Getting Started with Xero

The Xero Set up Guide

When youve created your organization in Xero youll automatically be taken through a series of steps to set yourself up. This guide explains whats required at each step and gives you a list of things you can collect up before you start to save time once you get going. Print it out as a reference or use the Help menu on each screen of the set up process for detailed assistance. Whether you're starting out with Xero or converting from an existing accounting system (even if its a spreadsheet), well help you understand which numbers to input into Xero so that you can start up where you left off with your previous system. While you can fly through the set up process by just inputting the bare minimum so you can start downloading your bank transactions or sending out invoices straight away, we suggest that you take the time to complete these steps to save coming back to fix things later. Especially if youre coming from an existing accounting system your financial reports in Xero might not be right if you dont carry across the right data. If you are unsure about what data to put into Xero or where to get it from, please ask your financial advisor. Regardless of how little or how much information you have on hand you need to complete the set up process before you can start using your organization in Xero. Where do I start the set up process? When you add a new organization in My Xero (using the Get free trial button for your first organization or the Add an organization button for subsequent organizations) you'll be taken through the Set up Guide as part of creating your organization.

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If you stop the set up process part way through, your new organization will be listed in My Xero and you can click on the organization name at any time to return to the step in the process that you were up to.

How long does it take? Honestly, anywhere from a few minutes upwards. It depends on how much data you want to bring into Xero, how readily available it is and whether or not you need assistance well help you work this out during the set up phase. You must complete the Set up Guide before you can use Xero for your day to day transactions. You can invite your accountant or financial advisor during the set up process and they can see what you've entered or complete the process for you. Can I stop part way through? As you move on to each step, what youve just completed will be saved and from any step you can exit the Set up Guide using the Save and Quit link. Next time you log in to Xero youll be taken back to the same step to carry on. You can change anything youve entered along the way nothing will be saved into Xero until youre at the last step and click Finish. If you complete the set up process without fully completing some screens, you can still get to all of this information from the Settings menu in Xero.

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The steps
1. 2. 3. 4. 5. 6. 7. 8. 9. Introduction this guide as a PDF and a couple of video tours of the set up process Organization Settings your organization name in Xero and on reports and address Financial Settings your organizations year end and sales tax/tax return settings Invoice Branding your logo, invoice address and invoice numbering sequence Invite Users allow your financial advisor to log in and help with the set up process Currencies choose if you want to use this, and which currencies youd like Tax Rates configure your own sales tax rates Chart of Accounts use Xeros default accounts or import your own Account Balances the date you want to start using Xero and the balances from your previous accounting system if you have them 10. Done commit it all and start using Xero

A checklist of things youll need

In order to fully complete each step of the set up process, you should organize these things now so that youre not scrambling when you get to that step! If you dont have this information ready now, you can just complete what you can of the set up process and once in Xero, revisit the set up screens from the Settings menu as necessary to complete or change it. Collect or decide on the following: 1. 2. The legal name of the organization to appear on financial reports. The currency, financial year end (default is 31 December which you can change) and any tax settings for filing returns for your organization. 3. A logo and contact details for your organization to appear on outgoing (Accounts Receivable) invoices and credit notes, if you use them. 4. The email address of your financial advisor or someone that you want to invite during the set up process if you need a hand. If you dont have a financial advisor, check out the Business Support section of our website for a list of advisors who are trained and ready to help you use Xero. 5. A conversion date and account balances - the date you want to start using Xero from for your day to day business, and balances for the accounts youve been using up until this date.

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Tips for choosing a conversion date

Youll start using Xero on the 1st of a month which month you choose will depend on how youre currently managing your accounts and what data you want to bring across. We suggest: The month your current tax filing period starts if you are registered to file returns, or The current month if you dont file returns.

