Is an electronic signature valid?

Yes. Electronic signatures are generally valid under the federal ESIGN Act (15 U.S.C. ch. 96, 2000) and state laws such as UETA where adopted. Ensure intent, consent, attribution, and reliable record retention to meet the ESIGN four‑prong validity test.

Do banks accept e-signed statements?

Many banks accept electronically signed statements, but acceptance varies. Confirm the bank's onboarding requirements and authentication level; some institutions may request notarization or additional identity proofing for higher-risk accounts.

When is notarization required?

Notarization is only required when a recipient or a state law specifies it. Requirements vary by jurisdiction and use; for matters needing notarized attestations, follow the state notary rules or RON provisions where allowed.

How do I correct or update the statement?

Issue a revised statement signed and dated by authorized signers. Keep previous versions in the record and note the reason for amendment; if a third party relied on the original, provide the revision and an explanation.

How long should I keep the executed statement?

Retention depends on the document's role: keep for the active term plus at least three years, and follow industry-specific rules such as IRS guidance (IRC §6501(a)) or HIPAA retention (45 CFR §164.530(j)).

Who is authorized to sign the statement?

An authorized officer or an individual with delegated signing authority should sign. The signer's title and evidence of authority should be recorded; attach a resolution or power of attorney if the signer is not an officer.

Electronic Signature
Templates
Miscellaneous
Business Purpose Statement

Business Purpose Statement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

BUSINESS PURPOSE STATEMENT

Parties

Party A (Name) Party A (Entity Type)

Individual Corporation LLC Partnership Other

Party A (Address) Party B (Name) Party B (Entity Type)

Individual Corporation LLC Partnership Other

Party B (Address)

WHEREAS

WHEREAS, Party A is engaged in the business of and seeks to document the intended business purpose and terms for the services or collaboration described herein;

WHEREAS, Party B has the experience, personnel, and capability to provide the services described in the Scope of Work below; and

WHEREAS, the parties wish to set forth their respective obligations, payment terms, confidentiality undertakings and other terms governing the business purpose stated in this document effective as of .

Scope of Work

The parties shall perform the activities and provide the deliverables described below. Party B shall perform such services with commercially reasonable skill and care and in accordance with industry standards.

Payment Terms

Compensation for services shall be as follows. Unless expressly set out below, amounts are payable in United States dollars and are exclusive of taxes, duties and other governmental charges.

Total Payment Amount Payment Schedule / Milestones Accepted Payment Methods

Check Wire Transfer Credit Card Other

Late Fee

Invoices are due in accordance with the payment schedule. Unpaid amounts shall accrue interest at the rate specified above and the non-paying party shall remain liable for all collection costs, including reasonable attorneys' fees. Taxes imposed on transactions under this statement are the responsibility of .

Term and Termination

This Business Purpose Statement begins on and shall end on unless earlier terminated in accordance with this section.

Either party may terminate this Statement for convenience upon days' prior written notice to the other party. Termination for cause may be effected immediately upon material breach by the other party that remains uncured for a period of 15 days following written notice of breach.

Upon termination, all unpaid fees for services rendered through the effective termination date shall become due and payable and each party shall promptly return or destroy Confidential Information as set forth below.

Confidentiality

Each party (the "Receiving Party") shall hold in confidence and not disclose or use any Confidential Information of the other party (the "Disclosing Party") except as required to perform its obligations under this Statement. Confidential Information includes non-public business information, financial data, customer lists, trade secrets, technical information and other information that is designated as confidential or that reasonably should be understood to be confidential.

Definition / Examples of Confidential Information

The obligations of confidentiality shall survive termination for a period of years, except that trade secrets shall remain protected for as long as they qualify as trade secrets under applicable law.

Governing Law

This Statement shall be governed by and construed in accordance with the laws of the State of without regard to conflict of law principles. The parties submit to the exclusive jurisdiction of the courts located in for resolution of disputes arising under this Statement.

Entire Agreement

This Business Purpose Statement, including any exhibits or schedules signed by the parties, constitutes the entire agreement between the parties with respect to the subject matter herein and supersedes all prior oral or written agreements, understandings and communications relating to such subject matter. Any amendment must be in writing and signed by authorized representatives of both parties.

Additional Provisions

The parties represent and warrant that they have the authority to enter into this Statement and to perform their obligations hereunder. The parties further agree that equitable relief, including injunctive relief, shall be available to the Disclosing Party in the event of a breach of confidentiality or misuse of proprietary information.

Party A:

By:

Date:

Party B:

By:

Date:

What a Business Purpose Statement Is and When It's Used

A Business Purpose Statement is a concise written description that defines a company’s primary activities, commercial objectives, and the intended use of a particular transaction or document. Organizations prepare this statement for bank onboarding, licensing, investor reviews, contracting, or regulatory filings where an explicit statement of activities helps establish purpose, limits, and authority. The statement typically identifies the legal entity, primary products or services, geographic scope, effective date, and any restrictions on activity. It may be requested by third parties to satisfy due diligence, tax classification, or compliance requirements.

Why a Clear Business Purpose Statement Matters

A clear statement reduces ambiguity about what the business does, supports KYC and licensing checks, and helps align third-party expectations. It provides a documented basis for account opening, contractor relationships, and certain filings where the reason for the transaction must be explicit.

Typical People and Organizations That Prepare This Statement

Common users prepare and review Business Purpose Statements when starting new relationships or formalizing activities.

