When two or more like-minded people agree to share skills, efforts and resources to go to business for profit, they are deemed to be in a partnership. And just like romantic relationships, business partnerships are founded on trust and shared visions.
Unfortunately, it is not uncommon for a business partnership to fail to go to plan. If you suspect that one of your partners is engaging in fraudulent activities, you need to act. If you don’t, you might not only end up with losses but a barrage of lawsuits as well.
What is partnership fraud?
Basically, a business partner commits fraud if they knowingly engage in deceptive practices for financial or personal gain at the expense of the partnership. For instance, a partner who withholds money that belongs to the business for personal gain would be deemed fraudulent. Likewise, a partner who uses business assets to start a competing enterprise without the knowledge and/or approval of the other partners would be considered fraudulent.
What can you do if your partner is engaging in fraud?
If you suspect that your partner is engaging in fraud, you need to take the following steps ASAP:
- Collect your evidence – without clear evidence, allegations that your partner is dishonest or fraudulent are just that – allegations. Thus, the first thing you need to do when dealing with partnership fraud is gathering your evidence. These may include financial records, screenshots and audit reports. Any other documentation like emails and phone records that pertain to the fraud may also be handy.
- Take action – Dishonesty in business is a big deal. Depending on the severity, you may dissolve the partnership or resolve your differences and continue with the partnership. And if the fraud in question led to financial losses, you may take legal action against the partner in question.
Partnership fraud can not only derail your business dreams but also cost you money in fines and lawsuits. If you believe your business partner is engaging in fraud, you need to take steps to safeguard your rights and interests.