Financial Controls & Payment Policy

Document ID: PLCY-FIN-001
Effective Date: December 22, 2025
Last Review: December 22, 2025
Owner: Hop And Haul Team

CONFIDENTIAL

This document is CONFIDENTIAL and for internal use only. Do not distribute outside the organization.

1. Purpose

This document defines the financial controls and payment policies for Hop And Haul to ensure IRS compliance, prevent wage misclassification, and maintain clear audit trails for all transport-related financial transactions.

2. Payment Method Hierarchy

2.1 Approved Methods

Priority	Method	Recommendation
Primary	Internal Payroll Reconciliation	Recommended
Secondary	Payment Rail via Stripe	Conditional
Prohibited	Driver-to-Driver Direct	Never

3. Option A: Internal Payroll Reconciliation (Recommended)

3.1 How It Works

Step	Actor	Action
1	System	Calculates transport credit/debit amounts
2	System	Generates reconciliation entry
3	Payroll	Processes credit to pickup driver
4	Payroll	Processes debit from passenger driver
5	System	Logs settlement completion

3.2 Financial Flow

[Ride Completed]
       ↓
[Transport Value Calculated]
       ↓
[Reconciliation Record Created]
       ↓
[Exported to Payroll System]
       ↓
[Pickup Driver: +$X (earnings)]
[Passenger Driver: -$X (pre-tax deduction or post-tax debit)]
       ↓
[Settlement Logged]

3.3 Advantages

Benefit	Description
Cleanest legally	Stays within employment relationship
No wage misclassification	Treated as company business
DOT-safe	Operationally documented
IRS-safe	Normal payroll treatment
No driver negotiation	Fixed/formula-based amounts

3.4 Rate Structure

Component	Calculation
Base transport rate	$X per mile (company-set)
Time component	$Y per minute delay (optional)
No surge pricing	Fixed rates only
No tips	Not permitted
No negotiation	Driver cannot set price

3.5 Payroll Integration

Requirement	Implementation
Pay code	Dedicated transport credit/debit codes
Pay period	Settled in regular pay cycle
Tax treatment	Subject to standard withholding
Documentation	Line item on pay stub

4. Option B: Payment Rail via Stripe (Conditional)

4.1 Acceptability Conditions

This method is only acceptable if ALL conditions are met:

Condition	Requirement
No driver-to-driver payments	Company processes all transactions
Company is merchant of record	Stripe account owned by company
Labeled correctly	"Expense reimbursement" or "Transport allowance"
Proper tax reporting	1099/W-2 issued appropriately
No tip structures	Fixed amounts only
No per-ride negotiation	Company-set rates

4.2 How It Works (If Approved)

Step	Actor	Action
1	System	Calculates transport amounts
2	Company	Initiates payment via Stripe
3	Stripe	Processes to driver bank account
4	Company	Processes debit from passenger
5	System	Logs all transactions

4.3 Stripe Configuration Requirements

Setting	Requirement
Account type	Company business account
Connected accounts	Not driver Stripe accounts
Transfer type	Standard payout
Payout timing	Per company schedule
Fee handling	Company absorbs fees

4.4 Tax Implications

Scenario	Tax Document
Under $600/year	No 1099 required
$600+/year	1099-NEC required
W-2 employees	Add to gross wages

5. Prohibited Practices

5.1 Never Permitted

Practice	Prohibition Reason
Driver-to-driver cash	Untraceable, liability risk
Driver-to-driver Venmo/PayPal	No company oversight
Per-ride price negotiation	Rideshare classification risk
Tip-like structures	Variable compensation issues
Surge pricing	Market-rate implications
Rating-based bonuses	Performance pay complexity

5.2 Classification Risk Warning

If drivers negotiate price → rideshare classification risk

Signs of misclassification:

Drivers set own rates
Market-based pricing
Independent contractor characteristics
Loss of employment protections

6. Rate Governance

6.1 Rate Setting Authority

Role	Authority
Operations Leadership	Approve rate changes
Finance	Review for tax compliance
Legal	Review for classification risk
HR	Review for labor law compliance

