As we talk with clients about the power of business ownership, we encounter many questions about what it takes to set up a business, thus this series of articles. We’re covering just about everything, from the corporate structure to annual/biennial reporting, to upcoming articles on tax filing and bookkeeping—and everything in between. We want to provide resources to help you down the uncommon path of business ownership done the right way.
In this article, we want to address the idea of a corporate seal. In days of old, a legal business would affix a wax seal to important documents, like the Articles of Incorporation, transactions for land, mergers—most any document that needed to stand up in court needed a corporate seal. It was the law. Eventually, wax gave way to an embossed seal created by a circular metal stamp. In the digital age, there is some question and confusion about the need for a corporate seal.
So…do you NEED a corporate seal? The short answer is an equivocal “not really.” In recent years, embossing a document with a corporate seal has become more of a symbolic act, with legal significance greatly diminished.
On the other hand, states still recognize the legal power of a corporate seal and official stock certificates. But in most cases, the signature of a company principal with the proper authority is taking the place of a corporate seal.
So, with no legal teeth to speak of, should you get a corporate seal? We think there is some value in having a corporate seal. It gives documents an air of authority, even if the legal requirement behind it has diminished. There’s something dignified about a seal that recognizes the long hours, the money, and the financial risk you put on the line to run a business.
And the law is a funny thing. Even antiquated laws can be dragged out to create problems if there is no explicit exemption from them written into your state law. As archaic as that may be, court precedent in some jurisdictions says that if you don’t have a corporate seal, you may not be taking the business seriously. As a measure to cover all your bases, it might be wise to design and implement the practice of putting your corporate seal on documents, like vendor contracts or leases, that represent an agreement by your company.
We’ve been impressed with the tools available at Business Rocket. If you are looking to start a business or take a step toward organizing an existing side-hustle through incorporating or becoming an LLC, Business Rocket can help you wade through the legal requirements in your state, file the right documents with the right government agencies, and generally take care of organizing your business.