What Is an Authorized Signer on a Business Account?

An authorized signer on a business account holds an important position within a company’s financial structure. This role enables effective financial management and the smooth execution of daily operations. Establishing clear protocols for these individuals helps maintain financial control and ensures the continuity of business activities.

Understanding Authorized Signers

An authorized signer is an individual empowered by a business to conduct financial transactions on its behalf, without holding ownership of the account. Their signature carries the legal weight to obligate the organization in financial matters. Their primary function involves handling day-to-day banking activities, which are important for maintaining operational flow.

Businesses rely on authorized signers to complete tasks like paying vendors, making deposits, or processing payroll, especially when the primary owner is unavailable. This delegation enhances operational efficiency and provides continuity for financial tasks. Individuals typically fulfilling this role include business owners, partners, key employees, or financial officers. Their authority stems from the business entity’s formal grant.

Designating and Managing Authorized Signers

Adding or removing an authorized signer to a business account requires specific documentation and procedures. Before contacting the bank, a business typically prepares internal corporate resolutions, such as board meeting minutes or partnership agreements, to authorize the change. These resolutions should clearly name the individual(s) being added or removed and specify their scope of authority. The business must also gather the full legal name, date of birth, and a government-issued identification document for each individual.

Financial institutions provide specific forms for adding or removing authorized signers, often available on their websites or in physical branches. These forms, sometimes called signature cards, require completion with the gathered personal and business details. After preparing internal documentation and filling out bank forms, the submission process can begin. This often involves visiting a branch in person, though some banks offer submission via mail or secure online portals.

After submission, the bank will process the request, which typically involves verifying the provided information and updating its records. The processing time can vary, ranging from a few days to several weeks, or up to 60 days, depending on the financial institution’s procedures and any required additional verification. Businesses should anticipate potential follow-up questions from the bank and confirm the change once processing is complete, ensuring the new signer has appropriate access or the removed signer’s access is fully revoked.

The Scope of Authority and Liability

An authorized signer is typically empowered to perform a range of financial actions for a business’s operations. These actions commonly include signing checks, initiating electronic fund transfers, making deposits, accessing account balances and statements, and approving payments. However, their authority is not always limitless; businesses can work with their bank to implement specific restrictions. Such limitations might involve setting transaction limits, requiring multiple signatures for transactions exceeding a certain amount, or restricting access to specific account types.

The business entity bears the primary responsibility and liability for actions undertaken by its authorized signers. The business is generally bound by all authorized transactions, even if they result in financial loss, as the signer acts as an agent of the company. Establishing clear internal controls and regularly reviewing account activity is important for businesses.

Regarding personal liability, an authorized signer is generally protected when acting within their defined scope of authority. They are typically not personally liable for the business’s debts or overdrafts, unless they knowingly misuse the account or engage in fraudulent activities. However, personal liability can extend to the individual in instances of fraud, gross negligence, or when they act outside the authority granted by the business and the financial institution.