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Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
Satisfied Customers: 29803
Experience:  Attorney
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Is it illegal to spend $ i have invested into a business

Customer Question

is it illegal to spend $ i have invested into a business for your personal needs?
Submitted: 1 year ago.
Category: Business Law
Expert:  Lucy, Esq. replied 1 year ago.

My name is ***** ***** I'd be happy to answer your questions today.
If I take money that belongs to a business I'm an owner of, and I use it for my own person needs�and we're not talking about my salary or an authorized distribution�that's embezzlement. Depending on the amount of money involved, it could be a felony.
When a business has multiple owners, then there should be meetings to discuss distributions, and a vote. It's not something that one owner can choose to do at will. So, that's one way to be able to tell whether a distribution was authorized. Even if one owner has a majority interest, he still has to tell the other owners what he's doing. Typically, all owners would get distributions at the same time, so that's another way to tell. If only one owner ever gets to take money out, that's a sign of embezzlement.
Also, business owners have a fiduciary obligation to act in the best interests of the company. Taking money out for person use likely isn't best for the company. So, the other owners/shareholders could bring an action against the owner who's taking money out for breach of that duty, plus conversion (the civil equivalent of theft).
If the company is an LLC, LP or a Corporation, then a local attorney can help go over the things you need to do before filing a lawsuit. LLCs can sue and be sued in their own name, but a lawyer has to represent them.
It's important that you are 100% satisfied with my courtesy and professionalism. Thank you.