If you run an LLC ("Limited Liability Company") you probably already know that it is being treated like one person for legal reasons. They also know that it is not a living, breathing entity. Hence, you need a real person to sign documents on behalf of the LLC. This is a fairly straightforward process, but if done incorrectly, it can cause serious problems.
Whether you are planning to set up an LLC or are already running one, it is important that you understand how to sign documents on behalf of your LLC. We'll walk you through the process, but don't hesitate to ask an attorney if you need additional help. While you're at it, try RocketSign, Rocket Lawyer's new digital signature service, for free and paperless.
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Who can sign documents on behalf of an LLC?
All members (owners) of the LLC have the power to sign as “Agents” on behalf of the company by default. However, you can take proactive steps to narrow or expand the list of authorized representatives. How you accomplish this depends on the type of LLC you have selected.
There are two main types of LLCs:
- Managed by members
- Managed by the manager
The type you choose will depend on the size of your business and whether you have outside investors. It will also help you decide who can sign on behalf of the LLC.
Most small businesses choose the member-managed LLC structure. In this structure, the members of the LLC are directly responsible for ongoing operations and must be able to sign documents on a regular basis. This is useful for smaller companies where each member has key decision-making powers and needs the ability to sign contracts and legal documents.
The other option is a manager-managed LLC. This option may be suitable for companies where at least one member is a passive investor and does not manage their day-to-day affairs. It can also make sense if the LLC is too large to share administrative responsibilities among all its members and you want to limit the types of decisions that require signatures to a few. Note that members may not sign documents on behalf of a manager-managed LLC.
How do I authorize someone to sign on behalf of an LLC?
Once you have decided on an LLC structure, your LLC operating agreement allows you to specify who can sign on behalf of the company. This document describes the roles and responsibilities members and managers assume from non-members in the context of the company. In some states it is not a legal requirement to draw up a company agreement. However, it is a good idea to have one as it will contain the operating instructions for your business.
The company agreement can designate members (or managers who are not members) as officers and assign them specific duties and responsibilities. Some state laws allow certain officials to sign legally binding documents on behalf of the LLC, while in other states the designation must be specifically stated. The company agreement can also specify how authorized persons may sign documents, e.g. B. Certain types of contracts or restrictions on check amounts.
How do I sign as a representative of an LLC instead of an individual?
When the designated member signs as a representative of the LLC, they may want to include some language that clarifies this. Failure to do so (i.e. just sign your name) can lead to personal liability in business matters. A standardized signature block can help you avoid such mix-ups.
For example, if Jane Smith signs on behalf of an LLC, she may want to include a language that indicates that she is signing as a representative of the LLC and its relationship with the company. Your signature on behalf of the LLC could look something like this:
Company X, LLC
From: (Jane Smith would add her signature here)
Jane Smith, President (or simply "Executive Member")
It is also important to carefully read any document you sign on behalf of the LLC, as the document may contain language that you can open for personal liability regardless of how you signed it.
Start your LLC with Rocket Lawyer
Small businesses are the backbone of the US economy. Getting them to work requires a solid foundation and plenty of elbow fat. Take the guesswork out of giving your LLC the best chance for success with Rocket Lawyer's extensive online resources. These resources include country-specific LLC incorporation papers and other important documents. Plus, Rocket Lawyer makes it easy to consult an attorney when you face challenging legal issues.
This article contains general legal information and not legal advice. Rocket Lawyer is not a law firm or a substitute for a lawyer or a law firm. The law is complex and changes frequently. For legal advice, please contact a lawyer.