This guide follows from Part 1 - Beginner’s Guide to Using Xero.
Follow these steps to now get started on Xero.
Getting Access to Xero
- Go to Xero.com and click the “Free Trial” button or you can follow the free trial link here
- Fill in your details for your 30 day free trial. Usually what happens is that your business details are allowed in the 30 day free trial but after that period, you’ll still be able to log in and use the Demo Company and can play around with Xero’s features.
- If you’re happy after reading the terms, press the “Get Started” button.
- Activate your account by following the prompts
- Choose to start a free trial or purchase a subscription (you can just choose the free trial and if you decide you like it, can purchase it later)
- Click the “Next” green button which will take you to the Organisation Settings - this is where you’ll enter the details of your business.
Setting up your Business Details in Xero
Basic Details - Click on the each of the blank spots to put in your details. You’ll need to put in your business name (in display name), legal/trading name, organisation type from the dropdown, the type of business (under What is Your Line of Business), ABN and address
Financial settings - add in your financial year end, for most businesses this is 30 June, then choose the tax options for your area, finally, put in your time zone.
Invoice settings - this sets up how your invoice will look. You can do this now, or leave it to a later stage. If doing it now, just follow the instructions.
Invite Users - only if you want other people to access your Xero files e.g. an accountant, bookkeeper etc.. go to your user dashboard and click “Invite a User” button, customise their invitation and send it off. Once done, you’ll now progress to setting up your chart of accounts.
Chart of Accounts - if you don’t know what a chart of accounts is, I’ve made an explanation of a chart of accounts. Xero has a standard chart of account that you can use as default, but you can always expand (add more accounts) or reduce it (take accounts out) as you see fit. So select the default Xero chart of accounts to use, or if you have your own chart of accounts set up, you can import that. Details for importing your own chart of accounts can be found in Step 2B - Converting to Xero from Another Accounting System.
Check your conversion balances - Don’t know what a conversion balance is? Then click on the link. Access your conversion balance by clicking on Settings > General Settings > Organisation > Conversion Balances. Click the conversion date button and enter in your conversion date, click on the “show all accounts” link and enter in the conversion balances. Then click on the box that says “Lock balances as at…” then click the green “save” button.
Accounts Receivable / Accounts Payable Balance - if you entered in an amount here for the conversion balances, you’ll need to add in your historical invoices, purchases invoices and credit notes. Historical invoices/bills are just things that happened prior to your conversion date in Xero and that still haven’t been paid to you or you haven’t yet paid out. To add in your historical invoices/bills/credit notes, all you have to do is click on the “Add Bill”, “Add Invoice” or “Add Credit note” button and fill out the details (like in the images below). Once it’s all done, you’ll click next and your conversion balances are filled!
Setting up your bank account
- Go to Settings > General Settings > Organisation > Chart of Accounts
- Click on “Add Bank Account” at top left and select “Bank Account”
- Put in your business bank name in “Your Bank” input area.
- Click “Account Name” and enter your business bank account name. Easiest way to do this without muddling all your accounts is to do: c2a x1234, c2a x3354 this means I have 2 accounts both in the business name: c2a and the first ends in 1234 and the second ends in 3354.
- Click “Code” and enter an account code. This will appear on your chart of accounts. Usually Xero’s default bank accounts start with 090, so perhaps, use codes like 091, 092, 093 etc… - you can always go to the chart of accounts to see what codes are available.
- Fill in other details requested on Xero e.g. account number.
- Choose what currency you’re going to be mainly dealing in.
- Save and more on. If you have a credit card and/or use paypal, you follow the next steps. Otherwise, scroll below to tax rates and you’ll nearly done.
- For credit card, go to Settings > General Settings > Organisation > Chart of Accounts and click on “+ Add bank account”, click on credit card. A form will appear and you enter in your details.
- For paypal, go to Settings > General Settings > Organisation > Chart of Accounts and click on “+ Add bank account”, click on paypal. A form will appear and you enter in your details, to enable automatic importing of data from paypal, click on the check box that says “Import data from Paypal”. Otherwise, fill in all other details and save.
- You need to add in the tax rates needed so that when you put in a transaction, you can allocate it to the right tax. So for example, if you have a piece of fresh rump steak, you’d code it to GST Free with a rate of 0%, if you purchased prepackaged cakes, you’d apply a GST tax rate of 10% to it. Xero usually comes default with the tax rates you need so you don’t really need to do anything, but to add a tax rate:
- Go to Settings > General Settings > Tax Rates > Click “+ New Tax Rate”
- Fill in the details for the tax rate.
That’s a wrap. You’ve survived! You’ve set up Xero to be ready to start inputting invoices and making purchases.
Move on to the next stage, you amazing Xero’er you!
Where to next?
Well there are more things you can do with settings up such as the below dot points (click on the link to go to that tutorial), or now you can get started on Part 3 - Creating a Contact List in Xero.