Forums: Discussions for entrepreneurs and small business.

I own a small business and have 2 other partners in an LLC.  One was hired to manage the daily operations.  After a year of assorted problems, I came in to assist with duties because things were falling through the cracks.  He has since resigned because he cannot produce receipts for cash withdrawals and other questionable transactions.  I have found out he was not completing any normal functions of a manager for almost a year (bidding, billing, returning calls, labor management, etc.).  Because of his neglect and theft (almost $20K is not accounted for), our company is in trouble financially and we will probably have significant tax issues state and federal agencies. 

Since he is a partner, the police will not get involved.  We want to sue him in civil court for the money he cannot justify.  Does anyone have any advice that we can use to hold him accountable for his actions?  I probably cannot avoid getting a lawyer, but does anyone else have information that may be helpful?

One thing I know you'll need to do is get all the paperwork together -- the operating agreement of your LLC, any documentation of his role in the business, etc. You will probably also need a complete audit of the books to understand what exactly is missing and how to correctly report it for tax purposes.

This is exactly the situation for which a competent attorney is needed. If your current attorney can't handle it, get several referrals and consult with each before you decide. You may determine that the cost of pursuing the case outweighs any recovery you may make.

Best regards,

Molly Donaldson

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Start Here. Go Far. LaunchX

In order for things will workout between you and your partner in business, both of you would need to be transparent in all your activities/transactions especially when it concerns your business. Honesty is important for both of you  to succeed.

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