What Happens If A Business Partner Steals From Your Partnership

Nov 20, 2017


As a business owner or entrepreneur, forming a partnership can be an exciting and rewarding journey. However, sometimes unfortunate situations arise where a business partner may engage in fraudulent activities, including stealing from your partnership. In such cases, it is crucial to understand your rights, legal implications, and the actions you can take to protect your interests.

Legal Implications

In cases of theft or embezzlement by a business partner, several legal implications come into play. Firstly, the partner who committed the act may be held personally liable for the stolen funds or assets. Additionally, the partnership agreement, which outlines the rights and obligations of each partner, may have specific provisions regarding theft or dishonesty. Violating these provisions can lead to termination of the partnership or other legal consequences.

Steps to Take

Discovering that a business partner has stolen from your partnership can be disheartening, but it is essential to take immediate action to protect your rights and assets.

1. Gather Evidence

Start by gathering all necessary evidence that proves the theft or fraudulent activities. This can include financial records, transactional documents, emails, and any other relevant documentation. This evidence will help support your case and give you a stronger position in potential legal proceedings.

2. Consult an Experienced Attorney

Seek professional advice from an experienced business attorney who specializes in partnership disputes and fraud cases. They will guide you through the legal process, help assess the extent of the theft, and provide you with options for legal recourse.

3. Review Your Partnership Agreement

Thoroughly review your partnership agreement to understand the specific provisions related to theft or dishonesty. This will help determine the appropriate course of action and potential remedies available to you.

4. Inform Other Partners

If there are other partners in the business, it is crucial to inform them about the theft. Collaboration and unity among partners will strengthen your case and increase the chances of recovering the stolen assets.

5. Report to Authorities

Report the theft to the relevant authorities, such as the police or local law enforcement agencies. Provide them with all the evidence you have collected and cooperate fully during the investigation process. This step ensures that the partner involved is held accountable under the law.

6. Explore Legal Remedies

Depending on the severity of the theft, you may need to explore legal remedies such as filing a civil lawsuit. Your attorney will advise you on the best course of action based on the specific circumstances of your case. Legal remedies can help you recover the stolen assets and seek damages.

Protecting Your Partnership

Preventing theft within a partnership requires proactive measures to safeguard your assets and ensure transparency. Here are some steps you can take to protect your partnership:

1. Set Clear Expectations and Roles

Establish clear expectations, roles, and responsibilities for each partner from the beginning. Clearly define financial responsibilities, access to funds, and approval processes for expenditures.

2. Regular Audits and Financial Reports

Conduct regular audits and prepare detailed financial reports to monitor the financial health of the partnership. This helps identify any potential fraud or discrepancies early on.

3. Implement Internal Controls

Implement robust internal control systems to prevent unauthorized access to funds and assets. This can include segregation of duties, dual approvals for significant transactions, and regular reconciliations.

4. Review Partnership Agreements Periodically

Regularly review and update your partnership agreements to adapt to changing circumstances and include provisions that protect against theft and dishonesty.


Dealing with a business partner who steals from your partnership can be a challenging and emotionally draining experience. However, by taking immediate action, consulting with legal professionals, and following the necessary steps, you can protect your rights and seek justice.

Baytowne Reporting, a leading court reporting service in Bay County, understands the complexities of partnership disputes and can provide expert advice and support throughout the process. Contact us today for a consultation and let us help you navigate through this difficult situation with confidence.

Adam Colwell
Avoid toxic partnerships.
Oct 13, 2023