Is it illegal for my boss to do this?

I'm the office manager for a small business. I am responsible for paying the company's bills, including credit cards. On one of our most recent statements, there is not one business related charge. There are, however, a couple thousand dollars in personal charges to pet stores, spas, restaurants, and grocery stores. I know for a fact my boss is not entertaining clients with these charges, as some of them were made in Florida, where he has a vacation home. This makes my blood boil, since my boss has put a freeze on cost- of- living or performance raises due to the "economy". So the economy is bad enough for him to cut raises, but not his own personal spending at the expense of the company? This seems incredibly unethical to me, but is it legal for him to pay for all of his personal expenses with company money? We are incorporated if that makes a difference. Professional opinions would be most welcome, this is driving me nuts!
Additional Details
If it's unethical, why would it be within his "right" to do this? This behavior is costing him the respect of his employees and overall productivity is being reduced. We are a corporation, and he is considered the CEO of this company.

jobbend

What he is doing is taking the value of the business, out of the business. He's also choosing to spend his money how he sees fit. You see it as unethical. It seems to me that it's more un-businesslike, poor management, and unprofessional. Are there other shareholders/investors of the business that would be adversely affected by this or other like situations? To me, that is where the pain is going to show as he is diluting the value of their interest in the company. I've worked for a company that had an owner who did some things I didn't like - but that didn't mean they were criminal or illegal.

Lastly, while it's not a good practice, he may be using the company credit card to "float" the charges until he pays them back to the company.

If this stuff makes your blood boil, you can choose to confront the issue or find another job. Confronting it may mean saying something as simple as, "I got the credit card statement and don't know how to account for these charges as they don't seem to be related to any account. Can you help me here?"

Judy

It's only illegal if he claims those expenses on his income tax as business expenses. Otherwise it might be sloppy accounting but isn't illegal.

If he owns the business, it's his money.

lucy

Think about it in this way. What about all the banks/car companies out there that got bailouts and then they are paying bonuses to them in the millions when they went to the government for help. They got their money and got away with it. Everyone in the US is boiling over that, but it did not change anything.

You state his behavior is costing him respect with his employees and I hope you are not telling everyone about these expenses, or will find yourself w/out a job very soon for insubordination. Your only concern is that you properly pay out these bills in the right category period. So you need to ask him, does the restaurants fall under entertainment and the groceries under personal etc. When your company files taxes, they have to pay taxes or get breaks on certain things. My husband is self employed for over 40 years and he can "write off" his car insurance, gasoline, medical insurance, doctors etc and other things and is perfectly legal. So even though you believe that some personal expenses are not legal, they maybe legal due to him being CEO of this corporation.

If any of his expenses are illegal, believe me, he will pay in higher taxes/penalties. The IRS has certain guidelines and per previous filings if the amounts go up/down substantially or outside the norm in other companies, it will be "flagged" and he may pay if flagrant or not validated.

He is your boss and it is none of your business how he spends his money, pay raises or freezes costs. You better keep your mouth shut on his spending and if not, will find yourself unemployed.

good luck

Paul

If he owns the company it is within his rights to do whatever he wishes with his money. You as an accountant may not be privy to his attempts at obtaining business for his company which may include entertaining at home, grocery bills or entertaining at his FL home.

I have seen owners get more expense checks than income. It is his money. Remember you have a fiduciary duty to the company and it's owners, not to other disgruntled employees. If it was me I would keep my eyes on the ball. Do not lie on any record and be honest. Do your job and let the financial records submitted by your boss be taken at face value. It is his job to worry about what is best for his company, let him worry about the consequences. I think you are looking for trouble. The respect of the employees should come every pay day. If not, get out, your doing no one any good worrying about your bosses expenses.

Unless the company is publicly traded or he is simply a manager and not the owner. If he is only a manager and the company is owned by others you still aren't privy to his employment contract. So shut up and do your job. However, if the owner wants to know something answer honestly otherwise keep quiet.

Michael James

As an owner of the small business I believe he has every right to do so. I do however agree that it is unethical. If he does not own the business then he would have absolutely no right.

If you issues, the best thing you can do is quit.

if its his company, he is free to spend the money however he chooses. the only nosing into that subject you should be doing is asking him what category you should put it in for the monthly P&Ls.
just because someone owns a company doesnt mean that theyre swimming in money, nor that they should put all their profits into the employees' pockets. a business is your livelihood. the owner is the one that takes the risks and makes it possible for you to have a job. without taking advantage of their staff, they have a right to earn substantially more money than you -and most definitely apply restrictions on business expenses such as payroll.
I hope that doesnt sound harsh, as it is not intended to. its just bottom line

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