Each limited liability company (LLC) has its own structure, comprised of one, a few or many investors and decision makers. Like any other enterprise, different members have different roles while representing the larger body together.
When representing the company, it’s essential to make it clear that actions are for the LLC. Signing a business contract with just a member’s name is a legal risk because it opens a possibility to conflating the individual with the business. One of the primary reasons why people form an LLC is to separate personal and business assets.
What does a signature require?
There are two basic points a business signature needs. First, it needs to be clear that a signature is on behalf of the LLC, not the individual. To make this distinction, the LLC name needs to be included in the signature block. In addition to the LLC name, the signature should point to the signee’s decision making role by including a title, such as “Manager, President, etc.”
Signee’s should enter something along these lines:
[Name and title of individual]
Clarity is key
Signatures are a routine part of life, from signing a check or credit card statement to package delivery. Because of the everyday nature of the act, it’s easy to sign without thinking about the larger implications. To do so would miss the details necessary to distinguish that you’re acting on behalf of an organization, not yourself.
Only pencils have erasers. Unfortunately, an innocent mistake has the potential to complicate or confuse a contract and risk personal property. There are many subtle liabilities in operating a business, which is why consulting with an experienced business law attorney is important not just to establishing a strong business model, but to protect its long-term interests as well.