How to Sign LLC Checks: Everything You Need to Know
Knowing how to sign LLC checks is an integral part of being a Limited Liability Company owner.3 min read
Knowing how to sign LLC checks is an integral part of being a Limited Liability Company owner. In order to keep benefits, such as limited liability protection, LLC owners must keep their personal and business transactions completely separate. There are also several bank policies that need to be respected, depending on the transaction type and LLC status. Once they are understood, endorsing a check will only take moments.
Tips for Keeping Personal and Company Matters Separate
An LLC is a very effective way to protect yourself from being liable for the debts of your company. In order for that to happen, however, a clear separation between your personal matters and the company's matters must be made. Not properly making the separation may lead to the loss of liability protection, and debt placed under your name instead of the company.
- The first step needed to start making payments as a Limited Liability Company instead of under your own name is opening a business checking account under the company's name. Also, the company's assets must be kept completely separate from your own, so if your company is ever sued you can be sure that you will not have to endure personal responsibility.
- To reinforce the separation between yourself and the company, instead of paying yourself by simply putting money into your personal account, use the company's account to transfer funds into your own.
- Make sure personal and professional expenses are kept separate at all times.
Necessary Steps When Signing an LLC Check
- The bank where the company has an account open must be contacted in order to fully understand the necessary procedures that must be taken for the LLC members to issue a check.
- If you currently lack the authorization to sign a check, you will need to be endorsed by a valid LLC member and present identification. Then, you will be asked for a signature sample so the bank has a record of your signature.
- Place the check on a flat surface and turn it over, so the “endorse check here” side is visible.
- If there is no such area, pick it up with the front side facing up.
- Endorse the check within the respective bank's guidelines. Specific rules, like writing your company's name, specifying the respective check is only for deposit, or only for deposit in a specific account, may be required by the bank.
- If the check's purpose is for you to cash in your share of the LLC's profits, make sure you write your full name, exactly as it appears on the checks front side.
- If a customer writes a check in your name instead of your company's for a business related matter, you will need to convince the respective customer to rewrite the check to the company in order to comply with the rule of keeping personal and business transactions completely separate.
- If you endorse the check for a third party in order for them to deposit it on your behalf, make sure you restrict the endorsement on the back to protect yourself from unlawful practices.
- To prevent any issues, always confirm everything with your bank.
- A check should never be signed using just your signature as your full name needs to appear on both sides.
Properly Signing a Check If You Are an LLC Owner
Signing a legal document such as a check incorrectly can have unpleasant consequences for the LLC owner, leading to a personal liability that nullifies the whole reason for a limited liability company. For that reason, it is crucial that documents are signed in a way that clearly shows your role within the company and not using the normal signature you use for personal matters.
Specifying your title in the company shows the other party that you are authorized to endorse checks for the organization and also that the check is not for a personal matter but on behalf of the company. A correct signature should include your full name, the name of the LLC and your title within the organization.
The same rules apply when signing on behalf of the company. As a representative, properly stating your name and role within the organization will spare you from any complications resulting from anyone placing responsibility on you personally instead of the company.
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