Who approves payroll when the owner is on it
Why nobody can approve a pay run that pays themselves, what that means for a small agency whose owner draws a salary, and practical ways to staff approval.
By Achekam · · 5 min read · For Recruitment businesses in South Africa, Nigeria, Kenya
Many recruitment agencies start as one founder, a phone and a list of clients. The founder places candidates, signs the temps' contracts, and at the end of the month runs payroll for everyone, including themselves. In a spreadsheet nobody notices. In Achekam, the founder will find that the run that includes their own salary cannot be approved by them.
That is deliberate, and it is worth understanding before payday rather than on it. This article explains the rule, why it pushes even a small agency to have two people in payroll, and the practical ways owner-managed agencies in South Africa, Nigeria and Kenya can arrange it.
Nobody approves a run that pays themselves
Achekam's payroll runs under South African, Nigerian or Kenyan rules, chosen when the business sets itself up as an employer. Whatever the country, three approval rules apply to every pay run:
- The run is approved by someone other than the person who prepared it.
- Nobody can approve a run in which they are paid.
- Once approved, a run is never recalculated.
For an owner on the payroll, the second rule is the one that bites. If the founder's salary sits in the same run as the consultants and temps, the founder cannot be the approver, even if someone else prepared it.
Why that needs two payroll people at least
Put the first two rules together and a one-person payroll is impossible. One person prepares; a different person approves; and the approver must not be paid in that run. Achekam's own note on the rule is plain: a business needs at least two people in payroll roles.
The reason is the oldest one in internal control. Payroll is cash leaving the business in amounts that one person could inflate, duplicate or redirect, and the person who benefits is the person least able to check it fairly. Splitting the steps between people is called segregation of duties, and AccountingTools explains in its definition of segregation of duties how assigning the steps of a process to different people stops anyone from both committing and concealing an error or a theft.
For an agency the point is sharper than for most businesses. Temp payroll is large, frequent and full of variable hours, and the owner who approves their own pay also sets the tone for everyone else's.
Options for a small agency
There is no single right arrangement. These are the common ones, roughly from smallest to largest agency:
Separate the runs. Pay runs can be weekly, fortnightly or monthly, so temps are often paid on a weekly run and the agency's own staff on a monthly one. An office manager who is paid monthly is not paid in the weekly temp run and can approve it. The monthly run, which pays both the owner and the office manager, still needs an approver who is in neither.
Bring in your accountant. A business can appoint its accounting firm by the firm's Achekam address or firm code, in roles that include payroll provider. A person at the firm who is not on your payroll can approve the monthly run that includes the owner. How that works in practice is set out in letting a payroll bureau run temp payroll.
A co-director or partner not on the payroll. In some agencies one shareholder takes dividends or drawings rather than a salary. That person is not paid in the run and can approve it, provided they genuinely review it.
Ask whether the owner belongs on payroll at all. If you trade as a sole proprietor, what you take out is usually drawings, not salary, and does not belong in a payroll run. If the agency is a company, a director's salary is an employment cost and does. Your accountant should confirm which applies before you set the owner up as an employee.
| Run | Who prepares | Who can approve |
|---|---|---|
| Weekly temps | Payroll administrator | Office manager or owner, if neither is in the run |
| Monthly staff, owner included | Payroll administrator | Someone paid in neither run, such as your accountant |
Approved runs are never recalculated
The third rule matters for owners in a particular way. Founders often adjust their own pay late: a higher draw in a good month, a smaller one when a client pays late. Once a run is approved, those changes cannot be made by reworking it. There is also no separate correction run; a correction goes in as a variable input on a later regular run.
So decide the owner's figure before the run goes for approval, and keep a short note of how it was set. A reviewer who sees the owner's pay change month to month without explanation will, rightly, ask why.
What the wages journal and payslips show afterwards
When a run is approved, Achekam posts it to the business's own ledger as a wages journal, with the amounts owed to the tax authority and to funds shown as liabilities. The owner's pay sits in that journal like everyone else's, which is exactly what an auditor or a lender reading your management accounts expects to see.
Payslips are PDFs carrying the business's logo and details. They can be downloaded or e-mailed one per person, and an employer setting sends them automatically when a run is approved, with a delivery log. The owner receives a payslip like any employee. Keep it: banks and landlords ask owner-managers for payslips, and a payslip from an approved run with a second person's approval behind it is a better document than one the owner produced alone.
Setting it up before the next payday
A short checklist for an owner-managed agency:
- Decide whether the owner is an employee or takes drawings, with your accountant.
- List who prepares and who approves each run, and confirm the approver is not paid in it.
- If nobody inside qualifies for the monthly run, appoint your accounting firm as payroll provider.
- Agree the owner's figure in writing before each run is prepared.
- Check the wages journal after the first approved run with the owner in it.
Agencies that pay temps weekly and staff monthly will find the scheduling side in weekly temps and monthly staff in one payroll. Settle the approval roles first; the rest of payroll is easier once the question of who signs off is answered.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
