Chosen by Asker

Yes and the money should be returned to the company. This should be outlined in your Articles of Organization or a Code of Conduct. The use of Company funds or assets for any unlawful or improper purpose should be strictly prohibited. Every associate is personally responsible for all Company funds over which he or she exercises control. Company funds are to be used only for Company business purposes. Associates are expected to use their judgment to act at all times in the best interest of Companies and to avoid conflicts of interest. A "conflict of interest" occurs when an individual's private interest interferes in any way or even appears to interfere with the interests of the Company as a whole. A conflict situation can arise when an associate takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest also arise when an associate or a member of his or her family receives improper personal benefits as a result of his or her position in the company. If you have any questions as to whether or not a certain action represents a conflict of interest, contact an Attorney who specializes in Contracts or Business Law.

Source(s)

findlaw.com

by JFAD

3 years ago

Asker's Rating: 

I think you have established guidelines on how funds should be used.If you think any of the guidelines have been overstepped,go ahead and approach him with these facts and apply the necessary penalties.can approach your attorney for more advice. DONT WAIT FOR CORPORATION'S FUNDS TO BE DESSIPATED ON STRIP CLUBS BEFORE YOU START FROM THE STRACH AGAIN.GOOD LUCK

by worldpeace- 3 years ago

If this is not reported, and taxed, as income then yes it is illegal. The IRS frowns on Corporations that use the corporate books as their own personal piggy bank, ya' ever here of Tyco? Google it. Just make sure you have a solid accounting of all his personal expenditures and do not allow the corporation to claim the items as expenses, they should be claimed as Shareholder distributions. It could get messy if the IRS were to decide to come back and treat all the distributions as earned income. Then the corporation would be required to pay payroll taxes on the money. Good luck, sounds like you need it.

by Gem- 3 years ago

The only thing I'm not sure of is whether or not you're incorporated, or a partnership (you mentioned your "partner" - so it made me wonder). Anyways if it is a corporation then he has no business doing any of this at all. Any expenses incurred are supposed to be for the business, and not personal use. If you ever get audited the IRS might be very interested in what all these little "expenses" are for. If it's a partnership, then ALL partners are to agree on personal use with the assumption it will be paid back. (called a "Withdrawl" more or less). If there is a balance on the withdrawl and the business makes money, the profit is deducted from the amount of the withdrawl left over. So depending on the type of business it is determines the legality of it. In general, using company funds for personal use is just not a good idea. IF he doesn't agree to pay back the funds then I would certainly obtain legal advice and go from there. Good luck.

by rogueryche- 3 years ago

Simple - illegal - doesn't require a lawyer just read back newspapers. Erron Aldephas and on and on. sit him down at a public resturant and calmly approach him on the accounts and $$. ask him when he is going to start the money back to the company. get it in writing. get a new accountant to check the books for other irregularities and report to you only. you need to cover you 'assests' seriously, unless you want to chance Club Fed. go with knowledge or get burnt.

by robert w- 3 years ago