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Maybe you'd say it's worth the risk, but founders should be very careful about making transfers from accounts owned by their business to their personal accounts

Maybe you'd say it's worth the risk, but founders should be very careful about making transfers from accounts owned by their business to their personal accounts because this is literally the definition of embezzlement. I'd speak to your accountant and get their blessing first.

cj 4y ago
Citing the justice department’s website: “The requirement that the defendant act with the intent to deprive the owner of his property makes embezzlement a specific intent crime.” Meaning your safe as long as your intent is not to steal the money. But if your concerned definitely ask your lawyer. (Accountant won’t be able to provide that sort of legal advice)
- mike_d 4y ago
  I think what the person you responded to was trying to point out is that commingling business funds with personal funds is not a wise strategy, even if you believe the companies assets are at risk. For one thing you immediately open yourself up to personal liability if any issues arise where someone may sue your company. Such a transfer could be considered a disbursement by the IRS, requiring you to pay taxes (or at least hire lawyers to clear up the issue). It may also be outright theft or look damn close to it in the eyes of your board or employees. Not to mention complicating claim issues for your company if the bank does become insolvent. You should absolutely talk to your CFO, board, accountant, and lawyer before taking such a drastic step.
  - cj 4y ago
    Yes you should do all those things if you’re comfortable risking all of your company’s money on a bank about to collapse which could happen in a matter of hours. the legal system is not black and white. You go to court and there’s a judge and possibly a jury that hears your story, and decides if what you did deserves punishment. Attempting to safeguard your company’s assets hours before a bank’s potential collapse will garner sympathy from just about everyone. I understand your points; but people banking with SVB may not be able to run this month’s payroll if they don’t move their money. That will cause more problems than anything else we’re talking about right now. Unfortunately a bank run is very likely due to VCs mass emailing portfolio companies. I hate to be yet another person promoting this, but it’s always best to be the first ones out during a collapse.
- throwwwaway69 4y ago
  Putting yourself in a position to prove intent (which is basically impossible) still isn't a great idea
  - cj 4y ago
    Strongly disagree, now that we see SVB clients are currently screwed. It’s very easy to prove good intent when you didn’t benefit in any way. Besides, it’s the prosecution’s burden to improve intent, not the defendant’s. Transferring $10 million to a personal account for 1 day then transferring again to a permanent business account a day later has zero legal risk when the bank you’re moving away from is literally collapsing.
csomar 4y ago
Embezzlement is using company funds for your own personal gain. It doesn't have to be transferred to your own account. If you move company funds in one blob from SVB to Personal account, and then move the same blob from Personal account to Bank XYZ, and document the process, you'll be fine. Of course, you can use your personal account for a while until you setup another business account (which you should have at least a couple if you are well funded) but while it's technically not illegal, it can massively complicate your accounting later.
- caminante 4y ago
  I realize you're talking in practical terms. I read about embezzlement because I was curious.[0] > Embezzlement is using company funds for your own personal gain. AFAIK, the criteria for embezzlement is much broader than "personal gain." You have to take possession (rightfully), but do something with it (unrightfully). I can see an argument that the scenario of an employee taking its money from SVB and putting in another bank IS embezzlement if this is done without the CFO/officer's consent. In practical terms, you're probably fine as long as you're trying to act in best interests. [1] [0] https://en.wikipedia.org/wiki/Embezzlement https://en.wikipedia.org/wiki/Embezzlement [1] https://en.wikipedia.org/wiki/Conversion_(law) https://en.wikipedia.org/wiki/Conversion_(law)

cj 4y ago

Citing the justice department’s website: “The requirement that the defendant act with the intent to deprive the owner of his property makes embezzlement a specific intent crime.” Meaning your safe as long as your intent is not to steal the money. But if your concerned definitely ask your lawyer. (Accountant won’t be able to provide that sort of legal advice)

mike_d 4y ago
I think what the person you responded to was trying to point out is that commingling business funds with personal funds is not a wise strategy, even if you believe the companies assets are at risk. For one thing you immediately open yourself up to personal liability if any issues arise where someone may sue your company. Such a transfer could be considered a disbursement by the IRS, requiring you to pay taxes (or at least hire lawyers to clear up the issue). It may also be outright theft or look damn close to it in the eyes of your board or employees. Not to mention complicating claim issues for your company if the bank does become insolvent. You should absolutely talk to your CFO, board, accountant, and lawyer before taking such a drastic step.
- cj 4y ago
  Yes you should do all those things if you’re comfortable risking all of your company’s money on a bank about to collapse which could happen in a matter of hours. the legal system is not black and white. You go to court and there’s a judge and possibly a jury that hears your story, and decides if what you did deserves punishment. Attempting to safeguard your company’s assets hours before a bank’s potential collapse will garner sympathy from just about everyone. I understand your points; but people banking with SVB may not be able to run this month’s payroll if they don’t move their money. That will cause more problems than anything else we’re talking about right now. Unfortunately a bank run is very likely due to VCs mass emailing portfolio companies. I hate to be yet another person promoting this, but it’s always best to be the first ones out during a collapse.
throwwwaway69 4y ago
Putting yourself in a position to prove intent (which is basically impossible) still isn't a great idea
- cj 4y ago
  Strongly disagree, now that we see SVB clients are currently screwed. It’s very easy to prove good intent when you didn’t benefit in any way. Besides, it’s the prosecution’s burden to improve intent, not the defendant’s. Transferring $10 million to a personal account for 1 day then transferring again to a permanent business account a day later has zero legal risk when the bank you’re moving away from is literally collapsing.

csomar 4y ago

Embezzlement is using company funds for your own personal gain. It doesn't have to be transferred to your own account. If you move company funds in one blob from SVB to Personal account, and then move the same blob from Personal account to Bank XYZ, and document the process, you'll be fine. Of course, you can use your personal account for a while until you setup another business account (which you should have at least a couple if you are well funded) but while it's technically not illegal, it can massively complicate your accounting later.

caminante 4y ago
I realize you're talking in practical terms. I read about embezzlement because I was curious.[0] > Embezzlement is using company funds for your own personal gain. AFAIK, the criteria for embezzlement is much broader than "personal gain." You have to take possession (rightfully), but do something with it (unrightfully). I can see an argument that the scenario of an employee taking its money from SVB and putting in another bank IS embezzlement if this is done without the CFO/officer's consent. In practical terms, you're probably fine as long as you're trying to act in best interests. [1] [0] https://en.wikipedia.org/wiki/Embezzlement https://en.wikipedia.org/wiki/Embezzlement [1] https://en.wikipedia.org/wiki/Conversion_(law) https://en.wikipedia.org/wiki/Conversion_(law)