Small business owners completing bank account or licensing applications
Compliance officers documenting permitted activities for KYC/AML reviews
Corporate counsel preparing transactional or corporate governance paperwork

The statement is often retained by legal, compliance, and finance teams as part of the official record.

Representative Signatories and Their Roles

Small Business Owner

An owner or CEO who certifies the company purpose for bank onboarding and vendor contracts; signs on behalf of the legal entity and ensures the description matches governing documents and registrations.

Corporate Compliance Officer

A compliance or legal lead who verifies the statement for regulatory consistency, KYC/AML screening, and internal policy alignment before distribution to banks or regulators.

Core Elements to Include in a Professional Statement

A well-constructed Business Purpose Statement is brief, specific, and tied to the legal entity and effective period; include clear signatory authority information.

Statement Title

A concise title such as 'Business Purpose Statement' and a one-line summary of the company's principal activity to frame the document.

Entity Identification

Full legal name, business type (LLC, corporation), and state of formation to ensure the statement matches official records.

Nature of Activities

Specific products, services, or business lines described plainly to avoid overly broad phrases that can cause downstream confusion.

Effective Date & Duration

The date the statement takes effect and whether it is open-ended, project-specific, or expires on a fixed date.

Intended Uses

List the immediate purposes (banking, licensing, investor due diligence, contract support) so third parties know why it was issued.

Signatures & Authority

Printed name, title, signature, and date for authorized signers; indicate whether notarization or witness signatures are required.

Step-by-Step: Preparing and Issuing the Statement

These sequential steps cover drafting, verification, and distribution so the statement is accurate and accepted by third parties.

01

Gather Records: Collect formation documents, EIN, and recent filings.
02

Draft Statement: Write concise purpose and intended uses.
03

Legal Review: Have counsel or compliance verify language.
04

Sign and Distribute: Obtain signature(s) and deliver to recipients.

Suggested Digital Workflow Settings for eSubmission

Configure your eSignature workflow to validate fields, require signer authentication, and store the executed record securely.

Field	Configuration
Mandatory Fields	Make legal name, signature, and effective date required.
Signer Order	Set required signer sequence for authorized approvals.
Authentication	Use email plus optional SMS or KBA for higher assurance.
Retention Policy	Enable immutable audit trail and long-term storage.

How Electronic Submission and Signing Typically Proceed

An electronic workflow reduces turnaround time and captures a full audit trail; follow these core actions for reliable eSubmission.

Prepare Document: Upload final PDF or DOCX and place fields.
Add Signers: Enter signer names and emails or generate links.
Authenticate: Apply chosen authentication level (email/SMS/KBA).
Complete & Store: Signed PDF and audit trail are captured automatically.

Technical Considerations for eSigning and Storage

Confirm the platform supports required file formats, signer authentication, and an auditable completion certificate.

File Formats: PDF and DOCX supported for signing.
Authentication Options: Email, SMS, or KBA where required.
Integrations: Connectors to CRM or document storage.

Security and Compliance Considerations for Electronic Records

Encryption in Transit: TLS 1.2 / 1.3

Encryption at Rest: AES-256

Regulatory Certifications: SOC 2 Type II; ISO 27001

Privacy & Data Laws: GDPR and CCPA compliance

Healthcare Controls: HIPAA compliant with BAA

eSignature Laws: ESIGN and UETA adherence

Key Risks and Potential Consequences of Errors

Banking Delays: Account openings or transactions may be delayed

Rejection by Third Parties: Incomplete statements can be refused by banks or insurers

Regulatory Exposure: Misstatements may trigger compliance inquiries

Contract Disputes: Vague purpose language can create interpretation disputes

Notarization Errors: Improper notarization can invalidate the attestation

Recordkeeping Gaps: Insufficient retention can hinder audits or legal defense

Common Preparation Mistakes to Avoid

Using overly broad language like 'general business activities' that fails to satisfy banks or regulators
Mismatched names or entity types that differ from formation certificates or EIN records
Omitting an effective date or signer title which results in uncertain authority and acceptance
Failing to follow state-specific notarization or witness rules when required by a recipient

Frequently Asked Questions About the Business Purpose Statement

Answers to common questions about legality, signatures, notarization, storage, and revisions for Business Purpose Statements.

Need help? Contact support

Is an electronic signature valid?
Yes. Electronic signatures are generally valid under the federal ESIGN Act (15 U.S.C. ch. 96, 2000) and state laws such as UETA where adopted. Ensure intent, consent, attribution, and reliable record retention to meet the ESIGN four‑prong validity test.
Do banks accept e-signed statements?
Many banks accept electronically signed statements, but acceptance varies. Confirm the bank's onboarding requirements and authentication level; some institutions may request notarization or additional identity proofing for higher-risk accounts.
When is notarization required?
Notarization is only required when a recipient or a state law specifies it. Requirements vary by jurisdiction and use; for matters needing notarized attestations, follow the state notary rules or RON provisions where allowed.
How do I correct or update the statement?
Issue a revised statement signed and dated by authorized signers. Keep previous versions in the record and note the reason for amendment; if a third party relied on the original, provide the revision and an explanation.
How long should I keep the executed statement?
Retention depends on the document's role: keep for the active term plus at least three years, and follow industry-specific rules such as IRS guidance (IRC §6501(a)) or HIPAA retention (45 CFR §164.530(j)).
Who is authorized to sign the statement?
An authorized officer or an individual with delegated signing authority should sign. The signer's title and evidence of authority should be recorded; attach a resolution or power of attorney if the signer is not an officer.

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