The whole point to running your business through a corporation or limited liability company is to protect you from personal liability. Incredibly, this can all be thrown away if you are not careful about how you sign documents. Let’s say a major vendor pushes an invoice in front of you, and you simply sign your name on the dotted line. The question arises: in what capacity did you just sign, on behalf of your company or on your personal behalf? It may seem obvious what you intended, but you have left yourself open to a lot of second-guessing, and potentially liability when the vendor decides to sue.
When signing documents on behalf of your company, be clear that’s what you are doing. There are various ways to do this, but the best is to specifically note this and to note your role in your company. For example, if you are a manager of your LLC, you would sign as follows: “John Doe, Manager of XYZ Company.”If you aren’t sure what your official title is in your company (you must not be using afterincorporation.com . . .), drop the title and sign as follows: “John Doe, on behalf of XYZ Company.” It’s better than nothing.
Admittedly, many documents you sign won’t expose you to liability, regardless of how you sign them. When you sign receipts for the purchase of office supplies, letters or time cards, there’s not a lot of exposure here. But there is still value in taking the formal approach as much as possible. By doing so, you are in effect drawing a line between what is personal and what is business. It shows that you are taking that division seriously. This has benefits for tax purposes, and heaven forbid your company goes under one day and creditors are chasing you, you will be in a stronger position.
For more on this topic from the Bongiovi firm in Las Vegas, check out this article.