How to Sign a Contract as a Business Owner

Part of being a business owner is signing agreements to manage relationships with business associates, contractors, vendors and employees.  Life is hectic as an entrepreneur so it’s tempting to quickly sign your name when given one contract after another.  But making a small tweak to your signature can help you sign a contract for your company the right way.

Who Should Sign:

If you haven’t formed an entity such as an LLC or corporation, then signing is a breeze. As a sole proprietor, you and your business are one and the same.  Your motto is me, myself and I, so you can simply sign your own name on the dotted line and you’re done.

If you’ve formed an LLC, you have formed a separate entity. You likely formed it to create a legal separation between yourself and the LLC. To keep things separate, sign your business agreements to show that you’re acting on behalf of your LLC.

Single-member LLC owners have the right to sign on behalf of their LLC. But for members of a multi-member LLC, it depends on the terms of the operating agreement whether each member is entitled to bind the LLC legally. If no operating agreement exists, state law applies which in most cases allows each member equal rights to sign at will.

How to Sign:

OK, now it’s time to sign. When the agreement is in the name of your company, you want to sign your name with reference to your role in the company.  The agreement should bind your company and not you personally.  One of the benefits of forming an entity is its ability to assume some liability for its acts. Let's take advantage of that.  Here are some options for an LLC or Corporation:

Jane’s Designs LLC

By:_________________

Jane Smith

Managing Member, Jane’s Designs LLC

Or

Jane’s Designs Inc.

By:_________________

Jane Smith

President, Jane’s Designs Inc.

When to Sign a Contract:

Depending on who drafted or presented the document for signature, you may or may not be in a position to determine who signs first.  If you're responsible for creating the agreement, once it is final you can have the other party sign first. This gives you some control over the final draft. It gives you that last chance to review before you sign it and it becomes a legally binding document.

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This blog posting is provided for general informational and educational purposes only and is not provided for specific, individual legal advice.