Otaku Haven

# Operating Instructions
# Run: run-2026-04-25-20-39-11
# Intent: intent-005 — Finance, Banking, and Compliance

---

## Your Role

You are the **Developer** for this run. Execute the tasks in `tasks.md` and produce the
deliverables listed there. Do not change scope, modify task definitions, or invent
requirements not stated in this document or `tasks.md`.

---

## What You Are Building

Seven documents formalizing Otaku Haven LLC's financial controls, accounting policies,
and compliance obligations. These documents must be consistent with each other and with
the prior deliverables listed under **Cross-Document Dependencies** below.

Output location: `Business Plan/05-Finance-and-Compliance/`
Create this subfolder if it does not exist.

---

## Business Context

**Otaku Haven LLC** is a fictional anime retail store at 2847 S Lamar Blvd, Suite 105,
Austin, TX 78704. Texas LLC. Target opening June 1, 2026.

**Entity facts you must use exactly:**
- Legal Name: Otaku Haven LLC
- EIN: 84-1234567
- Formation Date: January 8, 2026
- Fiscal Year: January 1 – December 31
- Accounting System: **Xero** (GL, AP/AR, reporting, bank reconciliation)
- POS System: **Square for Retail** (transactions flow from Square to Xero)
- E-commerce: Square Online (OtakuHaven.store)
- Payroll/HRIS: **Gusto**
- Email & Productivity: **Microsoft 365 Business Standard**
- Bank Account Opened: January 28, 2026
- Members: James Whitfield (40%, Managing Member), Kelli Nakamura (35%, Member/Operations Lead)

**Staffing (8 total):**
| Role | Count | Type | Compensation |
|---|---|---|---|
| Store Manager | 1 | Full-time, salaried | $65,000/year |
| Assistant Manager | 1 | Full-time, hourly | $20/hour |
| Key Holder | 2 | Part-time, hourly | $18/hour |
| Sales Associate | 4 | Part-time, hourly | $15/hour |

**Product categories (use these exactly for Chart of Accounts revenue accounts):**
- Figures & Statues
- Manga & Light Novels
- Apparel
- Accessories
- Home & Lifestyle
- Trading Cards
- Media
- Consignment / Local Creator

**Financial assumptions:**
- Startup Budget: $250,000
- Monthly Rent: $3,500/month (NNN)
- Target Gross Margin: 45–55%
- Break-Even Target: Month 10–14
- Payroll Frequency: Biweekly

---

## Cross-Document Dependencies

You must read the following files before producing the documents listed. Use exact values
— do not paraphrase, approximate, or invent figures.

### 1. `Business Plan/02-Strategic/Financial-Model.xlsx`
Read before producing:
- `Chart-of-Accounts.xlsx` — match revenue categories, COGS structure, and expense line items
- `Accounting-Policies.docx` — match accounting method and assumptions
- `Inventory-Valuation-Policy.docx` — confirm FIFO assumption is consistent

### 2. `Business Plan/04-Operations-SOPs/SOP-003-Cash-Handling.docx`
Read before producing:
- `Cash-Management-Policy.docx` — the policy must formalize the thresholds and controls established in this SOP

**Key values already extracted from SOP-003 (verified from prior run results):**
- Starting cash float: **$250**
- Acceptable variance (no action): ±$5
- Manager notification threshold: >$10
- Investigation threshold: >$25
- Mid-day cash pull trigger: $500 cash-on-hand
- Deposit: once per business day after close, sealed deposit bag, bank night-drop next banking day
- Safe access: Store Manager and Assistant Manager (full); Key Holder closing manager (drop slot only, no access to stored contents)

**Discount authority from SOP-004 (for internal controls reference):**
- Sales Associate: up to 5%
- Key Holder: up to 10%
- Assistant Manager: up to 15%
- Store Manager: above 15%