When choosing a month to start using Xero take the following into consideration: The date you start using Xero can be different to the start of your financial year. If youve been using another system for managing your accounts up until now, each account (or category) youve been recording your accounts against will have a balance for your financial year to date. The balance for each of the accounts youre currently using is entered against each account in Xero during the set up process meaning you dont have to enter and reconcile of all your transactions back to the start of your financial year. The balances should be as at the last day of the month before the month you want to start using Xero. If you have a current accounting system, you should be able to generate a Trial Balance which will show the balances of all your accounts. Whichever month you choose, choose one that you are happy to obtain and enter past data for. Whether you go back to the beginning of your financial year, or to the beginning of the current tax filing period, youll need account balances and unpaid invoices up until the day before your Xero conversion date. If you have recorded invoices or credit notes in your current accounting system that you havent yet paid or received payment for as at your Xero conversion date, youll need to enter these as historical transactions. If you do, it is likely your Trial Balance will show a balance for Accounts Receivable or Accounts Payable accounts and when Xero see this, it will prompt you to enter the invoices/credit notes that make up these balances. Each invoice/credit notes is entered individually so that when you receive and process the payments once youve started using Xero, you can match them back to these invoices. Whether or not youve got account balances to bring into Xero youll need to enter all your existing invoices and transactions back as far as the date youve chosen to start using Xero once the set up process is complete. If cash or invoice payments have been processed through your bank account you can download these and reconcile them what youve entered into Xero depending on how far back your Xero conversion date is, make sure your bank allows you to import data back that far. If you do start with Xero several months ago, we suggest you reconcile one month at a time to save having to deal with possible large lists of statement lines. You can also choose the start of the following month as a conversion date if you want to get Xero set up prior to the month you want to start using it on a day to day basis. If you choose a conversion date that is part way through your current tax period you wont be able to use Xero to generate an accurate Sales Tax Summary report for that period because Xero wont have all the relevant transactions to calculate the tax from.

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6.

Your last tax return or other documentation to work out the tax rates you should set up in Xero so that sales tax is correctly paid, charged and recorded on all transactions you enter into Xero. If you are required to report on certain components within a sales tax rate, youll need to know what these rates are and the percentages of each one. If you have historical invoices and credit notes to enter into Xero you should make sure you set up your tax rates now, otherwise you can do this once the set up process is complete but definitely before you start using Xero on a day to day basis for entering transactions.

7.

Your Chart of Accounts or a list or an idea of categories you might want to organize your accounts by e.g. Rent, Stationery, Sales. Xero has a default Chart of Accounts (list of coded account categories) which you can use or customize. You can also import an existing Chart of Accounts from another Xero organization. Make sure you have on hand the bank account or credit card numbers for any bank accounts you want to set up in Xero. Xero also has default tax rates applied to each account but if you want to use one of your own rates, make sure youve set these up first.

8.

The data and reports youll need for entering and checking so that Xero matches what you have recorded in your current system. Youll need: a. All the invoices and credit notes that are outstanding from your previous accounting system when you convert to Xero i.e. the amount owing to you or you owe as at your conversion date. These are the items that make up your Accounts Payable and Accounts Receivable balances. Youll also need the total amount of any uncleared funds (e.g. unpresented checks) - this is essentially the difference between your actual bank account balance, and the bank account balance you have recorded in your current accounting system. b. Reports (if you have them) detailing balances as at the day before your Xero conversion date so that you can just copy the balances into Xero e.g. Trial Balance or Balance Sheet. If youre not sure how to work out your balances, you should ask your financial advisor for help. If you have balances to enter into Xero its better than you get them right at the start. c. If you dont have any reports, use the balance of any bank accounts or categories that you have.

How to complete each step

Introduction
Familiarize yourself with the set up process by watching the Getting Started video tours (you can just watch them on screen within Xero, you dont need to download anything). The videos show an example of setting up an organization in Xero that doesnt currently have an accounting system, and one that does.

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Note the brief points given for each step are intended to provide you with some pointers on how to complete each step for a typical organization. You may or may not need them depending on how complex your current accounting system is. Each step refers you to the full online help in the Xero Help Center (http://help.xero.com) where you can get very specific information for each screen youll be using which you should use if you are unsure or have a specific scenario not covered in this quick guide.

Organization Settings
Your organization's basic details. 1. 2. 3. 4. Enter your organization's display name and legal name, organization type and description. If you provide one, the postal address will appear as a footer on your customer invoice & credit note PDFs as a 'Registered Office' address. In Xero, you can access this information again to edit or complete it from Settings > General Settings > Organization Settings. View the Organization Settings help.

Financial Settings
Enter financial information used in the production of invoices and reports, especially tax settings if you need to record and file sales tax returns: 1. 2. 3. 4. 5. 6. 7. 8. Choose your currency this will display on invoices and reports. Change the financial year end if the default 31 December is not right for your organization. If you file sales tax returns, enter the tax ID or registration number that identifies you with your tax authority and provide a label for this number to appear on invoices and reports. Select how often you are required (or want) to report on your sales tax activity (1,2,3,6 monthly or annually) and using what method (cash or accrual). If you dont charge or report on sales tax you can leave these blank. Choose a time zone (this is for time stamping the audit trail of changes made to invoices and determines the date for running reports. In Xero, you can access this information again to edit or complete it from Settings > General Settings > Financial Settings. View the Financial Settings help.

