Are you unsure how to sign a contract for your LLC? Who is allowed to sign? What should the signature line look like?

By the end of this video and post, you’ll know:

• Who is allowed to sign for an LLC
• The two places you should check in the contract before signing
• The best title for an LLC owner to use when signing a contract (and the one you shouldn’t use)

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Once you become an LLC there are lots of additional rules, expectations, and requirements needed to get the benefits of being an LLC. (Or as I like to say, you have to take a little action to keep the fence your LLC created between your personal and business lives.)

And one of the ways you are going to keep that fence strong is by making sure that you’re signing contracts properly. 

Which is why I’m really excited about this week’s question. This week’s question comes to us from Angela who lives in Florida.

Angela asks,

If I’m the only owner of my LLC, how should I sign a contract?

A little refresher on LLCs

One thing that surprises or confuses a lot of creative business owners is that once you become an LLC, your LLC is treated as its own person. 

Your LLC is its own legal “person”.

You and your LLC are no longer one and the same. And this is important and a distinction we want to keep because it’s the whole reason for having an LLC.

We can’t have a fence between our personal and business lives if there is no distinction between you and your LLC.

And so your LLC has to legally be treated as its own “person”.

This is also why an LLC comes with rules, expectations, and requirements.

Who can sign for an LLC?

Before we dive into the exact things you should look for in the contract to make sure you are signing on behalf of the LLC, you first need to make sure you are allowed to sign this contract.

Your LLC should have an Operating Agreement that spells out:

• Any restrictions around signing contracts (for example, contracts above $500 must be approved by all members before one member is allowed to sign it)
• If managers are allowed to sign contracts without the approval of members.
• If the LLC can have officers and what contracts they are allowed to sign

(Don’t have an Operating Agreement? We’ve got templates for single owner LLCs and LLCs with multiple owners.)

If the person signing the contract isn’t authorized, then: 

• the LLC doesn’t have to honor the contract
• the person signing the contract might personally be responsible for honoring the contract

So the first step is making sure that *you* are allowed to sign this contract and that you don’t need permission from anyone else to do so.

Check these two places before signing an LLC contract

There are two places you are going to check in the contract before you sign it. It is critical you look in both of these places to make sure you are signing on *behalf* of the LLC. Because you don’t want to personally sign the contract.

Who are the contract parties?

The first place you are going to check is the parties to the contract. You will want to make sure that the contract is between the LLC and the other person.

This usually happens at the beginning of the contract. The very first paragraph usually says who the contract is between.

If the contract doesn’t say that it is between your LLC and the other party, then you want to send it back to them to correct it.

You do not want your personal name listed in that paragraph.

So that’s the first place you are going to check.

Who is signing the contract?

The second place in the contract you want to check before signing is the signature block. And you want to make sure that the contract is being signed by you on behalf of the LLC.

And there are two primary ways you can do this.

You on behalf of the LLC

The first way is:

[Your name] on behalf of [LLC name]

You as your LLC role

While you can use the first way, the best way to protect yourself (and the LLC) and the legally preferred way is:

[Your name], [Your LLC Role], [LLC name]

So in my case, it could be Kiffanie Stahle, Manager, the artist’s J.D. LLC.

What are the LLC titles you could use?

The best titles are:

• Manager
• Managing Member

But you also could use:

• Member
• Sole Member

The one thing you want to make sure that it’s not there is Owner.

For example Kiffanie Stahle, Owner, the artist’s J.D. LLC. Even though you are the owner of the LLC, that’s not the traditional LLC terminology. The traditional LLC terminology is Member. And so you want to make sure that even though you are the business owner, that word is nowhere near that contract.

TL;DR

The short version is:

• Before signing make sure your Operating Agreement allows you to sign.
• In the first paragraph, make sure the contract is between the LLC and the other party
• Make sure your signature line is formatted like this [Your name], [Your LLC Role], [LLC name]

If you don’t do these things then the LLC doesn’t have to honor the contract and you might personally be on the hook for it.