Mixing personal finances with business...

[TheHaitian]

Does everyone in charge of a company do it? Blur the line between personal and professional? Nepotism? Can no longer make the difference between what is in the best interest of the company and one’s best interest?

I remember the watchdog reported the Secretary of State because he was using state employees to run his personal errands such as “picking up his laundry, do his dishes, walk his Dog.

And the President replied he did not mind because the Secretary of State has more important things to do ... Great, then he makes enough to hire a “house manager” to handle his personal affairs not government employees.

My old company and current one was big on trying to avoid the perception of “nepotism” even though it was obvious and rampant. So if I hired my cousin or brother, they could not work in my store or report directly to me. But the district manager kids can work at any of his stores.... you really think the store manager is going to reprimand his boss kid?

Or the kid with the last name of the owner of the company will be expected to do the same... or currently my VP of operations son got fast track to being a store manager. Do you think his DM is going to hold him to the same standard to the other store managers when his daddy is the VP? Or he is really that special that he made it to the top that quick?

I remember when I did my internship in accounting, the CFO’s 2 kids were basically paid to come hang out and chill in the accounting department. Because no matter how much you say: treat my kids equally, no one is stupid enough to go treat your kids as shitty as they treat the other interns. They work for you!

Bring me to this:

www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN25V27L

He put his two sons - and their wives as well - on the university’s payroll. He arranged the transfer of a multi-acre Liberty facility to his personal trainer. He enlisted a friend’s construction company to manage an ambitious campus expansion costing hundreds of millions of dollars.

And before becoming school president, Falwell set up two companies that enabled him to cut property deals with one of the many nonprofit entities affiliated with the university, Reuters found. In each of the deals, Falwell played multiple roles with potentially conflicting interests: He was an officer of the university, a board member for the nonprofit selling the land, and a private developer who could profit from the transactions.
.....

Liberty employed a private firm - JF Management - formed by Jerry “Trey” Falwell III, Falwell’s elder son, to manage university properties. The company received more than $58,000 in compensation in 2017, according to the school’s most recent public filing of tax form 990 with the U.S. Internal Revenue Service. Trey Falwell also serves as a Liberty vice president, with total compensation from the university of $189,000 a year, according to the tax filings.

Falwell’s other son, Wesley, drew compensation in 2017 from Liberty of $54,744, the filings show. Laura Falwell, Wesley’s wife, earned $57,751 that year from Liberty, and Sarah Falwell, Trey’s wife, earned $63,315.

I guess it is another version of the “I am eating... my whole family is eating”. But it is not coming out of your personal pocket but someone else pocket.

I know a family business in MA ... grocery store that went through similar issues. One of the brothers created another company that was building plazas and he was using his position as the President of the family business to influence where the next grocery store would be and surprise surprise it would be in the Plazas that “his personal” company built and was the landlord.

When the other siblings found out they fired him as President and then created a big mess where the employee boycotted him getting fired because it seems while he was still double dipping and using company access to enrich himself more ; to them he was still a great boss. I think he was buying out his siblings or something like that.

If you are from MA / NH / VT you probably Know about it: Market Basket -> Demoulas.

[bookkeeper]

A couple decades ago, my DH and I moved 300 miles away from a community we loved to take a different job.  His former boss was hiring his son, taking equipment from the business for personal use off site and using DH's name to add legitimacy to what he was doing.  It is one thing to lie and cheat and steal, but quite another to say that his #2 in charge was supporting that behavior.

DH was so distressed with the corruption, that a close call with high voltage happened that could have seriously injured or killed him.

With that kind of leadership, you can imagine the "morality" of the employees was kind of flexible.  This was not private business, but a utility.  In my mind, that is the most damaging component of nepotism.  When the boss is corrupt, the employees see no problem playing by the same lack of rules.  Everyone loses.

[Deleted]

At my job, we have several spouses that both work there. But when one spouse is in management, they can’t be in a position where their spouse reports to them. One of them has to find another job, even if they just work a different shift. 

We have rules about nepotism, however, several years ago the lady that was the manager of our maintenance department..... which covers everything from our machines to the buildings themselves, including cleaning and grounds keeping for all our local facilities.... gave some relatives the contract to install our new security features that controlled access to our parking lots, the building and access to certain areas of the building. Some of the systems didn’t work at all after the installation was “complete”. Other parts have not worked more than they have worked in the years since. Access to one parking lot has been especially problematic, it only worked for a very short period of time. 

And because it didn’t work, a few years ago, someone was able to come onto the property and pistol whip an employee when she got out of her car to go inside the building. The employee was seriously injured, and has permanent damage to her face. It wasn’t random, it was over a man they were both dating (stupid!). After that happened, my job got busy trying to fix the security access on that lot. They finally got it working, but it didn’t last long. Just last year, we had issues with people breaking into cars or just stealing the whole darn car off that parking lot. It’s federal property, but obviously people that are up to no good don’t care about that.

Aside from safety issues for employees, the property is supposed to be secure because of what we do.

That manager was gone not long after the initial installation. Idk if she was reprimanded, demoted, sent somewhere else or what. Knowing my employer, I doubt she was fired. And we’re still left with the shoddy work of her relatives, who obviously weren’t the best at what they were supposed to do.

[formerroomate99]

I’ve seen both nepotism and the whole “it’s not what you know or do but who you know or do “ at a variety of dysfunctional companies. It seems to be more common in companies that are still pretty young, and are growing fast, making the transition from start up to a big company. The whole thing has made me very reluctant to ever interact with the c-suite types.

[Tiny]

I think the tax code for businesses can also encourage some bad behavior.   

[TheOtherMe]

When I was an IRS agent, I saw personal expenses being paid by the business from all sizes of businesses.  From small mom and pop business to large corporations. 

I also saw many small businesses being very careful not to do this.  Also saw large corporations who did not do this.  

Depends on who is running it.

It wasn't only businesses.  Before SSN's were required to claim children as an exemption, I disallowed more than one cat or dog being claimed as an exemption.

[tractor]

Not quite the same, but my dad used to run everything through the business, house, cars, etc. He reported a very low income, which kept his taxes low, and the business paid for all his personal needs.

This also kept his SS tax payments, and by association his SS checks very low. After years of living way above his means, he had nothing saved when he retired. By the end he had refinanced the house (his main asset) and used the money to maintain his artificial lifestyle until it was all gone. Now he has a very small SS check to live off of. He’d be screwed if he wasn’t living with me.

[resolution]

My husband's employer will assign the employees to work on his house and on his kid's houses, whenever business is slow. The business also pays for the mortgage for the preacher of his church and for several relatives that have never worked there. I have never asked them what they are doing for taxes, since its none of my business.

My employer has strict anti-nepotism and conflict of interest rules. However we have a few site locations where everyone that lives nearby is somehow related, so the rules against relatives are more relaxed out of necessity.

[Clifford]

Depending on your tax filing, your business and personal taxes are the same filing. We own our little business, and it's all filed under my SS# (even though it's an LLC).

I guess we are too scared to do anything shady like the article says. We count miles on our car, use different credit cards for biz vs home, etc. Maybe their legal team is better than ours (there isn't one) so they think they can argue if they ever get caught.

[Ryan]

My company has several relatives working in different departments but never the son/daughter/spouse of someone in a high place.  I've seen relatives get fired, so it seems to work fine.

As far as blurring expenses, I used to work in banking and saw it all the time.  I don't think it's a huge deal in most cases.