Invoice Branding
You can skip this step if you dont send out invoices otherwise enter the details youd like to appear on the invoices and statements (that you send directly out of Xero) that your customers receive: 1. 2. Your organization name and contact details (especially useful if you want to use a different address than your main company address for invoices/credit notes). A logo youll need to provide an image file just follow the instructions for uploading on the Invoice Branding screen.
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3. 4. 5.

A starting point for your invoice/credit note numbering sequence if you dont want to use the Xero default. Payment terms (or other default text you want to appear on all your invoices). In Xero, you can access this information again to edit or complete it (even if you skip this step now) from Settings > General Settings > Invoice Branding. From here you can also set up multiple branding themes.

6.

View the Invoice Branding help.

Invite Users
You can skip this step if you dont want to invite anyone else to log in during the set up process. The remaining set up steps require some accounting knowledge (depending on how youre currently managing your accounts) so its a good idea to invite your financial advisor now if you need help. Its easier for them to correct what youve done (if need be!) before you complete the set up steps. 1. 2. For each person you invite, youll need just their email address and name. You should choose the Financial Advisor option when entering their details so that once the set up process is complete theyll have the necessary access rights to correct anything that might need further adjustment. 3. You can choose the option to Invite Xero Customer Care during the Set up Guide (or any time in Xero) if youd like us to log in to your organization to help with an aspect of the product youre not sure of. Your financial advisor or accountant remains your first point of contact for how you should actually do the accounting for your business. 4. In Xero, you can invite your financial advisor (if you dont invite them during the set up process) and all the other people you want to access your accounts from Settings > General Settings > Users. 5. View the Invite Users help.

Add multi-currency option

If you do business in other countries and would like to have foreign currency bank accounts or issue foreign currency invoices youll need to choose the right pricing plan now. 1. 2. 3. 4. Multi-currency is only available on the Large pricing plan. If youre setting up a trial organization youll get multi-currency by default. But if you have chosen a pricing plan that is not the Large plan, you will need to change to the Large plan now. Once you are on the Large plan you can add the currencies you require in your organization. View Multi-currency settings help.

Set up Tax Rates

In order to record sales tax on invoices and produce summary tax reports you need to enter tax rates relevant to your organization and the tax reporting requirements of your country. Xero has 3 default tax rates, all set to 0% initially, which you can update or create your own tax rates.

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1. 2.

Change the Tax on Purchases and Tax on Sales rates from 0% to the rate required. On these default rates, or rates of your own that you create, you can build up the overall rate using components if you need to record each type and amount of tax paid or charged on invoices and transactions.

3.

You can use the same tax rate on revenue or expense transactions and if the same component e.g. City Tax is used in several different tax rates, use the same name each time so that all the tax charged at this rate is reported on correctly.

4.

The names you use for tax rates are for your internal identification and reporting purposes your customers will only see 'Sales Tax' and the rate charged on the invoices and credit notes sent to them.

5. 6.

If you don't use sales tax and aren't required to report on it, just leave the defaults as 0%. In Xero, you can add more rates and edit these rates (as long as you edit them before adding any transactions) once the Set up Guide is complete from Settings > General Settings > Tax Rates.

7.

View the Tax Rates help.

Create a Chart of Accounts

Use Xeros default Chart of Accounts or import one of your own so that you have all the accounts that youre used to using set up in Xero to record (or code) your transactions against. 1. If you want to use Xeros default Chart of Accounts take a quick look to make sure all the accounts you need are included and update the default tax rates used on accounts to your own rates as required. You can make any changes necessary so it suits your organization by adding, editing (codes or account names or both) or deleting accounts. 2. You can import a Chart of Accounts as a Comma Separated Values file (CSV). There are a couple of options to import: a. Xeros default accounts as a CSV with changes youve made to it if you want to create your own this is a good place to start if you are using another accounting system and you want to recreate its Chart of Accounts. As long as you use the Xero default accounts as a basis i.e. stick to the same account types, and system accounts you can essentially replace all of Xeros accounts with your own. b. 3. A Chart of Accounts that has been exported from another Xero organization. If youre importing a Chart of Accounts we urge you to check and tidy your accounts in that system (because youll be more familiar with it than Xero) before exporting it for import into Xero (well provide guidelines for doing this). During the import youll be shown a summary of what Xero will import so youll have a chance to change your file and import it again if necessary. 4. You should include at least one bank account in your Chart of Accounts (whether you add it to the Xero default Chart of Accounts or import it) although you can proceed without one. Youll need to provide the bank account or credit card number. 5. If you have balances or transactions that you want to bring into Xero from another accounting system, its important that you make sure you have got the appropriate accounts set up now.

