How Do I Tell if a Business Partner is Stealing?
When you have a business partnership, assets that belong to the business cannot and should not simply be taken or spent by either partner. Money and assets should remain in the business except when paid out as salary or distributions that are documented. Unfortunately, there are times when business partners fail to fulfill their fiduciary obligation to the partnership and end up taking money or property without authorization.
If you suspect your business partner is stealing, you need to take action. The theft of company assets can be a criminal act, and can also lead to civil litigation as you seek to recover funds that were misappropriated.
An Irvine business law attorney should be consulted for help as soon as possible in order to determine if a theft occurred and to explore appropriate legal options to take when money or property has been taken. Brown & Charbonneau, LLP has extensive experience representing clients in all types of partnership disputes including in complex cases where theft is suspected. Call us now to schedule a consultation and to learn how we can assist you.
How Can You Tell if a Business Partner is Stealing?
The best way to tell if a business partner is stealing is to ensure that detailed accounting records are kept and to monitor the books to ensure that no money is disappearing without justification. Every sale or service should be tracked, and every expense or distribution should be documented. By monitoring money coming in and going out, you can quickly see if something appears unusual in a way that could suggest your business partner is stealing from you.
Some of the different red flags that you should watch out for as you look at the company books include:
- Excess distributions. If your business partner is taking more money out of the business in distributions than he or she would be entitled to, this is a form of theft. If you each own a 50-50 share of the company, your distributions should generally be equal. If they aren’t, this is a big sign that something has gone wrong.
- Excess expenses. If your business partner is suddenly charging a lot of personal expenses to the company, this is a problem. You should have a clear agreement with your partner about what types of expenditures go on the company account.
- Sudden and unexplained changes in income. If your sales suddenly drop dramatically without justification, this could be a sign your partner is pocketing money or not reporting all transactions.
When you suspect theft, you may need to bring in outside experts, including a forensic accountant who can review transactions and take a careful look at the company books to determine if everything is in order.
It can be very contentious to deal with a partner you suspect of stealing and if you make a mistake in your accusation, you could put your business future at risk. Having an experienced legal professional advise and guide you through the investigation process and through any resulting legal action is very important.
The Irvine partnership dispute lawyers at Brown & Charbonneau, LLP can provide invaluable assistance in protecting your interests and your companies assets when you suspect theft. Give us a call today to learn more about how we can help you.