How to sign a contract as an LLC

Running an LLC offers limited liability benefits, but also comes with responsibilities like proper contract signing. So, how do you avoid personal liability and ensure your LLC is bound by the agreement? Follow these key steps:

1. Check the operating agreement

Before you even touch the pen, consult your LLC's Operating Agreement. This document outlines who holds signing authority. Does it require approval for contracts above a certain amount? Do managers have independent signing power? Knowing these limits prevents exceeding your authority and protects your personal assets.

2. Verify contract parties

The contract should clearly state the parties involved. Look for the first paragraph or designated section mentioning your LLC name as one party, not your personal name. If it's missing, request a correction before signing. This ensures the agreement binds the LLC, not you individually.

3. Use the correct format

Here's where your signature magic happens, but do it right! Avoid simply signing your name. Instead, use one of these two formats:

• [Your Name] on behalf of [LLC Name] (simple and effective)
• [Your Name], [Your LLC Role], [LLC Name] (recommended for added protection)

Good examples:

• John Doe, Sole Member, XYZ Enterprise, LLC
• Sarah Jones, Manager, ABC Company, LLC

Bad example:

• John Doe
• XYZ Enterprise, LLC
• Manager of ABC Company, LLC

4. Don't use the term "owner" as your title

While you may consider yourself the "owner," avoid that term in the signature line. Stick to official LLC titles like "Member," "Manager," or "Managing Member." Using "Owner" might blur the line between you and the LLC, potentially jeopardizing your limited liability shield.

5. Understand the consequences

Signing incorrectly could leave the LLC unbound and expose you personally. Always double-check the contract and your authority before signing. When unsure, consult an attorney for personalized guidance.

By following these steps, you'll sign contracts with confidence, ensuring your LLC operates smoothly and your personal assets remain protected. Now get out there and conquer those deals!