Legal Question in Business Law in Ohio
S Corp fraud
My girlfriend and I have formed an S corp. She has ran thousands of personal expenses through it. Do I have any legal ground to make her pay me personally if I did not agree to these expenses? She keeps telling me she is reducing her personal investment, but MY personal investment has never been reduced. Isn't it supposed to be 50/50?
1 Answer from Attorneys
Re: S Corp fraud
There are many issues you need addressed. Is there any shareholder agreement in place? If she has violated an agreement, the corporation can recover any improper withdrawls.
Other questions are the liability and tax issues. By paying personal expenses directly from a corp, you may be losing your limited liability protection. And I am presuming these expenses are not being deducted as legitimate corporate expenses.
Normally in an S corp, only profits are subject to withdrawl not capital. You need to take action now to protect your remaining investment.
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