### 3. `Business Plan/04-Operations-SOPs/SOP-007-Inventory-Receiving.docx`
Read before producing:
- `Inventory-Valuation-Policy.docx` — valuation policy must be consistent with operational receiving procedures

**Key values already extracted from SOP-007:**
- Inventory discrepancy investigation threshold: 2 units or $50 retail value, or repeated mismatch on same SKU
- Cycle count frequency: Figures and Trading Cards counted weekly; all other categories at least monthly

### 4. `Business Plan/03-HR/Employee-Handbook.docx`
Read before producing:
- `Data-Security-Policy.docx` — must reference and be consistent with confidentiality policy and discipline procedures in the Handbook

---

## Document Specifications

### 1. `Chart-of-Accounts.xlsx`
Excel workbook, Xero-formatted. One sheet minimum.

Columns: Account Number, Account Name, Account Type, Account Code (Xero), Description

Account types: Asset, Liability, Equity, Revenue, Cost of Goods Sold, Expense

**Required revenue accounts** — one account per product category:
- Figures & Statues Sales
- Manga & Light Novels Sales
- Apparel Sales
- Accessories Sales
- Home & Lifestyle Sales
- Trading Cards Sales
- Media Sales
- Consignment Revenue (store's 40% share only — do not recognize consignor's portion)
- Online Sales (Square Online — can be a separate revenue account or sub-accounts mirroring the above)
- Other Income / Miscellaneous Revenue

**Required COGS accounts:**
- COGS – Figures & Statues
- COGS – Manga & Light Novels
- COGS – Apparel
- COGS – Accessories
- COGS – Home & Lifestyle
- COGS – Trading Cards
- COGS – Media
- COGS – Purchases (catch-all for mixed/unassigned)

**Required asset accounts (at minimum):**
- Checking Account (primary operating account)
- Petty Cash
- Accounts Receivable
- Inventory Asset
- Prepaid Expenses
- Security Deposit
- Fixed Assets – Leasehold Improvements
- Fixed Assets – Furniture & Fixtures
- Fixed Assets – Equipment & Technology
- Accumulated Depreciation

**Required liability accounts (at minimum):**
- Accounts Payable
- Sales Tax Payable (Texas)
- Payroll Liabilities – Wages Payable
- Payroll Liabilities – Employer Taxes Payable
- Consignment Payable (amounts owed to creators for sold consignment items)
- Accrued Liabilities
- Deferred Revenue (gift cards, store credit)

**Required equity accounts:**
- Member Contributions – James Whitfield
- Member Contributions – Kelli Nakamura
- Member Distributions
- Retained Earnings / Net Income

**Required expense accounts (match Financial Model categories):**
- Rent Expense
- Utilities
- Payroll – Wages & Salaries
- Payroll – Employer Taxes & Benefits
- Cost of Goods Sold (see COGS section above)
- Marketing & Advertising
- Credit Card Processing Fees
- Insurance
- Office & Administrative Supplies
- Technology & Software Subscriptions
- Professional Fees (accounting, legal)
- Repairs & Maintenance
- Depreciation Expense
- Bank Charges & Fees
- Business Meals & Entertainment
- Training & Development
- Miscellaneous Expense

---

### 2. `Accounting-Policies.docx`
Narrative Word document.

Sections required:
1. **Overview** — purpose, scope, accounting system (Xero), effective date
2. **Accounting Method** — accrual accounting (not cash basis); rationale
3. **Fiscal Year** — January 1 – December 31
4. **Revenue Recognition** — when revenue is recorded (at point of sale for retail, at time of Square transaction settlement; consignment revenue at time of sale, not at receipt of goods)
5. **Expense Recognition** — matching principle; pre-paid expenses amortized
6. **Inventory Accounting** — FIFO method; reference to Inventory Valuation Policy
7. **Bank Reconciliation** — frequency (monthly minimum), responsibility (Store Manager or designated accountant), system (Xero bank feed reconciliation)
8. **Month-End Close Process** — steps, timeline (close within 5 business days), responsibilities
9. **Year-End Close Process** — steps, external accountant involvement, timeline
10. **Roles and Responsibilities** — Managing Member (oversight), Store Manager (day-to-day), external accountant/bookkeeper (Xero management, tax filings)
11. **Chart of Accounts** — reference to Chart-of-Accounts.xlsx

