A power of attorney grants an individual or entity the ability to act on behalf of another individual or entity. The power of attorney form gives legal authority to an agent to act on behalf of a principle. Across many industries, there are several types of power of attorneys (POA) that business owners use. However, you might want to know if you can have a power of attorney for business? The answer is yes, you can. In this post, we’ll show you a number of ways to use a business POA.
Bidding On Government Contracts
In the contracting and construction business, owners use power of attorney forms to bid on projects like commercial roofing. These POAs have very little limitations because the SBA requires direct ownership of the company. That means, the power of attorney for business is nearly unconditional. These types of power of attorneys can be dangerous because the agent can do almost anything that the owner would perform in the business. This includes buying, selling or dissolving the company. Thus, these types of POAs should be used carefully for bidding on multi-million dollar SBA government contracts.
Open And Operate A Coporate Banking Account
Depending on the structure of the business and the banking institution, some agents are able to open a bank account with a power of attorney. In these cases, a corporate resolution might be enough to open the business banking account. However, banks have very strict rules on opening bank accounts with a POA. You would have to ensure that the form meets of the bank’s legal requirements. Otherwise, they may turn down the account to protect themselves from litigation. Once the account is open, the power of attorney can be used for business banking activities like cashing checks and making payments.
Hiring And Firing Employees
A broadly written power of attorney for business give the agent control over operations. If the business has many people working for it, the agent would have control over hiring and firing employees. Of course, this could have a major impact on the business either positively or negatively. Depending on the how the POA is written, the operational responsibilities could extend beyond that to employee salary and other operational decision making as well. You should be careful if you are thinking about giving someone a power of attorney that allows for operational control.
Signing On With An Accounting Firm
When it comes to doing the books, business owners often work with accounting firms who sign a power of attorney. If the accounting firm is large, the POA can be signed over to the entire entity so that anyone in the organization can act on your behalf. They can help your business with tax complications, incorporating to an S-Corp business and performing audits. While you can sign a POA to another business, it might be in your best interest to specific which individuals are allowed to act on your behalf. Most companies will not want to risk their reputation and a lawsuit. However, you still need to be able to trust any business that signs a POA for your company.
Ensuring Business Continuity
In an unfortunate circumstance where the business owner is incapacitated, a power of attorney could indicate who would make the decisions and what powers they have. Since POAs can be written so that they take effect upon the occurrence of an event, you can have a power of attorney in place to protect your business. If something were to happen, there would be a legal document that appoints an agent to act on your behalf. Although this is not a complete solution to business succession planning, it can provide a temporary solution in a tough situation.
You can certain use a power of attorney for business. In fact, they are highly effective to bring in major contracts, manage financial transactions and perform operational activities. Moreover, the business POA forms can facilitate partnerships and business continuity. Keep in mind, these decisions and legal authority come with a significant level of risk to the business and should be carefully written with an experience lawyer. When used effectively, you can use a power of attorney for business representation.