Power Of Attorney
Granting power of attorney for your business
Power of attorney is the legal authority granted to one person to act and make important decisions on behalf of another person. The person who grants the power of attorney is called the principal, and the person who receives that authority is called the agent.
Most commonly, power of attorney involves the handling of someone's personal medical and/or financial affairs, but in some cases it is also possible and necessary for a business owner or leader to grant power of attorney in a professional capacity. The particulars of the laws surrounding power of attorney can vary by state, so it is important have the documentation that corresponds with the state in which the business is located.
General, Limited and Durable Power of Attorney
When drafting a power of attorney document, the parties involved must decide what type of authority will be granted. General power of attorney usually gives the agent permission to represent the principal in all legal matters, whereas limited power attorney means the agent has authority to act only in the specific instances outlined in the contract. In the case of durable power of attorney, the agent continues to act in the principal's place even if the principal becomes mentally incapacitated.
Business Power of Attorney
When someone assigns an agent, via a general or medical power of attorney form, the authority to handle some or all of their significant personal decisions, that agent is usually a long-time trusted friend or family member. However, turning over authority for business-related financial decisions can affect everyone who is an employee, shareholder or otherwise economically invested in the success of that business, so it can be a more formal process. For example, before power of attorney is granted, the potential agent may be subjected to a standard background check.
Some of the business responsibilities that may be turned over to the agent via a power of attorney form include:
- Collecting all accounts receivable, such as payments for products and services provided by the business, via any legal means, including demands, collections and lawsuits.
- Buying and selling land owned by the company.
- Buying and selling company stock in the same ways that were available to the principal.
- Entering into new contracts with customers, clients, suppliers, affiliates, etc.
- Upholding existing contracts, especially with regards to the business's accounts payable commitments to suppliers, landlords, etc.