Payroll

This standard governs payroll in the accounting system of All About Pawz, LLC: what the payroll run computes, what it deliberately does not compute, and the procedures that close those gaps. Payroll is the least forgiving workflow in accounting: the amounts must be exact, the timing is set by law, and the records are legal documents. The Payroll Administrator runs payroll and maintains employee pay profiles; the Accounting Manager approves each run and posts its journal entry; managers approve their teams' timesheets. Payroll records are confidential and are handled under the confidentiality control below. Payroll tax records are kept under Taxes and the Marketplace Facilitator Tax Policy does not govern them; employer payroll obligations are the Company's own.

What the payroll run does: and does not do

The run-payroll action computes a pay run from approved timesheets: each employee's gross pay from their time entries multiplied by their profile rate, plus any commissions moved to paid state for the period. It writes the run record, the per-employee run items, and the deductions. The run record carries the period, the totals (gross, net, tax withheld), the run's state, and the approval record.

Two limitations are stated in the run procedure itself, and every step below is built around them

1. No withholding computation. Tax withheld is always zero; the run does not compute federal, state, or local withholding. Net pay shall therefore be computed outside the Platform: by the external payroll provider or from accountant-prepared figures: and the Platform records the run summary. The run's net figure shall never be presented or paid as actual net pay: with zero withholding, it overstates what the employee receives and leaves the tax liability unfunded.
2. No books posting. The run writes operational records and posts no journal entry. Every payroll run therefore requires a manual journal entry: wage expense debited, payroll liabilities credited (taxes payable, benefits payable), and cash credited for net pay. Without it, labor cost never reaches the Profit & Loss and the business appears more profitable than it is. This is the single most important payroll procedure on the Platform today.

Until both limitations are resolved, payroll runs gross-to-net through the external payroll provider, and the Platform records the run summary and the real withheld figures once the provider's computation replaces the run's placeholders.

The pay calendar

1. Payroll runs on a calendar the business sets: weekly, biweekly, or semimonthly: and the calendar is a commitment. Employees plan their lives around payday; moving it casually destroys trust faster than any pay error.
2. Publish the pay calendar for the full year: pay period end dates, run dates, pay dates, and the holiday adjustments. Where a pay date falls on a bank holiday, the pay date moves earlier, never later, and the moved date is communicated before the period starts, not after.
3. Each run's manual journal entry posts in the period the wages were earned, not the period they were paid. A run whose pay date falls in the following month still accrues the earned portion to the current month at close; otherwise a month containing three paydays appears heavily overstaffed and the next appears impossibly lean.

New hires and terminations

New hires.

1. Complete the new hire's profile before their first run: rate, pay type, start date, withholding elections, and deduction enrolments.
2. Build the profile on the start date, not the first pay date. A hire who works before their profile exists is paid through a correction run: and a correction run for a first paycheck is the worst possible introduction to the Company's payroll.

Terminations.

1. Handle terminations the same day: final timesheet approved, final pay computed under the state's final-paycheck rules: some states require payment the same day or the next day, and the Payroll Administrator confirms the rule that applies: deductions stopped, and system access revoked under Admin Users.
2. An employee who has left and remains active in payroll is a ghost-paycheck risk; a final paycheck computed late is a compliance violation. Neither is an edge case; both are handled in the termination checklist, not from memory.

The run procedure

Before the run:

1. Confirm all timesheets for the period are approved. Unapproved time does not compute; the Payroll Administrator pursues the approving managers and does not run without it.
2. Verify the commission records moved to paid state for the period, and reconcile them against the run items before the run is finalized: a commission moved to paid but not in the run, or in the run but not moved, is a missed payment or a double payment waiting to happen.
3. Confirm employee profiles are current. A rate change effective this period shall be entered before the run, not after; a rate change entered after the run means a correction run.

During the run:

1. Execute the run for the pay period.
2. Verify the run totals against a spot check: select three employees and compute gross by hand from their timesheets. Where the spot check fails, the run fails; run items are never adjusted by hand to make them agree.

After the run:

1. Post the manual journal entry: wage expense, payroll liabilities, cash: because the run does not post one.
2. Compute actual withholding through the external provider and record the real withheld figures against the run, replacing the run's zero-withholding placeholders.
3. Release pay only after the Accounting Manager has approved the run and the journal entry is posted.

Deductions and tax forms

1. The deductions record carries each employee's deductions: benefits, garnishments, retirement: with type, amount, and effective dates. A deduction without an end date runs forever; the Payroll Administrator reviews active deductions quarterly, because the most common payroll error after wrong rates is a deduction that should have stopped.
2. Tax form records track what has been issued and filed: W-2s, 1099s, and quarterly filings. The filing calendar is set by law, not by operations: a missed filing deadline is a penalty, not an inconvenience. The filing calendar is kept separate from the pay calendar and reviewed monthly, under Taxes.

Controls

• Payroll confidentiality. Payroll records: rates, gross and net pay, deductions, garnishments, and tax forms: are confidential. Access is limited to the Payroll Administrator, the Accounting Manager, and the employee's own record for the employee concerned. Payroll figures are never recorded in a shared document, a general memo, or any record outside the payroll system, and are never disclosed to another employee.
• Separation of duties: the person who approves timesheets does not run payroll for those timesheets, and the person who runs payroll does not reconcile the bank account the pay leaves, under Banking.
• A completed run is a legal record and is never edited. Corrections are made by a new correction run; the original run and the correction together are the record.
• Banking credentials for payroll disbursement are never shared and never recorded in a payroll record or any other document.
• Where a deduction that should have stopped is found: stop it, compute the total over-withheld, and refund or credit the employee: documented on the record, never netted silently against the next run.

Records created and where they are kept

Payroll run records and run items, pay period records, deduction records, commission records, and payroll tax form records are kept in the accounting system, under the confidentiality control above, and retained under the Regulatory Record Retention Policy.

Escalation

A wrong payment, a missed final-paycheck deadline, a garnishment question, or any legal process touching payroll: a levy, a wage claim, a subpoena: goes to legal@aapawz.com on the day it arises. Payroll system failures go to support@aapawz.com. Employees' questions about their own pay go to the Payroll Administrator, who answers from the run record.

Review cadence

The Payroll Administrator reviews active deductions quarterly and the filing calendar monthly. The Accounting Manager verifies, at each month-end close, that every payroll run in the period has a matching journal entry: checking by run identifier, not by total, because a total can agree while one run is missing and another is doubled. This standard is reviewed annually.