Struggling to get your head around Xero? You’re not alone. This cloud-based accounting software has become a favourite amongst Australian small businesses, and for good reason. Let’s sort through the basics to get you up and running with confidence.
Getting Started with Xero
Before diving into the nitty-gritty, you’ll need to create an account. Head to Xero’s website, sign up for a subscription that suits your business needs, and follow the prompts to set up your organisation. Be sure to have your ABN and business details handy.
Once you’re in, take a moment to customise your dashboard. This is your command centre, so arrange it to display the financial information most relevant to your day-to-day operations.
Setting Up Your Chart of Accounts
Your chart of accounts is the backbone of your financial system. Xero comes with a standard Australian chart of accounts, but you’ll want to tailor it to your specific industry.
To access this:
1. Navigate to Accounting > Chart of Accounts
2. Review the existing accounts
3. Add, edit or archive accounts as needed
Remember that a well-organised chart of accounts makes tax time significantly less stressful!
Connecting Your Bank Accounts
One of Xero’s most brilliant features is automatic bank feeds. To set this up:
1. Go to Accounting > Bank Accounts
2. Click “Add Bank Account”
3. Select your financial institution
4. Follow the secure authentication process
Once connected, your transactions will flow into Xero daily, ready for reconciliation. No more manual data entry—how’s that for a time-saver?
Reconciling Transactions
Reconciliation doesn’t need to be a monthly headache anymore. With Xero:
1. Go to Accounting > Bank Transactions
2. Review imported transactions
3. Match them to existing invoices or bills
4. Create new transactions as needed
5. Click “OK” when matched correctly
Aim to reconcile frequently—daily or weekly is ideal—rather than facing a mountain of transactions at month-end.
Read more: How to Reconcile in Xero
Creating and Sending Invoices
To bill your clients:
1. Navigate to Business > Invoices
2. Click “New Invoice”
3. Select your customer (or add a new one)
4. Add line items, prices and GST (if applicable)
5. Set payment terms
6. Add your personalised message
7. Send directly through Xero
Pro tip: Set up invoice reminders to automatically chase outstanding payments. Your cash flow will thank you!
Managing BAS and GST
Come BAS time, Xero has your back:
1. Go to Accounting > Reports > GST
2. Select your reporting period
3. Review the automatically generated GST summary
4. Make any necessary adjustments
5. Export the report for your records or accountant
Many accountants can access your Xero file directly, making tax compliance a collaborative and smoother process.
Staying on Top of Payroll
If you have staff, Xero’s payroll function helps you stay compliant with Australian regulations:
1. Set up employees under Payroll > Employees
2. Configure pay items, superannuation and leave entitlements
3. Create pay runs as needed
4. Submit STP reporting directly through Xero
Remember that Single Touch Payroll (STP) reporting is mandatory for all Australian employers, and Xero makes this compliance straightforward.
Making the Most of Reports
Don’t let all that beautiful data go to waste! Xero offers powerful reporting capabilities:
1. Profit and Loss reports show your bottom line
2. Balance Sheet reports reveal your financial position
3. Aged Receivables help identify overdue invoices
4. Budget Variance reports help you stay on track financially
Schedule these reports to arrive in your inbox regularly to stay informed without having to remember to run them.
At Griffiths Advisory, we’re dedicated to simplifying your financial journey, much like navigating Xero with ease. Our expert team is here to assist you with tailored advice and support, ensuring you maximise the benefits of this powerful tool. Contact us today to discover how we can enhance your business’s financial health and efficiency.
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Phil has been the Managing Director of Griffiths Advisory for 29 years, combining his expertise in taxation, business advisory, superannuation, negative gearing, and wealth creation. He also loves an active lifestyle, indulging in surfing, cycling, snowboarding, and spending quality time with his wife and two children.