---

### 3. `Inventory-Valuation-Policy.docx`
Narrative Word document.

Sections required:
1. **Purpose and Scope**
2. **Valuation Method** — FIFO (First In, First Out); definition and rationale for retail
3. **Cost Determination by Category** — how unit cost is determined for each product category (invoice cost + inbound freight, if applicable)
4. **Consignment Inventory** — not owned inventory; recorded off-balance-sheet until sold; at point of sale, recognize consignment revenue (store's 40% share) and consignment payable (creator's 60% share)
5. **Damaged and Defective Goods** — write-down procedures; markdown authorization levels
6. **Markdown Procedures** — authorization levels (who can mark down by how much); documentation requirements in Square
7. **Cycle Count Adjustments** — how count variances are recorded in Xero; threshold for investigation (2 units or $50 retail value, or repeated mismatch on same SKU — consistent with SOP-007)
8. **Write-Off Procedures** — authorization (Store Manager for items <$100; Managing Member for items ≥$100 or total write-offs exceeding $500 in a month); documentation in Xero
9. **Year-End Inventory** — physical count requirement, reconciliation to Xero, external accountant review

---

### 4. `Cash-Management-Policy.docx`
Narrative Word document.

Sections required:
1. **Purpose and Scope**
2. **Authorized Bank Signers** — James Whitfield (Managing Member), Kelli Nakamura (Member/Operations Lead)
3. **Expenditure Approval Thresholds**:
   - Routine operating expenses (pre-approved categories, e.g., inventory reorders, recurring subscriptions): Store Manager up to $2,500 per transaction
   - Non-routine or unbudgeted expenses: Managing Member approval required for any single expense >$500
   - Capital expenditures: Managing Member approval required regardless of amount
   - Emergency purchases: Store Manager up to $500 with same-day notification to Managing Member
4. **Petty Cash** — fund amount ($250); custodian (Store Manager); replenishment procedures; receipt requirements; maximum single petty cash disbursement ($50)
5. **Cash Handling Controls** — reference SOP-003 for procedures; formalize thresholds from SOP-003:
   - Starting float: $250
   - Acceptable variance: ±$5
   - Manager notification: >$10 variance
   - Investigation required: >$25 variance
   - Mid-day pull trigger: $500 cash-on-hand
   - Deposit: daily after close, sealed bag, bank night-drop next banking day
   - Safe access: Store Manager and Assistant Manager (full); Key Holder closing manager (drop slot only)
6. **Segregation of Duties** — for an 8-person operation: the person who handles cash (Sales Associate/Key Holder) is not the same person who reconciles (Store Manager/AM); the person who approves expenses is not the same person who processes payment; Managing Member reviews and approves monthly bank reconciliation
7. **Refund and Discount Authorization** — reference SOP-005 (returns) and SOP-004 (discounts); discount authority: SA 5%, KH 10%, AM 15%, SM above 15%
8. **Bank Reconciliation Responsibilities** — Store Manager prepares monthly Xero reconciliation; Managing Member reviews and approves within 5 business days of month end
9. **Check / ACH Controls** — authorized signers only; dual approval required for disbursements >$5,000

---

### 5. `Record-Retention-Policy.docx`
Narrative Word document.

Sections required:
1. **Purpose and Scope**
2. **Retention Schedule** — table format with these columns: Record Category, Retention Period, Storage Method, Notes

