Xero is one of the most popular accounting software programs out there. It is widely used by small businesses everywhere. If you’re a new Xero user, it is important that you learn how to make the most of this resource. In this guide to Xero accounting software, we’ll share all the information you need to get started. The following steps will allow you to manage your finances with greater ease and confidence.
1. View the Xero Dashboard Video
As a newbie to Xero accounting software, the first thing that you need to do is watch the Xero dashboard video to get an idea of how it works. It’s located at the top left corner and will provide you with valuable information about navigation.
2. Enter the Business Details
The next thing that you need to do is provide all your company details. If you are running a limited company, you’ll have to enter the registered office address and the registration number. The information you provide would be displayed on the invoices you issue clients. To enter or update the business details, you need to head over to Settings and select Organization Settings. Here is the information that you will need to provide.
Logo
Website
Trading Name
Display Name
Physical Address
Registered Address
Organization Type
Registration Number
Phone and Fax Numbers
Organization Description
3. Head to the Financial Settings
Make sure that you go to Financial Settings from Advanced Settings to provide the following information.
VAT / Sales Tax Details: The VAT period, VAT number, and VAT scheme should be filled in.
Financial Year End: To make sure that the right year-end appears on all of your reports, you must determine your financial year-end first.
4. Include Company Branding
Another great thing that you can do with Xero accounting software is that you can add your company branding. To do so, you have to go to Invoice Settings from Settings to make sure that the invoices include your logo and payment terms. By covering your payment terms, you can improve your cash flow and encourage customers to make payments on time.
5. Create the Chart of Accounts
One of the main reasons why businesses rely on Xero accounting software is that it allows them to import their chart of accounts from another accounting software. Then, it’s possible to modify the chart of accounts. An accounting service provider can help you decide the chart of accounts. Otherwise, you can add, customize, and delete the accounts based on your business goals. For changing the accounts, you have to check out the Chart of Accounts in Accounting. It would enable you to customize the chart of accounts.
6. Create the Bank Account Feed
If you have a PayPal account and credit card, you will need to create your bank account feed. You can watch the video on this to get started.
7. Reconcile Regularly
Even if you don’t have much experience with bank reconciliation, Xero makes everything super easy. Within a few minutes, you can go through the pre-matched items to make sure that all your data is updated. Since Xero would be connected directly to your bank account, it would automatically pull up transactions. In fact, it even remembers when you categorize transactions. Therefore, you can click “OK” to ensure that it sticks to the category of your choice. It’s important that you reconcile your accounts every week to ensure they remain accurate.
When you update your invoices regularly, you also benefit from a clear picture of your cash flow. With an accurate view of your cash flow, you can avoid falling behind on payments and make better decisions. You can also make use of Xero’s useful add-on apps to help you reconcile more efficiently.
8. Create the Payroll
If you have employees, you’ll need to utilize Xero to create a payroll for monitoring expenses. It would provide you with access to all your payroll costs without having to go through different spreadsheets to determine total costs. Creating the payroll is straightforward. You can visit Payroll from the Payroll Overview to get started. If transferring payroll data from a different system during the financial year, you will need to add opening balances.
9. Include Payment Services
Small businesses that use an active payment service should link it to their Xero account. Some options include GoCardless, Stripe, and PayPal. As there are plenty of payment options to choose from, you should have no trouble finding the solution that’s right for you. All you have to do to get this going once you’ve decided on a service is head to Payment Services which is located in Invoice Settings.
10. Create Payment Reminders
To ensure that all your customers stay on top of their payments, you can also create payment reminders on Xero accounting software. Getting paid on time is necessary for staying afloat. By setting up payment reminders, you can expect to get paid quickly and keep your books more accurately. You can head to Invoice Reminders by opening Invoice Settings. Only if you have the habit of regularly reconciling receipts should you set up the payment reminders. If you chase payments that customers have paid, it can hurt your reputation. To avoid this, make sure to reconcile daily.
11. Add More Users
Xero accounting software also lets you add more users. To add more users, you need to head to Users from Settings. This means that you get to add the bookkeeper, accountant, and just about any other stakeholder. Here is some of the information offered by the software.
Send Invitation to a User
Edit a User
Add a User’s Details
View Your Xero Users
12. Generate Basic Reports
To unleash the potential of Xero accounting software, you need to know how to generate basic reports. Only when you have entered the data will you be able to put these reports to good use. You can view the Profit and Loss, Balance Sheet, Aged Payables, and Aged Receivables. Visit Reports in Accounting for more options.
13. Connect Apps
Lastly, you can connect apps to the Xero accounting software. It offers a variety of add-ons and apps that you can leverage for streamlining processes and saving time. You can view the apps for performing a variety of functions such as document management and cash flow forecasting. Check out the Xero app marketplace to find out more. By connecting Xero to apps, you can get more out of the software.
Conclusion
Now that you know how to use Xero accounting software, you can get started. There is a lot you can do with this incredible tool. It’s a strong choice for many businesses. However, it is still important that you partner with a great bookkeeping service provider to help you plan ahead and make the most of your financial data.
Sound Accounts helps business owners manage their finances and put their data to work for them. We’ll stay on top of your bookkeeping so you can rest easy and have the knowledge you need to make excellent business decisions. Connect with us today to get started.
Check out our frequently asked questions below for more information about accounting software and bookkeeping.
FAQ
What does Xero accounting software do?
There is a lot that you can do with Xero accounting software. If you haven’t used it yet, you’re missing out. It is a cloud-based accounting software, designed to help small businesses manage all their finances. You can rely on it for performing bookkeeping functions such as payroll and invoicing. It can even be connected with apps and your bank accounts. You’ll have access to just about every type of information you could possibly need.
Which is better, Xero or QuickBooks?
Since Xero and QuickBooks are both extremely popular, chances are that you are wondering which
software is better. It is important you understand that these two applications are designed for different purposes. Xero is a powerful accounting software that caters to small businesses that require simple navigation and processes. On the other hand, QuickBooks is designed for businesses that have an accountant on board and prioritize scalability. Therefore, it is difficult to claim that one is better than the other. It all comes down to your requirements.
Is Xero difficult to learn?
The best thing about Xero accounting software is that it’s easy to use. Unlike most accounting software solutions, it is relatively straightforward and doesn’t require accounting expertise. This means that you should get the hang of it within a few days. Besides, Xero even has a training portal that offers courses which you can take to learn how to navigate within the program. The learning programs do not require any prior knowledge and teach you everything you need from the ground up..
How Much Does It Cost To Set Up Xero?
You can decide whether to use either the free version of Xero or the paid version. If you want more features, you will need to spend at least $13.50 a month. However, it is well worth the cost.
Do I still need a bookkeeper or bookkeeping service if I use Xero?
Although it isn’t necessary just to use Xero, you will need one to make sense of the reports and help you plan ahead. He, she, or they can manage your payroll, produce graphs, spot hidden details and issues, and make projections to ensure that you’re getting the most from your software.
