Employee theft is a nightmare that no business owner wishes to experience. But what most business owners don’t understand is that the most likely culprit is often a person who is most-trusted. It is a sad fact, but nonetheless true, that there are many cases in which family members are involved in fraud and embezzlement of cash in family-owned businesses. If there was a way to know if your family was stealing from you, wouldn’t you want to know? Of course you would. Take a look at some of the common signs of family embezzlement that you should keep an eye out for.

Have You Noticed an Unusual Drop in Profits?

If you realize that there is a sharp drop in the business profits in your family-run business, a red flag should be waving around in your head. A significant drop could be the result of someone taking money out of your business. If this has not been the trend for the last few months, it extremely important for you to take action. Getting a professional involved can determine whether an employee or family member is siphoning your business profits or is engaging in cash embezzlement.

Can’t Seem to Find Your Records?

When you realize your business records are completely disorganized, you should take the time to evaluate what has been happening in your business. Whether or not someone has been stealing money from you, you should be worried about keeping organized books in case of an IRS audit and to keep your everyday business in order.

A lot of people involved in stealing will attempt to cover their trails and interfere with your official business records to reflect inaccurate revenues. If you monitor your financial situation closely, you will see any misplaced documents, altered amounts, or duplicate payments being made as they happen. If you notice any of these things, you should find a professional who can help you solve your problem to ensure that you did not misplace something and that someone else is, indeed, stealing from your business.

Other Warning Signs of Family Embezzlement

comic-characters-1296081_1280(1)A number of other warning signs of fraud include delayed bank deposits and customers calling with complaints of having settled their bills earlier when payment is asked for by another employee. Other red flags include alterations in the check amounts you previously written.

You should also be on the lookout for large numbers of payments being made to individuals bearing the same name and address, repeatedly. Consider starting an investigation into the financial health of your business when you realize there are late bank reconciliations, missing petty cash, and unbalanced books.

How to Keep Your Family Members Out of Your Business

Due to the likelihood of cash embezzlement or fraud orchestrated by family members, it is important for you to put a number of safeguards in place to avoid the possibility of theft. You should carry out unannounced audits periodically, run background checks on all employees and family members, while also keeping all paper checks and financial documents in a safe and secure place that family members do not have access to.

However, in the event that you suspect that there is a family member involved in embezzlement, you can call on your local CPA to guide you through the difficult process of establishing the truth. Experts will investigate the matter further and provide you with information before you make any accusations that are not valid.

Why Do People Steal and How Can it be Prevented?

People steal for a number of crazy reasons. The pressures of life, drug or other addictions, having access to large amounts of money, and the aspect of family-owned companies having fewer structures and formalities in place to safeguard the assets of the company, can create access to your funds that you never thought about before.

As a CPA firm, we know that family businesses can only realize fraud when they put up measures to prevent, as well as detect, fraud. Hiring the services of an expert CPA can help you detect any anomalies in your books and also help you set up measures to prevent future fraud. If you need to secure your family business funds, call our office, Chad Garland CPA, to find out what you can do to keep your money in your hands.