Include at minimum these categories:
| Record Category | Retention Period | Storage Method | Notes |
|---|---|---|---|
| Federal and Texas tax returns | 7 years | Digital (M365) + physical | IRS statute of limitations |
| Bank statements | 7 years | Digital (Xero/M365) | |
| General ledger / financial statements | 7 years | Xero + digital backup | |
| Accounts payable records / invoices | 7 years | Digital (Xero/M365) | |
| Payroll records (Gusto) | 7 years | Gusto + digital backup | FLSA / IRS requirement |
| Employee records (personnel files) | 7 years post-termination | Gusto + digital (M365) | Texas and federal |
| I-9 forms | 3 years from hire or 1 year post-termination (whichever is later) | Physical secure file | USCIS requirement |
| Contracts and leases | Duration + 7 years | Digital (M365) + physical | |
| Insurance policies | Duration + 3 years | Digital (M365) + physical | |
| Corporate records (Operating Agreement, resolutions) | Permanent | Digital (M365) + physical | Texas LLC requirement |
| Customer data (loyalty program, email lists) | Active + 3 years after last activity | Digital (M365 / Square) | Data minimization |
| POS transaction records | 7 years | Square + Xero | Sales tax audit support |
| Vendor agreements | Duration + 5 years | Digital (M365) | |

3. **Storage Methods** — physical (locked file cabinet in back office), digital (Microsoft 365 SharePoint, Xero, Gusto — cloud-hosted)
4. **Destruction Procedures** — shredding for physical records; secure deletion for digital; must not destroy records under legal hold
5. **Legal Hold** — any record potentially relevant to litigation, audit, or investigation must be preserved; Managing Member determines legal hold status
6. **Responsibility** — Managing Member (policy owner), Store Manager (day-to-day record maintenance)

---

### 6. `Data-Security-Policy.docx`
Narrative Word document.

Sections required:
1. **Purpose and Scope** — covers Square, Xero, Gusto, M365, security camera system; does not cover a full IT security program (cloud providers handle their own security)
2. **System Access Matrix** — table of who has access to which systems:
   | System | Managing Member | Store Manager | Assistant Manager | Key Holder | Sales Associate |
   |---|---|---|---|---|---|
   | Square (POS) | Full admin | Full admin | Manager-level | Standard cashier | Standard cashier |
   | Xero | Full admin | Read/report | No access | No access | No access |
   | Gusto | Full admin | Employee self-service | Employee self-service | Employee self-service | Employee self-service |
   | M365 | Full admin | Standard user | Standard user | Standard user | Standard user |
   | Security cameras | Full access | Full access | Manager-directed review | No access | No access |
3. **Password Requirements** — minimum 12 characters; unique per system; managed via M365 credentials where supported; no shared passwords
4. **Access Provisioning** — new employee access granted day of hire by Store Manager (Square, Gusto, M365); Xero access granted only to roles listed in access matrix; access must match role in this policy
5. **Access Deprovisioning** — all access revoked same day as termination or resignation; Store Manager responsible for executing deprovisioning within 2 hours of separation; Managing Member notified immediately
6. **Customer Data Handling** — loyalty program data (Square) and email list (M365/marketing platform) are covered; data collected: name, email, purchase history; not stored: payment card numbers (Square handles PCI); retention: per Record Retention Policy; no sale or sharing of customer data
7. **POS Data Security** — Square handles PCI DSS compliance per merchant agreement; Otaku Haven staff must not attempt to capture or store card data outside Square; receipts containing card data must be handled per Square's guidelines
8. **Physical Security of Financial Records** — locked file cabinet; back-office access restricted to Store Manager and above
9. **Incident Response** — if a data breach is suspected: (1) notify Managing Member immediately, (2) preserve evidence, (3) assess scope with external counsel if needed, (4) notify affected individuals per Texas Business & Commerce Code Chapter 521 (notification required within 60 days of discovery); document incident in M365
10. **Reference** — this policy supplements the Confidentiality and IP Policy in the Employee Handbook; in case of conflict, this policy governs for data security matters

---

### 7. `Annual-Compliance-Checklist.xlsx`
Excel workbook. Practical reference for key filing dates and compliance obligations.

