How to Sign on Behalf of an LLC

By Joe Stone

A limited liability company is a legal entity you can create to operate your business. Every state has its own LLC laws that specify how to create an LLC and establish its management structure. An LLC is a unique type of legal entity because it protects your personal assets from the debts and liabilities of the business, while giving you considerable flexibility regarding how to manage the business, including designating who is authorized to sign on behalf of the LLC.

LLC Members' Management Authority

Each state’s LLC laws define the LLC owners as “members” and specify that each member is authorized to act on behalf of the LLC, unless the members decide otherwise. As a general rule, each member will have authority to run the LLC in proportion to his percentage ownership in the LLC; however, this only applies to a vote among the members on what action the LLC should take. With regard to third parties, a member who has authority to act on behalf of the LLC can sign documents, such as a contract, that will incur liability for the LLC.

Designated Managers for an LLC

LLC members can choose to designate management authority for the LLC in one or more members, or in a non-member. Most states require this choice to be specified in the LLC initial filing to create the LLC, such as the articles of organization. Additionally, the members who choose to designate a manager will adopt an operating agreement for the LLC that will specify the managers' authority. Any person designated in the operating agreement to manage the LLC, whether he is a member or not, has authority to sign documents on behalf of the LLC.

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Authority to Delegate Signing Power

In addition to specifying a manager for the LLC with signing authority, the members or manager of an LLC can designate any person to have signing authority. The designated person is not required to be a member or manager. For the most part, such a delegation of authority will be limited to specific situations. For example, the designated person may have check signing authority, but only up to a specified amount and for regular monthly bills, as opposed to general signing authority.

Authorized Signing Basics

All persons authorized to sign on behalf of the LLC must understand how to properly sign on behalf of the LLC, or risk incurring personal liability. Proper signing requires you to include your name plus wording that indicates you are signing on behalf of the LLC and your relationship to the LLC, such as manager or member. Also, when signing any contract on behalf of the LLC, you should review the contract language carefully to determine that it does not indicate that you will be liable personally. Even if you sign the contract properly as a designated manager of the LLC, the contract language may make you liable if it is not properly worded.

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Typical LLC Structures

Starting your own business involves choosing the right legal structure to operate it. A limited liability company, or LLC, is a type of legal structure that is right for many businesses because of its flexibility. Depending on your business needs, your LLC can be primarily structured around the number of owners, how it is to be managed and organized, or tax planning considerations.

Can an LLC Elect a Non-Member as a Treasurer?

A limited liability company, or LLC, has some characteristics of a partnership and a corporation. Like a corporation, owners aren’t liable for debts and other obligations of the business; like a partnership, an LLC allows for flexible management. Depending on how the articles of organization are written, and depending on the wishes of the LLC members, it's possible for non-members to fill a management position, such as a treasurer.

How to Sell a Percentage of an LLC

A limited liability company is owned and run by its members, and it operates according to the terms of its operating agreement and state law. An LLC is not typically structured in such a way that it's easy to add members, but it can be done. Although laws vary among states, and LLCs' operating agreements vary as well, there are certain procedures commonly involved in selling a percentage of an LLC.

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