If you operate an LLC (“limited liability company”), then you probably already know that it’s treated just like a person for legal purposes. You also know that it’s not actually a living, breathing entity, so you’ll need a real person to sign documents on the LLC’s behalf. This is a fairly straightforward process, but doing it incorrectly can cause serious problems.
Whether you’re planning to start an LLC or already running one, it’s 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 a lawyer if you need additional help. While you’re at it, why not go paperless and try RocketSign, Rocket Lawyer’s new digital signature service, for free?
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Who can sign documents on behalf of an LLC?
All members (owners) of the LLC have the authority to sign on behalf of the entity as “authorized representatives” by default. However, you can take proactive steps to limit or expand the list of authorized representatives. How you accomplish that depends on the type of LLC you have chosen.
There are two main types of LLCs:
The type you choose will depend on the size of your business and whether you have outside investors. It will also help guide your decision on 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 the day-to-day operations and need to be able to sign documents regularly. This makes sense for smaller entities where each member has critical decision-making responsibilities and needs the ability to sign off on contracts and legal documents.
The other option is a “manager-managed” LLC. This option may be appropriate for companies where at least one member is a passive investor and doesn’t manage its day-to-day affairs. It may also make sense where the LLC is too large to share management duties among all members and you want to limit the types of decisions that require signatures to just a few. Keep in mind that members may not sign documents on behalf of a manager-managed LLC.
How do I give someone the authority to sign on behalf of an LLC?
Once you’ve decided on an LLC structure, you can designate who may sign on behalf of the business in your LLC Operating Agreement. This document outlines the duties and responsibilities that members and non-member managers take on within the context of the company. You’re not legally required to draft an operating agreement in some states, but it’s a good idea to have one anyway as it sets out the operating instructions for your business.
The operating agreement may assign members (or non-member managers) as officers, and grant them certain duties and responsibilities. Some state laws grant designated officers the power to sign legally binding documents on behalf of the LLC, while in other states that designation must be expressly stated. The operating agreement also may specify how authorized individuals may sign documents, such as certain types of contracts or limits on check amounts.
How do I sign as a representative of an LLC instead of as an individual?
When the designated member signs as a representative of the LLC, they may want to include language that clarifies this. Failing to do so (i.e., just signing their name) can invite personal liability into business matters. Having a standardized signature block can help you avoid such mixups.
For instance, if Jane Smith signs on behalf of an LLC, she may want to include language indicating that she is signing as a representative of the LLC and her relationship to the company. Her signature on behalf of the LLC might look something like this:
Company X, LLC
By: [Jane Smith would add her signature here]
Jane Smith, President [or simply “Managing Member”]
It’s also important to thoroughly read any document that you sign on behalf of the LLC because there might be language in the document that could open you up to personal liability, regardless of how you signed it.
Start up your LLC with Rocket Lawyer
Small businesses are the backbone of the U.S. economy. Getting them up and running requires a solid foundation and a lot of elbow grease. Eliminate the guesswork and give your LLC the best chance at success with Rocket Lawyer’s extensive online resources. These resources include state-specific LLC formation paperwork and other vital documents. Plus, Rocket Lawyer makes it easy to ask a lawyer when you’re confronted with challenging legal questions.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.