Sheets: one sheet titled "Compliance Checklist"

Columns: Frequency, Obligation, Agency / Recipient, Deadline / Timing, Responsible Party, Notes

**Monthly obligations:**
- Texas Sales and Use Tax filing and remittance — Texas Comptroller — Due 20th of following month — Store Manager / Accountant — Required even in low-volume months
- Sales tax collected reconciliation in Xero — Internal — Month-end close — Store Manager — Tie to POS reports

**Quarterly obligations:**
- Estimated federal income tax payment (if applicable) — IRS — April 15, June 15, Sept 15, Jan 15 — Managing Member / Accountant — Consult CPA for LLC pass-through tax treatment
- Federal payroll tax deposits (Form 941) — IRS — Per Gusto deposit schedule — Gusto handles deposits; 941 filed quarterly — Confirm with Gusto
- Texas Workforce Commission (TWC) quarterly wage report — TWC — Last day of month following quarter end — Gusto / Accountant — Covers unemployment insurance (SUTA)

**Annual obligations:**
- Texas Franchise Tax and Public Information Report — Texas Comptroller — May 15 — Managing Member / Accountant — Required for all Texas LLCs; Public Information Report lists members
- Federal income tax return (Form 1065 or Schedule K-1 pass-through) — IRS — March 15 (partnership/LLC) — Accountant — Consult CPA
- W-2 distribution to employees — Employees / IRS — January 31 — Gusto — Gusto handles W-2 generation and filing
- 1099-NEC filings (consignment creators and contractors if applicable) — IRS / Recipients — January 31 — Managing Member / Accountant — Required if payments ≥$600/year to non-employee individuals
- Insurance policy renewals — Insurer — Per policy anniversary — Managing Member — General liability, property, workers' comp, business interruption
- Business license renewal — City of Austin — Per license terms — Managing Member — Confirm renewal date from acquired license
- Workers' comp audit — Insurer — Annual — Managing Member / Store Manager — Insurer may require payroll audit
- Security camera system review — Internal — Annual — Store Manager — Verify storage retention, camera coverage, access

**As-needed obligations:**
- EIN updates — IRS — As needed — Managing Member — Required if entity structure changes
- Registered Agent changes — Texas Secretary of State — As needed — Managing Member — File Form 401 (Change of Registered Agent)
- Operating Agreement amendments — Internal — As needed — All Members — Requires member consent per Operating Agreement
- New hire reporting — Texas OAG — Within 20 days of hire — Gusto / Store Manager — Texas new hire reporting requirement
- Workers' comp incident reporting — Insurer / TDI — Per policy terms — Store Manager — Required for workplace injuries

---

## File Conventions

- All deliverables in `Business Plan/05-Finance-and-Compliance/`
- Word docs: use professional formatting — cover page with document title, entity name, effective date; numbered sections; page numbers
- Excel files: freeze header rows; use consistent column formatting; use descriptive sheet names; no merged cells in data ranges
- Effective date for all documents: **June 1, 2026** (store opening date)

---

## Rules

1. Produce only the 7 deliverables listed. Do not create additional files.
2. All values must match the business context above and the cross-document dependencies. Do not invent or approximate.
3. Accounting system is Xero. Do not reference QuickBooks, FreshBooks, or any other system.
4. If a value is not available in the provided context or a dependency file, document the gap in `results.md` and make the simplest reasonable assumption consistent with a Texas LLC retail operation. Do not silently guess.
5. If a coherence conflict is detected between a dependency document and this spec, stop and document it in `results.md`. Do not silently resolve.
6. Deliverables are .docx and .xlsx only. No PDF, markdown, or other formats.
7. Update `results.md` upon completion: record all assumptions, deviations, and coherence flags.