When you enter a contract, you always want to make sure your business is the one on the hook (not you personally!).
It's also important to double-check how your client enters and signs the contract. If anything goes wrong, you don't want them to wiggle out of it because the wrong person signed the contract or used the wrong business name.
Use these tips to enter and sign all your contracts correctly so you're never left unprotected.
How To Sign A Contract As A Business
Use your business name throughout the contract, and sign the contract as your business.
To sign as your business:
- Write out the legal name of your business
- Sign your legal name with your normal signature
- Write your legal name[,] your position.
Your position in your business could be Member, Manager, President, Director, or a similar title.
Avoid Owner and Founder because they don’t really have a “legal” meaning in this context. If you aren’t sure of your title, you can write “Duly Authorized” instead.
Enter the contract using the name of the LLC, not your name. An LLC usually ends in "LLC". When you sign, write the name of your LLC, then sign your name, then type out your name and your position.
In an LLC, your position will typically be either Manager or Member. Check your formation documents to see which it is.
There may also be other people who are members or a manager of your LLC who would have the authority to sign for the business as well.
Enter the contract using the name of the corporation, not your name. A corporation usually ends in "Inc." When you sign, write the name of your LLC, then sign your name, then type out your name and your position.
In an LLC, your position will typically be President or Director. If you don't know your official title, it's important to figure it out. State laws usually require that certain positions be filled in every corporation.
There may also be other people who would have the authority to sign for the business as well. They may be the Secretary, Treasurer, or another Director.
You can also give someone else the authority to sign for your business. In that case, they would use the words "Duly Authorized" to indicate they are allowed to sign on behalf of the business.
If you’re a sole proprietor, you enter the contract individually even if you have a business name. You can also enter the contract as your name d/b/a your business name. Just make sure you don't leave your name out.
Sign the contract with your regular signature, and write out your legal name d/b/a the name of your business.
The same rules for entering and signing contracts apply to your clients.
Sometimes clients can be clueless about their own business structure, so always double-check that you have the name of the client's business entered correctly in your contract (including the LLC or Inc. if applicable) and that the person signing indicates their authority (Member, President, etc.).
Electronic vs. Pen & Ink Signatures
Electronic signatures are just as valid these days as pen & ink signatures. There is a federal law saying that an electronic signature is no less valid than an ink signature just due to the fact that it was made electronically.
Banks and lawyers often don't use electronic signatures because it can be easier to fake the identity of the person signing. You can't always be positive who's on the other side of the screen.
For your business, fraud probably isn't high on your list of client concerns.
Using a service like Honeybook to have your clients sign your contracts electronically shouldn't cause you any problems. If you're confident that your client and the person who made the electronic signature are the same person, then an electronic signature works just as well as an ink signature.
For other ways to protect your money and business, watch the free masterclass: How to Legally Protect & Grow Your Online Business So You Can Keep More of the Money You Make