How can I sign binding contracts on behalf of an LLC?

Question from Michael, How can I sign binding contracts on behalf of an LLC?

Answer from AI:

Signing binding contracts on behalf of a Limited Liability Company (LLC) in the United States involves understanding the legal authority and proper procedures. Here’s a general guide to help you navigate this process.

Understanding Authority to Sign Contracts

To sign binding contracts on behalf of an LLC, you need to have the proper authority. This authority is typically granted to certain individuals within the LLC, such as:

• Members: In a member-managed LLC, any member can sign contracts.
• Managers: In a manager-managed LLC, only designated managers have the authority to sign contracts.
• Officers: If the LLC has appointed officers (e.g., President, CEO), these individuals may also have signing authority.

Steps to Add an Adult to an LLC

If you need to add an adult to your LLC to grant them the authority to sign contracts, follow these steps:

1. Review the Operating Agreement: Check your LLC’s operating agreement to understand the process for adding new members or managers. The operating agreement will outline the necessary steps and any required approvals.
2. Obtain Consent: If required by the operating agreement, obtain consent from existing members or managers to add the new individual.
3. Amend the Operating Agreement: Update the operating agreement to reflect the addition of the new member or manager. This may involve drafting an amendment and having it signed by all existing members or managers.
4. File Necessary Documents: Depending on your state, you may need to file an amendment to your Articles of Organization with the Secretary of State. Check your state’s requirements for adding new members or managers.
5. Update Internal Records: Ensure that your LLC’s internal records, such as membership ledgers and meeting minutes, are updated to reflect the new addition.

Signing Contracts on Behalf of the LLC

Once the new individual has been properly added to the LLC and granted authority, they can sign contracts on behalf of the LLC. Here are some key points to remember:

• Use the Correct Title: When signing, the individual should use their official title (e.g., Member, Manager, President) to indicate their authority.
• Include the LLC’s Name: The contract should clearly state that it is being signed on behalf of the LLC. For example, “John Doe, Manager of XYZ LLC.”
• Review the Contract: Ensure that the contract is reviewed by legal counsel to confirm that it is in the best interest of the LLC and complies with all relevant laws and regulations.

When to Seek Legal Advice

Adding a new member or manager and signing contracts on behalf of an LLC can have significant legal and financial implications. It is advisable to consult with a legal professional to:

• Ensure compliance with state laws and regulations.
• Properly draft and amend the operating agreement.
• Review and negotiate contract terms.

For personalized advice, consider consulting with an attorney who specializes in business law. They can provide guidance tailored to your specific situation.

Additional Resources

For more information, you can refer to the following resources:

• U.S. Small Business Administration – LLC Guide
• Nolo – Forming an LLC FAQ

Remember, while this guide provides a general overview, it is not a substitute for professional legal advice. Always consult with a legal professional for specific guidance related to your LLC.