6.2 Rate Change Process

Step	Action	Approver
1	Rate change proposed	Operations
2	Financial impact assessed	Finance
3	Classification review	Legal
4	Labor compliance check	HR
5	Approval granted	Operations Leadership
6	System updated	IT
7	Drivers notified	Communications

6.3 Rate Transparency

All drivers see same rates
Rates published in driver app
No secret or negotiated rates
Rate changes announced in advance

7. Transaction Audit Trail

7.1 Required Log Fields

Field	Description
transaction_id	Unique identifier
ride_id	Associated ride
payer_driver_id	Tokenized passenger driver
payee_driver_id	Tokenized pickup driver
amount	Dollar value
calculation_basis	Rate * distance/time
settlement_method	Payroll or Stripe
settlement_status	Pending/completed/failed
settlement_timestamp	When settled
pay_period	Payroll period (if applicable)

7.2 Reconciliation Records

{
  "ride_id": "[uuid]",
  "ride_completed_at": "ISO8601",
  "distance_miles": 45.2,
  "duration_minutes": 52,
  "base_rate_per_mile": 0.35,
  "time_rate_per_minute": 0.10,
  "calculated_amount": 21.02,
  "pickup_driver_credit": 21.02,
  "passenger_driver_debit": 21.02,
  "settlement_method": "payroll",
  "pay_period": "2025-01-15",
  "settlement_status": "completed",
  "payroll_confirmation": "[ref]"
}

8. Dispute Resolution

8.1 Dispute Types

Type	Resolution Path
Amount calculation	System recalculation, adjustment
Ride not completed	Operations review, void transaction
Duplicate charge	System audit, refund
Wrong driver credited	Payroll adjustment

8.2 Dispute Process

Step	Timeline	Action
1	Immediate	Driver reports dispute via app
2	24 hours	Operations reviews transaction
3	48 hours	Decision communicated to driver
4	Next pay period	Adjustment processed
5	Ongoing	Dispute logged for audit

8.3 Dispute Logging

All disputes logged with:

Original transaction details
Dispute reason
Investigation notes
Resolution decision
Adjustment details (if any)

9. Reporting & Compliance

9.1 Financial Reports

Report	Frequency	Audience
Transaction summary	Weekly	Operations
Settlement reconciliation	Per pay period	Finance
Tax reporting preparation	Quarterly	Finance
Audit trail export	On demand	Auditors

9.2 Year-End Requirements

Task	Timeline	Owner
Total payments calculated	January 15	Finance
1099s generated (if applicable)	January 20	Finance
W-2 adjustments finalized	January 25	Payroll
Tax documents distributed	January 31	Payroll

10. Document Control

Version	Date	Author	Changes
1.0	[DATE]	[NAME]	Initial release

Financial Controls & Payment Policy ​

1. Purpose ​

2. Payment Method Hierarchy ​

2.1 Approved Methods ​

3. Option A: Internal Payroll Reconciliation (Recommended) ​

3.1 How It Works ​

3.2 Financial Flow ​

3.3 Advantages ​

3.4 Rate Structure ​

3.5 Payroll Integration ​

4. Option B: Payment Rail via Stripe (Conditional) ​

4.1 Acceptability Conditions ​

4.2 How It Works (If Approved) ​

4.3 Stripe Configuration Requirements ​

4.4 Tax Implications ​

5. Prohibited Practices ​

5.1 Never Permitted ​

5.2 Classification Risk Warning ​

6. Rate Governance ​

6.1 Rate Setting Authority ​

6.2 Rate Change Process ​

6.3 Rate Transparency ​

7. Transaction Audit Trail ​

7.1 Required Log Fields ​

7.2 Reconciliation Records ​

8. Dispute Resolution ​

8.1 Dispute Types ​

8.2 Dispute Process ​

8.3 Dispute Logging ​

9. Reporting & Compliance ​

9.1 Financial Reports ​

9.2 Year-End Requirements ​

10. Document Control ​