Unexpected charges or missing financial records can put your business and investment at risk. If you co-own a New York City company, unusual activity may point to an accounting error or possible misuse of company funds.
Watch for these three signs that call for a closer review:
1. Unauthorized transactions appear
Withdrawals, transfers or purchases may need review if they do not follow your company’s approval process. Compare these transactions with bank statements, receipts, expense reports and payment records.
One unexplained charge does not prove misconduct. However, repeated transactions, missing receipts or payments to unfamiliar parties may signal a larger problem.
2. Your access to financial records changes
A co-owner may limit your accounting access, disable your login or refuse to provide reports. These changes can prevent you from reviewing how the business earns and spends money.
Document when your access changed and save any notices or emails about the restriction. Do not use another person’s login credentials to retrieve records.
3. Cash shortages lack a clear explanation
Your revenue may remain steady while less money is available for payroll, taxes or routine operating costs. Unexplained shortages may result from accounting errors, unrecorded expenses or unauthorized spending.
Review ledgers, invoices, deposit records and account balances. Note when the difference began and whether it follows a pattern.
What should you review next?
Your rights in shareholder and partnership disputes may depend on whether the business is a partnership, limited liability company (LLC) or corporation. Review your governing documents and bank authorization forms to determine who may approve transactions and access records.
Depending on the entity and circumstances, possible legal options may include seeking an accounting or filing a breach of fiduciary duty claim. If the suspected misuse harmed the company, a shareholder or LLC member may sometimes bring a derivative lawsuit on its behalf.
Keeping an organized, dated financial record can help you explain your concerns and determine what steps may be appropriate.
