It's a horrible feeling to suspect that someone in your team might be stealing from you.

In a small business, theft isn't just about missing inventory or cash. It can drain profits, damage trust in the team and land you in serious legal trouble if you don't handle it properly.

Here's how to deal with the situation calmly and protect your business.

Start with the evidence you do have

Most small businesses don't have security cameras or sophisticated systems. That doesn't mean you're powerless. Look at what you can gather:

• Compare inventory records against sales
• Check cash register or POS reports for discrepancies
• Collect written witness statements
• Save any relevant emails or messages
• Document specific instances with dates

This isn't about "catching someone red-handed". It's about building a clear, factual picture before you act.

Handle the investigation fairly

When you suspect theft, emotions run high. But acting in anger could cost you more than the theft itself. Stay professional and methodical:

• Never confront the employee publicly
• If the allegation is serious, consider placing them on paid administrative leave while you investigate
• Arrange a formal investigation meeting and give them a chance to explain
• Follow your employee handbook, internal procedures and applicable laws with a prompt, thorough, impartial investigation
• Keep detailed, objective notes throughout

This process protects both your business and your legal position if things escalate.

When to involve the police

Calling the police feels like the obvious step, but it isn't always straightforward. You should only report if:

• The theft is substantial
• There is credible evidence of deliberate theft
• The value involved is significant

And remember: involving the police does not replace your obligation to follow a fair internal process. It’s often wise to consult legal counsel before reporting.

Mistakes to avoid

Small business owners often make the same errors:

• Confronting the employee in anger
• Letting gossip spread in the workplace
• Terminating someone without investigation
• Ignoring the issue and sending the wrong message

Each of these can damage your case and increase the risk of a lawsuit.

Protecting your business

Your goal isn't just to deal with the theft. It's to protect your business from bigger problems. That means being:

• Consistent
• Evidence-based
• Fair
• Careful to document every step

If you skip these, you may face a wrongful termination claim on top of the original theft.

Let's solve this

Theft investigations are tricky. One wrong move can turn a serious issue into a massive headache.

Schedule a confidential HR consultation today. We'll:

• Review your situation
• Guide you through each step
• Help to protect your business from potential claims