One of the benefits of forming an LLC includes a clear legal separation between you and your business. This means you’re not personally liable for debts, legal claims, bankruptcies, etc. that occur within your company.
However, incorrectly signing documents can void that liability protection leaving you and your personal assets vulnerable. And if you’re not sure how to sign documents or checks as a representative of your Limited Liability Company, you’re in the right place.
In this article, I cover why signing documents correctly matters, who is allowed to sign on your LLC’s behalf, and how to sign contracts and checks. I also provide a birds-eye view of the entire signing process.
Let’s get started!
How You Sign Matters — Here’s Why
Your personal signature is just that…personal. When you sign something using your name, you’re held responsible for the contents of that document and the agreement to which you are now legally bound.
In doing so, you voided the level of separation you created when you formed your LLC. You’re now personally responsible for fulfilling everything outlined in the document you signed.
To mitigate this and uphold that level of separation, you must sign documents properly. A proper signature ensures that the liability outlined remains on your business entity rather than on you as an individual.
Related: How Does an LLC Protect You?
Who is Allowed to Sign on Behalf of the LLC?
Because your LLC doesn’t have a physical presence, representatives of your LLC engage in actions or agreements on behalf of your LLC. This is an important distinction because it shifts liability from the representative to your business entity.
So, who is allowed to act as a representative? Great question.
All members of your LLC are automatically authorized to make decisions and otherwise act as representatives of the entity. However, an operating agreement can extend or limit this authority.
In a nutshell, you can delegate signing power to anyone and limit which of your LLC members are authorized to act as representatives.
How to Sign For Your LLC or Corporation
Now that you know the why and the who, it’s time to talk about the how. The best signatures on behalf of an LLC make it overtly clear that the signee is a representative of the business entity. They typically include:
● The name of the LLC
● By: ___________________ (this is where the representative signs)
There are several ways to include this information. There’s no set right or wrong way as long as your title is present, and it’s clear that you’re signing on behalf of your LLC. Furthermore, the format you use varies depending on what you’re signing.
How to Sign Contracts
First, read through the entire document before signing it. You need to make sure the contract doesn’t hold the signee liable for anything included.
If it includes any language attempting to hold you personally accountable for your LLC actions, don’t sign it.
However, if you read through it and everything looks good, include a signature block with your company’s legal name, your name, and your role/title. This ensures it’s clear that you’re signing on behalf of your LLC rather than as an individual.
How to Sign Checks
When endorsing a check for your LLC or corporation, it’s just as essential to make it overtly clear you’re signing on behalf of the company. That said, it’s necessary to verify specific requirements with your bank.
And if you’re authorized to sign, include the company name, name of the person signing, signer’s title, and any specific requirements from the bank (if any) in the endorsement area.
Navigating the Signature Process
Now let’s look at the entire process of signing on behalf of your LLC or corporation. The process varies slightly from signing things as an individual, so it’s crucial to understand the differences to avoid any liability mishaps or confusion.
Follow these steps any time you (or anyone else) signs as a representative of your LLC:
- Ensure the correct authorized people are signing the document
- Read over it to make sure the name of your LLC is included rather than an individual’s name
- Don’t sign if there’s any indication of personal liability or responsibility involved
- If everything looks good, use a signature block that identifies signees as representatives of the LLC
Can a Registered Agent Sign on Behalf of an LLC?
As we discussed earlier, you can authorize anyone to sign on behalf of your LLC. However, registered agents are not automatically allowed to act as representatives.
Unless you complete an operating agreement explicitly stating your registered agent is an authorized signee, they cannot sign or act on your LLC’s behalf.
With that said, they CAN sign for the receipt of legal documents and communications via certified mail from the government. But they can’t sign those documents unless you authorize them to do so.