Hi there.....

I run a retail business in Illinois. My owner has two companies operating out of one building. One company is a development company that "flips" houses, and the other is a retail electronics chain store.

These companies are seperate, both are LLC's

Here's what's happening, and I want to know if it's illegal...I'm suspecting it is.

My retail store is making money. What money we make however is moved via bank accounts to the development company to fund this "house flipping" business. He has yet to sell any homes, however, so he takes money out of here like it's water.

He has taken loans and notes out on both businesses, and then spread the money around to both of them. I thought it was illegal to move money from one company to another??

My retail store also pays for his wife's new GMC Yukon, with a monthly payment of $1,250(!). The kicker here, however is that the owners traded in their existing vehicle in which they had a load against personally, and then had the company take over the remaining balance plus the new vehicle, with a new loan under the business name, at $1250 per month.

My retail store is failing, simply because of the above. All profit from my store does not stay in the store, it is funneled all over hell and back.

What should I do?

If it's a chain store there are probably people concerned with protecting the name of the company and an annonymous letter to them asking them to investigate the accounting may be in order.

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Never sign intellectual property agreements...

It is a franchise store of a major retail chain....should have mentioned that.

Yeah, I'm sure there is a corporate headquarters that can investigate this for you, write an annonymous e-mail to their website posing as a "concerned customer" and say that you heard a woman who drove a car financed by the store even though she didn't work there. THAT should draw some attention. Mention things like "is this legal?" and "Nightly news"

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Never sign intellectual property agreements...

On the surface, it seems both unethical and illegal.

However, without an audit of the books it's tough to say. You see, if this were a public company, the owner would be violating a number of laws.

But these are LLC's, which are "pass-through" entities. What that means is that company profits (and losses) are passed through to the owner's personal tax returns.

If he takes his profits as his income, and then deposits his own money into another business, this would be perfectly legal. I'm inclined to believe that he's probably not doing anything illegal whatsoever. He may be blurring some lines somewhere with the vehicle, but a CPA would have to answer that.

wayneotis, do you have an accountant at all? I would definitely seek advise on this issue, partly because you ned to ensure that it's all done legally - but also because you need to ensure that your own business is protected. An accountant certainly may strongly recommend certain limits and specific agreements for moving money out of the retail business.

2c.

You refer to this as "My Store" which shows an incredible amount of dedication on your part, but the reality is, no matter if it is legal or not, wise or not, or just plain foolish the way he chooses to run his businesses, they are still his businesses. Unless there is some ownership on your part, there is little you can do that will benefit your personal situation.

Paying for "company vehicles" or other expenses is one of the benefits of being a small business owner. While it seems he may be making some grave errors in both judgment and finances, that is his right as a business owner.

I would suggest two steps for you:

First, be active in looking for a new job (on the Q.T.). If he is killing the company as you have described, you don't want to be around when paychecks start to bounce and your bills are due.

Second, be willing to confront him with your fears and concerns. Let him know you have noticed the store struggling and you would like to know if he sees things settling down and in what time frame. If his answers don't give you a sense of relief, you have step one already in action.