Setting up on Xero online accounting software for the first time? Are you moving to Xero from different software or new to using online software to manage your business?
Follow this checklist to make sure you’re setting up Xero correctly from the beginning.
Our online accountancy team is comprised of Xero Certified Users, we host monthly Bookkeeping Workshops and we use Xero in-house, so we have lots of experience working with clients setting up on Xero for the first time.
If you’re just getting started, this guide will show you how to use Xero and what settings you need to update to get the most out of your subscription.
1) Update organisation details
Go to: Company > Settings > Organisation details
The first thing you’ll need to do is configure Xero to your business. You need to enter your business details such as display name, legal/trading name, logo, line of business, organisational type, business registration number, and contact information.
This information automatically populates any invoices you send, so it’s important to have this set up correctly before you send anything to your clients.
2) Change/add currencies
Go to: Company > Settings > Currencies
When you’re setting up on Xero for the first time, you choose the base currency for your organisation, which cannot be changed. So, it’s important you choose the correct currency from the beginning.
If you trade in a single currency, this is all you need to do.
If you trade in multiple currencies, you will need a Premium Xero subscription which costs a little extra per month. You can send invoices, quotes and purchase orders, or receive bills and payments in over 160 currencies with a Premium subscription. Xero automatically updates the foreign exchange rates every hour from XE.com.
Some accounting firms may include a subscription to an online accounting software with their accountancy package, so be sure to check if it has multi-currency capabilities. If not, you may need to consider moving to Xero’s Premium subscription.
3) Add VAT rates
Go to: Accounting > Advanced > Tax Rates
There are default tax rates set up on Xero and these can be edited depending on the location of your organisation.
If your business is registered for VAT in Ireland, there are multiple changes you need to make to account for Irish VAT. For example, there are different implications if a business is exempt from VAT versus zero-rated (zero-rated is a method of charging VAT and in summary, it means that you don’t need to charge VAT if the business you are trading with has a VAT number – check with an accountant for more advice here). VAT needs to be amended when you’re setting up on Xero to ensure using reports is as straightforward as possible.
This is a task that only needs to be done once, so be sure that you’re set up correctly from the beginning.
We recommend that you speak to a Xero Certified User or your accountant if you need help setting up the Irish VAT rates. There are different VAT rules depending on what you are selling and to where, so you should talk to a professional if you need help.
Your accountant should talk you through the process or set it up for you, so you don’t need to worry about making mistakes.
4) Set up and connect Hubdoc
Go to: Company > Hubdoc
Hubdoc is a mobile application that is used alongside Xero to capture digital copies of receipts, invoices and bills.
The software extracts key information and uploads it to your Xero account, making manual bookkeeping tasks automated.
Hubdoc is free with each Xero subscription so you should set it up straight away and connect it to Xero.
5) Invite your accountancy team and other users
Go to: Company > Settings > Users
Give access to other users so they can view your Xero account – this is a great feature if you work in a team.
Don’t worry about accidentally changing settings or sharing sensitive information because you control what others have access to. For example, you can share Xero with your sales team so they can create quotes but not view the financials or add a Director who only wants to view the reports and not make any changes.
If you have an accountant, make sure you invite them to your Xero account. Then they can view your books and records when they’re preparing your tax returns and financial statements.
6) Connect your bank account
Go to: Accounting > Bank accounts
Connect your bank account and credit cards to Xero to easily keep track of your transactions. Get daily bank feeds, reconcile your bank accounts and view cash flow reports from Xero.
Irish banks, such as AIB, Bank of Ireland, Ulster Bank, and Permanent TSB can be connected to Xero. You can also connect payment services such as PayPal and Stripe and log into your Xero account each day to view receipts and payments.
You’ll need your Account Name, Account Type, Account Number and Currency to connect your bank with Xero. Then your bank will appear on your dashboard for quick and easy reporting and reconciliations. When you’re setting up for the first time, it can take up to 24 hours for your bank to fully sync with Xero.
Xero security features:
If you rather not connect your bank to Xero, you can download your statements as a CSV file from your bank account and import it to Xero.
But if you’re worried about Xero’s security features, check out Xero’s commitment to security here.
Set up bank rules
You can set up bank rules for easier bank reconciliation by entering information on how to treat certain transactions. This can be based on merchant name or payment amount so you can really personalise your bookkeeping requirements and save time.
