Entity Signature Requirements

It is essential for any business to improve its understanding of the types of entities and business structures that may exist. It is also essential to obtain written contracts and properly secure signatures in a manner required to make that entity or business structure legally responsible under the contract.  Below we discuss those types of business structures that companies will likely encounter and the proper way to secure a signature.

Individuals are responsible for all debts that they, as individuals, accumulate. An individual need only sign his/her name as shown below:

John Jones, Owner

Sole Ownership (Sole Proprietorship) – a business that is owned by a single person and is not a partnership, corporation, or limited liability company.  Commonly an individual will file an assumed name certificate (oftentimes reflected as d/b/a which means doing business as) reflecting the name in which he/she is conducting business. An owner may sign a contract as shown below:

John Jones d/b/a Forget About It Company

John Jones, Owner

Partnerships are generally of two types:  (1) a general partnership; or (2) a limited partnership.  With a general partnership, any general partner can enter into contractual arrangements to the extent a sole owner would, thereby binding the partnership and all the general parties to the contract that is entered into.   A general partner may sign a contract as shown below:

Forget About It Partners, a General Partnership

By: _________________________________
John Jones, General Partner

With respect to limited partnerships, there will be one or more general partners (who are responsible for all the contract obligations, including payment responsibility, and one or more limited partners, who invest a certain amount of capital and their liability is limited to that amount.   A limited partnership generally has "L.P." or "Ltd." in its name.  The signature requirements for a limited partnership are: 

Forget About It Enterprises, Ltd.

By: Forget About It, L.L.C., Its General Partner

By: _____________________________
John Jones, Manager

Corporations are entities organized by one or more persons.  Stockholders or shareholders own the corporation and are issued share certificates to reflect their ownership interests. The business is run through its board of directors and officers.  Stockholders participate in electing members to the board of directors but, as stockholders, do not direct business activities and have no authority to obligate the company. A stockholder is not liable for debts of the corporation.  The board of directors elects the officers of the corporation and authorizes the corporation to act, generally through resolutions adopted at meetings or by a unanimous written consent.  Officers of the corporation who manage the day-to-day business are authorized to act on its behalf through the corporation's bylaws and at the direction of the board of directors.  The corporation's name will contain "Inc.", "Incorporated", "Co.", "Company", “Corp.”, or “Corporation”.  Signatures of the officers such as President, Vice President, Treasurer or Secretary are preferable. The following format should be used:

Forget About It, Inc.

By: _________________________________
               John Jones, President

Limited Liability Companies are entities which resemble partnerships in some respects and corporations in other respects.  Generally denoted in its name as either an “L.C.” or an “L.L.C.”, Members own the limited liability company. The business is operated through managers (similar to the director in a corporation), or members if the company is member-managed, and officers.  Following the practice utilized for a corporation, the following format should be used by a limited liability company:

Forget About It, L.L.C.

By: _________________________________
John Jones, Manager