What does a Power of Attorney (POA) do? This document enables the individual named as the attorney-in-fact to act for, and on behalf of, the principal.
You may have already come across this document in some of your legal and formal dealings, but do you know that having one premade when you are running a business is just as important? As you go about the day-to-day operations of your business, you should remember to have a POA safely tucked in but ready to use, should the need arise for it. Here’s why:
Having one makes you compliant with the law
Say, for example, your company has a real estate property to sell or to buy. However, in the middle of the transaction days, you suddenly had an emergency that requires you to be out of the country. What happens to this transaction now? Could it possibly be wasted income for your company? Not if you have a Power of Attorney that is ready and waiting to be used.
Remember that in the Statute of Frauds, no sale of real property can be valid if it is without a written contract of sale. Since a written contract is required, you should expect, too, that for an agent of your company to finish the transaction that you left hanging, this authority should also be in writing.
Having one allows for better management of the company or organization
Businesses that have suffered an irreversible failure is not an occurrence that is rare or new. Many businesses fail because the owner was sick, forced to relinquish any control over the business due to unforeseen circumstances. For example, after undergoing surgery, some complications needed more medical care. If you had already prepared a POA for your business, this can run as smoothly as it should, as if you have never left. You will no longer have to worry about who can sign documents for you and perform other jobs concerning the upkeep and operations of your business.
Having one provides an assurance that the individual now managing your business is the exact person you wanted for that task.
You’ve seen it in movies: The owner or CEO of a company dies and, suddenly, the company is left at the mercy of someone who was legally appointed by the courts or by the company itself. However, this individual isn’t someone whom you could trust, as they have previously been caught falsifying company documents, but were taken back and forgiven.
Imagine the horror you will feel on the day you discover that your business is placed at the mercy of a person you cannot trust at all. This situation could’ve easily been avoided if you already prepared a POA, such that the one managing your business in your absence or incapacity is the same person you trust for this task.
Having one prevents the stoppage of operations
Especially for smaller businesses, if the individual who has been managing it for so long suddenly becomes incapacitated, you will immediately see a stoppage in the business’ operations. This is very unfortunate for the owner who has done everything to keep the company doing well. Also, imagine the responsibility and burden that will weigh on your conscience if your employees have lost their jobs simply because you were forced to declare a stoppage of operations.
In the example above, if a POA was made, naming a specific person to carry on with the operations of your business would not have resulted to a cease in operations. You would still be earning an income, and your employees would have kept their jobs.
Having one lessens the risk of forgery and dishonest transactions
If you have to leave your business for long, perhaps for a holiday or some medical treatment, one of the very first documents that you should put out is your POA. The person you have named as your agent is now responsible for the affairs of your business during your absence.
Because of this umbrella of protection, you can prevent the risk of forgery and dishonest transactions. Without the POA, control over the company would’ve just been given to a member of the senior staff or to an executive. Without a clear directive, temptations for forgery and fraudulent transactions are higher, thereby putting at risk the overall financial safety of your business.
After reading through this document, perhaps you are more convinced now that you need a well-made and well-drafted Power of Attorney, especially if you are in the business industry. For all the above-mentioned reasons, as well as many others, it is undeniable that there is so much you can gain from having a POA ready for anytime that you will need it. If your business still doesn’t have one, all you have to do now is go to your trusted lawyer and have one made.