For example, if your payment contains the text “Aer Lingus” or “Ryanair”, then Xero can automatically sort the contact to “Flights” and apply the purchase tax rate for “Travel” at 8.25%.
7) Set up your customers, products and branded invoices
Go to: Contacts > Customers
There is a lot you can do with the Customers section in Xero. This is one place where you should put in as much information as possible so you can get the most out of Xero.
- Enter the contact information, including email address and financial details, for each of your customers so you can assign your invoices and see exactly how much they owe you.
- Set up “Smart Lists” to categorise your contacts based on your chosen conditions. For example, clients overdue over 7 days.
- If you agreed on credit limits or discounts, you can also set them up here.
Products and services
Go to: Business > Products and services
Set up each of your products and services so you can manage your items and track your inventory. These can also be used when issuing invoices so they help keep invoices consistent.
Remember to assign product codes and product details so your invoices have up-to-date information.
Go to: Company > Settings > Invoice settings
This is where you create branded themes for documents, add payment services and auto-reminders for invoices.
- Change your invoice to suit your brand guidelines. You can also create multiple themes depending on your business.
- Set up payment services with PayPal, Stripe and/or GoCardless to allow your customers to pay online. You can also add other payment services if you have other services available.
- Write invoice reminder templates for when an invoice is 7, 14, and 21 days overdue. You can also include a link to the invoice and insert placeholders, so fields like First Name will automatically populate the email.
8) Suppliers and purchases
Go to: Contacts > Suppliers
Like setting up the customers, when you enter your suppliers’ information, you can see how much you owe them in one place.
Clicking into each individual supplier/contact will give you a chart of how much money you’ve paid over the last 12 months, activity history and any notes on the contact.
9) Reporting and accounting
Go to: Dashboard > Edit Dashboard
Used to viewing your dashboard a certain way? Customise your dashboard to only show what you need to see.
- Business bank account
- Account watchlist
- Business savings account
- Invoices owed to you
- Total cash in and out
- Bills you need to pay
- Expense claims
Go to: Accounting > Reports
Prefer seeing your balance sheet and profit and loss in a certain way? You can amend reports to reflect your needs.
Talk to your accountant if you need help customising your accounting reports and they should help you adjust the lines.
10) Enter initial accounting balances
Go to: Accounting > Advanced > Conversion balances
Conversion balances are the balances in your previous accounting system on the day you’re converting to Xero.
You need to enter the conversion date, the conversion balance and enter historical invoices and bills that make up these balances.
If you’re not sure about how to complete conversion correctly, contact your accountant or follow Xero’s support guide.
11) Integrate additional apps
Go to: Company > Settings > Connected Apps
You can connect over 800 apps with Xero for advanced accounting reports, CRM, payroll, time tracking and more. Check if the software you’re currently using integrates with Xero here.
When is the best time to change to Xero?
You can move your accounting to Xero at any stage, but it’s common to wait until the end of your financial year. However, we recommend that you start the conversion a month earlier to ensure Xero has time to update with your previous information.
If you rather not carry out the conversion yourself, you can outsource this task to a Xero Certified User within Accountant Online. We can take care of the process, so the system is ready to use and you don’t need to worry about customising the updating the conversion balances.
If you are moving to Xero from different software or if you’re setting up on Xero for the first time, our Startup and Scale-Up Accountancy Offers include a free Premium Xero subscription. As an online accountant, we’re here to support you in your transition from paper to digital and ensure that you have the right support no matter what stage your business is at.
- Outsource Xero Setup to our Xero Certified Team. If you’re setting up for the first time, we can take care of the process so the software is ready to use. We help first-time users and businesses that want to switch to Xero from different software. Talk to our Client Services Team about your needs and we’re happy to assist you.
- Join our Live Online Bookkeeping Workshop. This workshop provides training to new and existing businesses in Ireland on how to use accounting software to manage your bookkeeping online. It’s free for clients of Accountant Online or €29+VAT for non-clients.
If you want us to take care of setting up your Xero account, get in touch with our Client Services Team and we’ll talk you through our Accounting Services. We’re here to help. You can call us on +353 (0)1 905 9364 or email firstname.lastname@example.org.