What is a Power of Attorney for Business?
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When it comes to owning your own business, it is essential to ensure that you have taken care of all the required legalities. You may want to consider whether or not you need a power of attorney in place for your business.
While, in most cases, you typically do not need one, you may want to put one in place to ensure that you are covered if anything goes wrong. A person who becomes your power of attorney has the right to act on your behalf if the need arises.
Want to know more about putting a power of attorney for your business in place? Keep reading to know if this is the right choice for you and your business.
What is a Power of Attorney for Business?
Even though you may have heard of a power of attorney, you may not understand how this applies to business owners. The power of attorney for your business is similar to what it is in your personal life.
The business power of attorney certifies that the person named on the form has the right to act on the owner's behalf should something happen. In most cases, the business owner specifies what a power of attorney will cover if they need to activate the form.
Just like any other power of attorney, the principal person needs to ensure that they choose someone they trust. This is because the document allows the person named to make necessary decisions for the principal which may include financial resources.
It is also important to keep in mind that the power of attorney form for a business requires the principal to choose specific activities they want the person to do. These activities can include dispersing checks, selling securities, and other financial items that need to be done that the principal cannot do.
How Does a Power of Attorney for Business Work?
When it comes to filing a power of attorney for your business, you must consult a legal professional. While there are forms that can be accessed online and through other means, the best rule of thumb is to file the paperwork through your attorney.
One reason you should consult with your attorney when putting a power of attorney in place is that the process can vary from state to state. Because of this, if you download a form online, you may not be filling out the right form.
Keep in mind that the first step in creating a power of attorney for your business is to ensure that you know what aspects of your business you may want someone to take care of on your behalf. Knowing this information will help you and your legal representative complete your form much faster.
Once you have the power of attorney form filled out properly, in most states, you are required to have it notarized. This often also applies to the person witnessing the power of attorney you are drawing up.
For the best information on what is required for a power of attorney to be legal, you should consult with an attorney. Since the form is being drawn up for your business, you must get everything filled out properly.
Types of Power of Attorney
Once you know what a power of attorney is and how it works, it is also crucial for you to understand the different types that exist. This is because, depending on your circumstances, you may need a specific type of power of attorney.
During a conversation with your attorney, they will be able to explain to you what the different types are and why you may need them. Depending on the type of business you have, there are a variety of items your appointed person may be able to do for you.
Wondering what types of powers of attorney you may need? Keep reading to find out.
When you sign a financial power of attorney, this entitles the appointed person to act on your behalf on various activities that involve the finances of your business. This document can be specified to kick in when you are incapacitated or can no longer act on your behalf, or for a specified timeframe.
When you designate someone as your power of attorney for financial matters, there are specific activities that are covered. Since this involves the finances of your business, you should only designate someone you trust.
Here are some of the activities that a financial power attorney may cover:
- Complete operation of your company
- Quarterly taxes
- Dealings with financial institutions
- Investments or retirement plans
- Contract negotiations
- Real estate transactions
- Paying any bills or living expenses
It may be important to note that if you choose to designate your spouse as your financial power of attorney, there may be specific laws in place depending on where you live.
A healthcare power of attorney is another type of legal document that you may want to consider for your business. In this type of power of attorney, the appointed person can make medical decisions on your behalf if you are unable to do so.
You may be wondering why you would need this type of power of attorney designation for your business. Keep in mind that it is important to put someone you know, typically a close friend or family member in this position.
It is also important to note that a healthcare power of attorney is much different than a living will that you may have if you have been hospitalized. The biggest difference is that a living will deal with decisions for end-of-life and the power of attorney can make decisions for any and all medical decisions.
A power of attorney for special circumstances comes into effect in a limited capacity only. For example, if something comes up temporarily and you cannot act on your behalf, you can designate someone to take care of specific activities for you.
Out of all of the other powers of attorney that exist, this one is one of the most simple to get and is the most limited. Most business owners only use this type of power of attorney as a last-minute special circumstance.
Why, Would You Need a Power of Attorney for Business?
The biggest question that exists for business owners is whether or not they need a power of attorney for their business. When forming a new company, in addition to the other business obligations you are responsible for, it may be necessary to also complete a power of attorney.
Most people know that life can be uncertain at best and unpredictable at very worst. Because of this, it is important to make sure that your business is covered in case something happens to you.
To protect you and your business in the event that something happens to you, putting a power of attorney in place is vital. While you may not want to go into the business thinking that something may happen, you should have certain information in place in case the worst does happen.
How do You Put a Power of Attorney in Place?
When it comes to putting a power of attorney for your business in place, the best thing to do is to contact your business attorney. This person will know the applicable laws in your state and the proper form that you should complete.
It is important to note that there is not one single form that you can use for your business for all states that may apply. To create a power of attorney, you will need to make sure that you are using the right form.
Here are the most important tips that you should keep in mind when putting a power of attorney in place:
- Any power of attorney you file must be in writing for it to be legal
- Use the right form according to the type of power of attorney you want to form
- Choose someone that you can trust completely to be the appointed person on the form
- Be clear on the terms and activities you wish to be covered by the designated person
- Make sure the durability is specified to ensure the legalities
- Have the power of attorney notarized by you and the witness
- Ensure that your attorney files the power of attorney in the county in which you live
Following these instructions, you will have a solid document that is not only completed properly but is legal in the eyes of the law. Since you never know when you will need to activate your power of attorney, it is important that you have it in place before something happens.
Overall, if something does happen to you down the road, it is in your best interest and the interest of your business and employees to have someone who can step in and keep the company running smoothly.
Reference Legal Explanations
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"What is a Power of Attorney for Business?". Legal Explanations. Accessed on February 8, 2023. https://legal-explanations.com/blog/what-is-a-power-of-attorney-for-business/.
"What is a Power of Attorney for Business?". Legal Explanations, https://legal-explanations.com/blog/what-is-a-power-of-attorney-for-business/. Accessed 8 February, 2023
What is a Power of Attorney for Business?. Legal Explanations. Retrieved from https://legal-explanations.com/blog/what-is-a-power-of-attorney-for-business/.