Free Enterprise - The FindLaw Small Business Law Blog

What to Do If Your Business Partner Steals From the Business

When a business partner is stealing from the business, it may be incredibly difficult to detect. Business partners legally have access to business accounts, merchandise, and more. However, misappropriation of any business assets could be considered not just a violation of the partnership under civil law, but could also be criminal acts. Partners are considered fiduciaries for each other.

If you suspect that your business partner is stealing, or misappropriating assets, deciding on the correct course of action is not easy. At the first suspicion, you should contact a qualified business attorney to help guide your investigation, and advise you on whether, when, and how to contact law enforcement, and potentially how to end the partnership without ending the business.

Depending on your business, and what was stolen, how you proceed could be critical to ensuring your business's survival.

Involving Law Enforcement

Business partnerships are more complex than most people expect. Whether or not there's a written partnership agreement, or formal business structure, business partnerships are governed by state law. When a business partner takes money from the business for their own personal benefit, if there is no agreement about doing so, it can be viewed as fraud, embezzlement, or even theft, under both criminal and civil laws. Generally, business partners are not supposed to draw a salary, and split profits and losses evenly.

Although you may be upset about your business partner's actions, you may want to carefully consider when to involve law enforcement, and the further impacts that a police investigation could have on your business's public perception. If your partner has taken operating account funds, or stolen assets, it may be easier to gather evidence independently (with the help of an attorney), then confront your partner and demand the return of the funds or assets.

Additionally, after you have secured the return of the funds, or assets, you will still be able to contact the law enforcement. If you expect law enforcement to return your money or assets promptly, you'll probably be let down. Having to wait for law enforcement to investigate, arrest, charge, try, and sentence, your business partner could result in long delay in the return of your business assets.

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