is a rather simple procedure, but doing it wrong might lead to catastrophic consequences.
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Who may sign papers on an LLC’s behalf?
As “approved representatives,” all LLC members (owners) have the power to sign on behalf of the company by default. You may, however, take deliberate efforts to restrict or increase the number of authorized agents. The method you use depends on the sort of LLC you choose.
There are two kinds of LLCs:
Member-managed
Manager-managed
The kind you choose will be determined by the size of your company and whether or not you have outside investors. It will also assist you in deciding who may sign on behalf of the LLC.
The “member-managed” LLC form is preferred by the majority of small firms. The members of the LLC are directly accountable for the day-to-day activities under this structure and must be able to sign papers on a regular basis. This makes sense for smaller organizations when each member has significant decision-making duties and must sign contracts and legal papers.
Another alternative is to form a “manager-managed” LLC. This approach may be ideal for businesses in which at least one member is a passive investor who does not handle the day-to-day operations. It may also make sense if the LLC is too big to distribute management responsibilities among all members and you want to restrict the sorts of actions that need signatures to a few. Members are not permitted to sign papers on behalf of a manager-managed LLC.
How can I delegate permission to someone to sign on behalf of an LLC?
After you’ve settled on an LLC structure, your LLC Operating Agreement may specify who can sign on behalf of the company. This document defines the tasks and responsibilities assumed by members and non-member management within the framework of the corporation. In certain areas, you are not legally compelled to establish an operating agreement, but it is a good idea to have one nevertheless since it lays out the operating directions for your organization.
The operating agreement may appoint members (or non-member management) as officers and delegate certain roles and obligations to them. Some state laws provide selected officers the authority to sign legally binding papers on behalf of the LLC, while others need that designation to be specified explicitly. The operational agreement may also establish how authorized personnel may sign documents such as certain kinds of contracts or check amount restrictions.
How can I sign as an LLC representative rather than as an individual?
When the selected member signs as the LLC’s representative, they may wish to insert wording clarifying this. Failure to do so (i.e., just signing their name) may expose them to personal culpability in commercial situations. A standardized signature block might assist you in avoiding such mixups.
