An authorized person is someone legally empowered to act on behalf of another individual or business within a defined scope, whether that means signing the paperwork to form a new LLC, moving money in and out of a bank account, or representing a taxpayer before the IRS. The label travels across corporate law, banking, and tax administration, and it means something different in each. What stays constant is this: the authority is real, and so is the liability that can come with it.
The Main Types You’ll Encounter
Before you accept the role or ask someone else to take it on, figure out which kind of authorized person is actually in play. The responsibilities, exposure, and exit options are not the same.
Business Formation Organizer
When a limited liability company is created, somebody has to sign and file the formation documents with the state. That person is the authorized person, often called the organizer. Under most state LLC statutes, the organizer executes the certificate of formation (some states call it articles of organization) and submits it to the secretary of state’s office to establish the company’s legal existence. In many cases the organizer’s job ends the moment the filing is accepted, though an operating agreement can give them broader ongoing authority.
The role is narrower than it sounds. The organizer does not automatically become a member, manager, or officer. A lawyer or formation service can serve as the organizer without owning any part of the company.
Authorized Signer on a Bank Account
Banks use “authorized signer” for someone permitted to conduct transactions on an account they do not own. This is ongoing access rather than a one-time event. The signer appears on the account’s signature card and can generally view balances, withdraw cash, write checks, and make transfers within whatever limits the owner sets.
An authorized signer is not an account owner. They have no claim to the funds if the owner dies, and the institution can cut off their access at the owner’s request. The distinction matters in disputes over estate assets and in business dissolutions.
Authorized User on a Credit Card
People mix up authorized signers and authorized users, but the liability profiles differ sharply. An authorized user on a credit card can make purchases and is generally not responsible for repaying the debt. The Consumer Financial Protection Bureau has confirmed that being an authorized user does not obligate you to pay the balance, even after the primary cardholder’s death.1Consumer Financial Protection Bureau. Authorized User on Deceased Relative’s Credit Card Account An authorized signer on a bank account, by contrast, has transactional power that can create real financial exposure, particularly on business accounts where tax obligations enter the picture.
Registered Agent
A registered agent is sometimes lumped in with the authorized person, but it is a different job. A registered agent receives legal documents for a business, including lawsuits, subpoenas, and government notices. Every state requires businesses to maintain one with a physical address in the state. The agent has no authority to make financial decisions, sign contracts, or bind the company. They are a mailbox with a legal duty to forward documents promptly.
How It Differs From a Power of Attorney
A power of attorney creates a broader, more formalized delegation than a typical authorized-signer designation. When you sign a power of attorney, you appoint an agent who can act on your behalf across a wide range of matters, or within a specific defined scope. The document can be limited to a single transaction, like selling a house, or it can cover virtually all financial and legal decisions.
A “durable” power of attorney survives the principal’s incapacity, meaning the agent keeps authority even if the principal becomes mentally or physically unable to make decisions. A standard power of attorney terminates the moment the principal is incapacitated. Both types end immediately when the principal dies. No power of attorney, durable or otherwise, survives death. Any action taken after the principal passes is legally unauthorized.
An authorized-signer designation on a bank account is narrower. It grants access to specific financial accounts and nothing else. It does not allow the signer to make healthcare decisions, sell real property, or represent the principal in legal proceedings. For IRS matters, Form 2848 (Power of Attorney and Declaration of Representative) creates its own limited authority allowing a designated representative to act before the IRS on tax matters. That representative cannot endorse government-issued tax refund checks and cannot sign returns except in narrow circumstances like extended absence from the country or serious illness.2Internal Revenue Service. Instructions for Form 2848, Power of Attorney and Declaration of Representative
What You Can and Can’t Do
An authorized person can bind the principal to legally enforceable obligations. When they sign a contract, write a check, or approve a transaction within the scope of their authority, those actions carry the same legal weight as if the principal had done them personally. But the power has edges, and the way you sign your name matters more than most people realize.
Under the Uniform Commercial Code, adopted in all fifty states, the form of a representative’s signature on a negotiable instrument determines whether personal liability attaches. If the signature clearly shows it was made on behalf of an identified principal, the representative is not personally liable. If the signature is ambiguous about representative capacity or the principal is not identified, the signer can be held personally liable to anyone who takes the instrument without knowing the signer wasn’t supposed to be on the hook.3Legal Information Institute. UCC 3-402 Signature by Representative In practice, this means always signing as “Jane Smith, as authorized representative of XYZ Corp” rather than just “Jane Smith.” That small addition is the difference between the company’s obligation and yours.
Limits on authority usually appear in the governing documents, whether that is an operating agreement, corporate bylaws, or a bank’s account agreement. An authorized signer on a business account might be able to withdraw funds and pay bills but lack the power to close the account, change ownership, or add other signers. Exceeding those limits can void the transaction and leave the signer personally liable for any resulting losses.
Where Personal Liability Hits You
This is where most people underestimate what they’ve signed up for. Being an authorized person is not ceremonial, and in certain situations it creates personal financial exposure that can be devastating.
