Myth or fact?
  • The world is flat.
  • The sun revolves around the Earth.
  • Ink on paper is the only legally acceptable signature.

Strange as it seems, all three were once believed to be true. Today, all three are most definitely myths, and the last one may surprise you.

Many small business owners believe ink signatures — commonly referred to as “wet signatures” — are the only option when it comes to legally binding documents. However, electronic and digital signatures have been acceptable since 2000, when the Electronic Signatures in Global and National Commerce Act (ESIGN) designated that electronic signatures had the same legal standing as handwritten ones.

If a traditional wet ink signature on a piece of paper is scanned into an electronic device, the scanned version is considered to be an electronic signature.

ESIGN has been in effect for 17 years, so why are some folks so adamant about written signatures being the only true signature? Some habits die hard, and that’s okay; if you prefer written signatures, keep on scribbling. However, it is important to know that digital and electronic signatures are 100% legal and secure, and they just happen to be easier to manage than print signatures.

Electronic Signature vs. Digital Signature — What’s the Difference?

This is where it gets a little confusing, so let’s keep it simple. Under the broad category of electronic signatures, you’ll find the more specialized subcategory of digital signatures for documents. Both electronic and digital signatures allow you to authenticate yourself as the signer, and both are legally acceptable. Let’s look at the differences:

Electronic signature. It’s basically the act of authenticating, acknowledging or adopting an electronic transaction. Common examples are personal identification numbers used to access accounts (think ATMs), checking “agree” or “disagree” to accept terms on an electronic document, typing a name on an electronic document (emails, letters, forms, etc.), a scanned image of your handwritten signature placed into a document, and signing your name on a tablet to conclude a transaction. Each situation represents your acknowledgment and is legally binding.

Digital signature. This takes the electronic signature process a step further by including an embedded “certificate of authority.” When a digital signature is used, the certificate indicates who the person is, and it includes a date-and-time stamp to assure authenticity. Digital signatures usually require software programs (like Adobe Acrobat) or e-sign services (like DocuSign) to create a certificate that is specific to you.

Many business and HR software programs also include the ability to create personal certificates for digital signatures.

Digital Signatures Save You Time and Money

If you’re not using digital signatures, it may be due to the intimidation factor. Your first thought may be “That sounds pretty technical and complicated, and I don’t have time for all of that.” Fair enough, but there are advantages to moving away from printing documents and applying your John Hancock in ink:

  • You no longer need to print documents. You’ll save money by reducing expenses on paper, printer ink and file folders, not to mention pens. Once you set up a digital signature, the process of signing and circulating documents is much easier and more efficient. Files are stored electronically and shared via email. They never need to be printed.
  • Signing authority out of town? No problem. This is a huge advantage for smaller businesses that require an owner signature for purchase orders. If owners or those designated to sign on their behalf are out of the office, you no longer have to wait for them to return to acquire a signature. Just email the document for application of the digital signature, and your documents are ready to go. This is a huge time saver for small businesses.
  • Electronically signed documents are more secure than paper documents. By attaching a verified digital signature to a document, the receiving party can be assured that the integrity of the document is intact. This authentication process means you know who created the document, and you know it hasn’t been altered in any way since the signer created it. This also protects you from identity theft if the document is compromised.

As technology continues to advance, more and more businesses will move toward digital signature acceptance. However, as long as your business partners agree on a preferred process, both wet signatures and electronic signatures are acceptable and legally binding.

  • “Ink on paper” isn’t the only option for authorizing a document.
  • Digital and electronic signatures are 100% legal and secure.
  • Both electronic and digital signatures allow you to authenticate yourself as the signer, and both are legally acceptable.
  • There are advantages to electronic signatures, including saving paper and increased security.
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