by Keith Neely

Created on: May 12, 2008   Last Updated: May 20, 2008

In today's day an age, being a small business owner often means more than merely making profit and expanding. With all of the new legal codes in place, running a successful business also means making decisions that take advantage of what the law allows you to do. Ironically, one of the most powerful tools that a small business owner can use to help them in legal matters is also one of the most misunderstood: power of attorney.

By definition, power of attorney is the legal recognition that you, as a citizen and business owner, have authorized someone else to act on your behalf in legal matters. Therefore, instead of spending time representing yourself in basic legal procedures, someone else can do it for you while saving time in the process. When selecting your power of attorney, be sure to select someone you trust to act on your wishes, because the decisions they make are legally binding. Optimal candidates may include a trusted friend or colleague whose opinions mirror your own. Selecting someone who is a lawyer, or who has studied law is not necessary, but may make certain decisions easier.

Also important to recognize are the different types of Powers of Attorney. On a very basic level, Powers of Attorney can be divided between general and specific (or limited). Under a general Power of Attorney agreement, your legal representation is given the authority to make legal decisions in all situations while specific powers only take effect in certain scenarios.

The above divisions can be separated further into what is known as durable, non-durable, and springing power of attorney. Under a Durable Power of Attorney, sometimes known as Health Care Power of Attorney, your legal representation is authorized even when you are incapacitated or ruled mentally incompetent. However, once the grantor dies, the authorization is removed. Meanwhile, under non-durable power of attorney, legal representation is only given when the grantor is mentally competent and conscious, so the authorization becomes void once the grantor enters a coma for example.

The most unique kind involves the springing power of attorney, in which legal authorization is given ONLY once the grantor has become incapacitated, but not before. This power can be useful when you want someone to manage your medical care should you become incapacitated, but not before. However, it's important to recognize that certain powers are only available in certain states, so make sure that your state supports that kind before attempting to invoke it.

When invoking power of attorney, some circumstances require a written power of attorney form to be filled out for the authorization to be legally binding. However, in less significant circumstances, oral instructions may be given that will hold up in the court of law, even if witnesses were not present at the time instructions were given.

Power of Attorney is easily one of the most valuable legal tools available to the small business owner, and its use can make running your small business easier and more efficient. Just make sure that you understand the agreements you're entering because, like any legal power, the consequences are often powerful and legally binding.

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