experience. After all, this is someone you trusted, and decided to form a business with.
You never expected them to be taking money and opportunities from the business. It is more than distressing. It is also illegal, and takes from your business profits. But how can you be sure your business partner is stealing? Before you put your significant war chest together – and these cases demand a significant war chest, here are some red flags that might indicate your business partner is engaging in dishonest behavior:
1. Financial discrepancies: Unexplained losses, discrepancies in financial records, or
unaccounted for funds could be an indication of fraudulent activity.
2. Unusual behavior such as avoiding discussions about financial matters, becoming
defensive when questioned about expenses, or exhibiting secretive behavior. Significant changes in how they deal with routine business matters may indicate something more pernicious.
3. Lack of transparency: If your partner is unwilling to share financial information or is
reluctant to allow you access to relevant business records, it is a cause for concern. This is more pronounced if your partner handles paying bills for the company, and used to keep you in the loop on upcoming financial commitments.
4. From an accounting standpoint, look for Unexplained expenses - Large or unexplained expenses in the company's financial records without corresponding evidence of legitimate business activities is concerning. Not only are you looking for large line items in your P&L or ledger, but you are also looking for unusual credit card expenses, taking draws out of the business early, and giving you (or other partners) a corresponding draw.
If you suspect that your business partner is stealing from you, it is critical to seek legal advice and gather evidence before taking any further action. Once you have decided that your business partner is harming and not helping the business, and has taken what should have been your profits for him or herself, call an experienced law firm to begin the process of protecting yourself and your business. The Vethan Law Firm, P.C. has litigated partnership disputes for over twenty five years, and we are committed to standing with our clients who have been wronged in their business.