Payroll Tax Liability
The single biggest trap for authorized signers on business accounts is the trust fund recovery penalty. When an employer withholds income tax and FICA contributions from paychecks, those funds are held in trust for the IRS. If the business fails to pay them over, the IRS can assess a penalty equal to 100% of the unpaid trust fund taxes against any “responsible person” who willfully failed to ensure payment.4Office of the Law Revision Counsel. 26 USC 6672 Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax A responsible person includes anyone with authority to direct payment of the company’s bills, and having signature authority on the business bank account is one of the strongest indicators the IRS uses to establish that status.5Internal Revenue Service. IRM 5.1.24 Third-Party Payer Arrangements for Employment Taxes
“Willfully” here does not require evil intent. It covers reckless disregard. If you knew the taxes weren’t being paid and had the authority to direct payment but used the funds for other business expenses, you meet the standard. The penalty is personal. It follows you even if the business entity dissolves. The IRS must provide written notice at least 60 days before assessing it.4Office of the Law Revision Counsel. 26 USC 6672 Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax
Personal Guarantees and Cosigned Obligations
Signing authority alone does not make you personally responsible for a company’s debts. But if you cosign a business loan, personally guarantee a credit line, or pledge personal property as collateral, the creditor can come after your personal assets if the business defaults. This happens more often than people expect, particularly with newer LLCs where lenders insist on personal guarantees from anyone with signing authority. Read every document before signing, and clarify whether you are signing in a representative capacity or as a personal guarantor.
Foreign Account Signers and FBAR
Authorized signers on foreign bank accounts face a federal reporting obligation that catches many people off guard. If you have signature authority over foreign financial accounts whose combined value exceeds $10,000 at any point during the year, you must file a Report of Foreign Bank and Financial Accounts (FinCEN Form 114), commonly called an FBAR. The requirement applies even if you have no ownership interest in the accounts and never personally benefit from them.6Financial Crimes Enforcement Network. BSA Electronic Filing Requirements for Report of Foreign Bank and Financial Accounts (FinCEN Form 114)
Penalties for non-filing are severe. A non-willful violation carries a civil penalty of up to $10,000 per account per year. Willful violations jump to the greater of $100,000 or 50% of the account balance at the time of the violation.7Office of the Law Revision Counsel. 31 USC 5321 Civil Penalties Exceptions exist for employees of certain regulated financial institutions, publicly traded companies, and SEC-registered entities, but those exceptions are narrow. If you are an officer or employee of a company that doesn’t fall into one of those categories and you can direct the movement of funds in a foreign account, you need to file.
Getting Appointed and Getting Out
Appointment procedures depend on which role you’re stepping into. For a new LLC, the organizer files the certificate of formation (or articles of organization) with the secretary of state, typically through an online portal. Adding or changing an authorized person on an existing business entity usually requires filing an amendment, and the company’s operating agreement or bylaws should be updated to match. For a bank account, the new authorized signer generally has to appear in person at a branch, present identification, and sign the signature card. If the account belongs to a business, the bank will want a corporate resolution or incumbency certificate confirming the governing body actually approved the designation, and the name on the resolution must match the identification exactly.
Getting out takes deliberate action. The principal or business owner must submit written notice to whichever institution recognizes the designation. For bank accounts, that means a new signature card or a formal removal request. For business entities, removing an authorized person listed in formation or governing documents means filing an amendment with the secretary of state. Failing to update these records can leave the company exposed if the former representative keeps acting under apparent authority, because third parties who reasonably rely on outdated filings can hold the company liable.
And here is the part worth sitting with: being removed does not erase liability for actions taken while you were authorized. If you signed contracts, directed payments, or had authority during a period when trust fund taxes went unpaid, that exposure follows you after your name comes off the signature card. The IRS statute of limitations on trust fund recovery penalties runs from the original tax due date, not from the date of your removal. Personal guarantees you signed while authorized remain in force unless the creditor releases you in writing.
A Note on Beneficial Ownership Reporting
The Corporate Transparency Act originally required most domestic companies to report their beneficial owners to FinCEN, which caused confusion about whether authorized persons were caught up in the reporting net. As of March 2025, FinCEN revised its rules to exempt all entities created in the United States from beneficial ownership information reporting. Only foreign entities registered to do business in the United States are now required to file.8Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting FinCEN has also stated it will not enforce reporting penalties against U.S. citizens or domestic companies.
For foreign entities still subject to reporting, being authorized to file a BOI report on behalf of a company does not make you a beneficial owner. The CTA distinguishes between company applicants, who file the formation or registration documents, and beneficial owners, who exercise substantial control or own at least 25% of the entity. Filing paperwork on someone else’s behalf does not, by itself, trigger beneficial ownership reporting for the filer.9Financial Crimes Enforcement Network. Beneficial Ownership Information Frequently Asked Questions These rules remain in flux, and FinCEN has signaled further rulemaking may follow. Anyone serving as an authorized person for a foreign-registered entity should keep an eye on FinCEN’s updates.