What should I do about my business partner cheating me out of my money?
Enter the Project Grow Challenge presented by Entrepreneur and Canon USA for a chance to win up to $25,000 in funding for your business. Deadline is Sept. 15 2015. Click here to enter.Whether or not you're actually being cheated by your business partner, there are several steps you can take:
1. Engage a qualified accountant to review the financial books and records--the P&L, income statements and cash flow journals (as well as bank statements, canceled checks, credit card statements, etc.) These should give you an idea of how money is actually being spent in the business. As a business owner, you should be familiar with these financial documents (especially the reports) and review them regularly as a matter of good business "hygiene."
2. Obtain a copy of the formation documents for the company that were filed with the Secretary of State of your state. Realize, though, that some states don't require the identities of the owners to be listed on them, so don't get upset if you don't see your name there.
3. Engage an attorney who has experience with business owner relations to review the "paperwork" you're supposed to be provided and to create the shareholder's (or operating) agreement for the company.
4. If you're already having feelings that your business partner is cheating you, that's not a good basis on which to continue a business relationship. If there's no paperwork, and before enmeshing yourself further with an untrustworthy partner, you may want to pull out of the venture altogether, recoup what you can of the investment and take your money elsewhere. Let your attorney help you do so as cleanly as possible.