Otaku Haven

# Intent — Finance, Banking, and Compliance

Owner: James Whitfield
Last Updated: 2026-04-21

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## Purpose

Produce the internal financial controls, accounting policies, and compliance documents for Otaku Haven LLC. These documents formalize how money is managed, how inventory is valued, how records are retained, and how the business stays compliant with Texas and federal requirements. They must align with the Financial Model (Intent 2), the Cash Handling SOP (Intent 4), and the reference data.

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## Constraints

- Accounting system is Xero. All accounting policy references must reflect Xero.
- POS system is Square for Retail. Transaction data flows from Square to Xero.
- Inventory valuation method must be consistent with what the Financial Model assumes.
- Output format: Word (.docx) for policies, Excel (.xlsx) for the Chart of Accounts.
- Output location: `Business Plan/05-Finance-and-Compliance/`

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## Dependencies & Files

**Input files:**
- `trail/meta/files/Otaku_Haven_Reference_Data.md` — canonical fact set
- `trail/meta/files/Otaku_Haven_Document_Checklist.md` — master checklist

**Cross-document dependencies (prior intent deliverables):**
- `Business Plan/02-Strategic/Financial-Model.xlsx` — revenue categories, COGS structure, expense categories, inventory valuation assumptions
- `Business Plan/04-Operations-SOPs/SOP-003-Cash-Handling.docx` — cash handling thresholds and procedures that the Cash Management policy must formalize
- `Business Plan/04-Operations-SOPs/SOP-007-Inventory-Receiving.docx` — inventory procedures that the valuation policy must be consistent with
- `Business Plan/03-HR/Employee-Handbook.docx` — confidentiality policy, discipline procedures referenced by data security

**External dependencies:**
- None.

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## Scope (In Scope)

### Finance and Banking (Section 8)
1. Chart of Accounts and Accounting Policies
2. Inventory Valuation and Costing Policy
3. Cash Management and Internal Controls Policy

### Compliance and Record-Keeping (Section 11)
4. Record Retention Policy
5. Data Security and Access Policy
6. Annual Compliance Checklist (Texas and federal)

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## Out of Scope (Non-Goals)

- Business bank account setup — acquired.
- Insurance policies — acquired.
- Credit card processing / merchant services agreement — acquired.
- Tax filings or tax returns — those are done by the accountant, not produced as documents.
- PCI compliance documentation — governed by the Square merchant agreement.

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## Assumptions

- The Chart of Accounts follows Xero's standard retail chart of accounts structure, customized for Otaku Haven's product categories and expense lines.
- Inventory valuation uses FIFO (First In, First Out), consistent with retail best practices and the Financial Model.
- The Cash Management policy formalizes the thresholds and controls established in SOP-003 (Cash Handling). If SOP-003 documented specific thresholds in its results.md, those values carry forward here.
- Record retention periods follow Texas state requirements and IRS guidelines (generally 3–7 years depending on record type).
- Data security covers POS data, financial records, customer data (loyalty program), and employee records. It does not cover a full IT security program — the store uses cloud services (Square, Xero, Gusto, M365) that handle their own security.
- The Annual Compliance Checklist is a practical reference document listing key filing dates and requirements, not a comprehensive legal analysis.

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## Specifics

### Chart of Accounts and Accounting Policies (.xlsx and .docx)

Two deliverables:
- **Chart of Accounts (.xlsx):** Xero-formatted account listing with account numbers, names, types (asset/liability/equity/revenue/expense), and descriptions. Must include accounts for each revenue category (matching product categories in reference data), COGS accounts, payroll accounts, rent, utilities, marketing, insurance, and other expense categories matching the Financial Model.
- **Accounting Policies (.docx):** Narrative document covering: accounting method (accrual vs. cash — use accrual), fiscal year (January 1 per reference data), revenue recognition, expense recognition, bank reconciliation procedures, month-end close process, year-end close process, and roles/responsibilities for financial operations.

### Inventory Valuation and Costing Policy

Covers: valuation method (FIFO), how cost is determined for each product category, handling of damaged/defective goods, markdown procedures, consignment inventory treatment (not owned until sold — different accounting treatment), cycle count adjustments, and write-off procedures.

### Cash Management and Internal Controls Policy

Formalizes: authorized signers on bank accounts, expenditure approval thresholds (who can authorize what dollar amounts), petty cash procedures, cash handling controls (referencing SOP-003), segregation of duties (to the extent possible with a small team), refund/discount authorization levels, and bank reconciliation responsibilities.

### Record Retention Policy

Covers: document categories (tax records, financial statements, bank statements, employee records, contracts, insurance, customer data), retention periods for each category, storage method (physical vs. digital), destruction procedures, and legal hold provisions.

### Data Security and Access Policy

Covers: who has access to what systems (Square, Xero, Gusto, M365, camera system), password requirements, access provisioning/deprovisioning when employees join/leave, customer data handling (loyalty program, email lists), POS data security, physical security of financial records, and incident response for data breaches. References the Confidentiality policy in the Employee Handbook.

### Annual Compliance Checklist

A practical reference document listing:
- Monthly: sales tax filing and remittance (Texas Comptroller)
- Quarterly: estimated federal tax payments (if applicable), payroll tax deposits
- Annually: Texas Franchise Tax and Public Information Report, federal tax return, 1099 filings, W-2 distribution, insurance policy renewals, business license renewals, workers' comp audit
- As needed: EIN updates, registered agent changes, Operating Agreement amendments

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## Deliverables

1. `Chart-of-Accounts.xlsx` — Xero-formatted account listing
2. `Accounting-Policies.docx` — accounting policies and procedures
3. `Inventory-Valuation-Policy.docx` — inventory costing and valuation policy
4. `Cash-Management-Policy.docx` — cash management and internal controls
5. `Record-Retention-Policy.docx` — document retention schedule and procedures
6. `Data-Security-Policy.docx` — data security and access controls
7. `Annual-Compliance-Checklist.xlsx` — filing dates and requirements checklist

All deliverables written to `Business Plan/05-Finance-and-Compliance/`

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## Acceptance Criteria

1. Chart of Accounts includes revenue accounts for all product categories in the reference data.
2. Chart of Accounts expense categories match the Financial Model's expense line items.
3. Inventory valuation method (FIFO) is consistent across the Inventory Valuation Policy, Chart of Accounts, and Financial Model.
4. Cash Management Policy thresholds and controls are consistent with SOP-003 (Cash Handling).
5. Accounting Policies specify accrual accounting and January 1 fiscal year start, matching reference data.
6. Data Security Policy references the correct systems (Square, Xero, Gusto, M365).
7. Annual Compliance Checklist includes Texas-specific requirements (franchise tax, sales tax, Public Information Report).
8. Record Retention Policy specifies retention periods consistent with Texas and IRS requirements.
9. All documents reference Xero as the accounting system, not QuickBooks or any other platform.
10. No document contradicts the Financial Model or SOPs from prior intents.

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## Notes

This intent produces 7 deliverables (not 6 as listed in the checklist) because the Chart of Accounts is split into an Excel workbook (.xlsx) and a narrative Accounting Policies document (.docx). The Compliance Checklist is also produced as an Excel file for practical usability.

The Cash Management Policy is the primary coherence link to Intent 4 (SOPs). The Manager should ensure the Developer reads SOP-003 before producing this document.