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This will save you having to come back and do this when youre asked for your account balances during the next step. 6. Any reports you generate from Xero use the Chart of Accounts as a basis so if you want particular accounts to display in your reports, this is another reason you might want to review and set up the Chart of Accounts now. 7. 8. In Xero, you can make changes to the Chart of Accounts youre choosing now (or import again) from Settings > Chart of Accounts. View the Chart of Accounts help or help for Importing a Chart of Accounts.

Enter your Conversion Date & Account Balances

Conversion Date: Enter the month youve chosen to start using Xero on a day to day basis. Account Balances: Enter the balances you have from your existing accounting system including your bank account balances. Depending on the Conversion Date chosen Xero will prompt you with the last day of the previous month as the date you should enter balances for. Typically youll be entering figures straight off your Trial Balance. If you dont have any balances to enter, leave the accounts balances as 0.00 and move to the final step. In Xero you do not need to journal entries to create opening balances, you simply need to enter the balances you have from your existing accounting system into the Account Balances screen. You can enter balances for previous financial years after completing the Set up Guide by entering Comparative Balances. 1. Use Add new line to add each account from your Chart of Accounts and input the account and bank account balances (as debits or credits), reconciled and as at the day before your conversion date. 2. If you have invoices or credit notes for which payment has not yet passed through your bank account these will already be included in the balances youre entering (i.e. Accounts Receivable and Accounts Payable) Xero will prompt you to enter the individual invoices/credit notes that make up these balances so that you can reconcile them later in Xero when you receive payment. If you dont have the invoices and credit notes to hand, you can leave the balances as 0.00 and complete the Conversion Balances screen in Xero after the set up process is complete. If you have a lot of historical invoice data to enter, you can choose to leave the invoice balances at 0.00 and import your invoices once the set up process is complete. 3. If you have fixed asset or accumulated depreciation balances to bring from a previous accounting system, enter these balances as at the day before your conversion date in the same way as for other balances you're bringing into Xero. Once the set up process is complete, fixed assets and depreciation can be entered into the Fixed Assets register in Xero, whether these are assets you held at the beginning of your financial year or in the time between the start of your
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financial year and conversion date to Xero (if you're not starting with Xero at the beginning of your financial year). If you have unpaid invoices for fixed assets, these assets will be automatically entered into the fixed asset register when you enter historical invoices to match your Accounts Payable balance entered as long as you choose a fixed asset account when entering these invoices. 4. If you have a balance for unpresented checks, add a current liability account called Unpresented Checks. Enter the amount of the unpresented checks into the new liability account. As each check is presented in your bank account and is brought into Xero as a bank statement transaction, you can create a Spend money transaction that is coded back to the Unpresented Checks liability account. 5. Xero only has one account for sales tax. If you have used more than one sales tax account in your current Chart of Accounts, add these balances together and enter this as the starting balance into Xeros account Sales Tax. 6. 7. 8. If your debits and credits dont match, the difference will be recorded as an historical adjustment which your financial advisor can correct during the set up process or later. If all you have is a bank account balance, enter this and leave the other side as an historical adjustment for your financial advisor to redistribute later. If you want to use the multi-currency option in Xero and have outstanding invoices or a bank balance in other currencies you can enter these balances in their original currency. Make sure you have the exchange rate at which these balances were arrived at on your conversion date as youll need to enter this when you enter your foreign currency balances. 9. In Xero, you can get to this information again to update your conversion date or account balances from Settings > General Settings > Conversion Balances. 10. View the Conversion Date and Conversion Balances help (enter Conversion Balances for foreign currency accounts), or Import invoices help

Outstanding (historical) Invoices: If no balance was entered for the Accounts Receivable or Accounts Payable accounts, you wont be asked to enter outstanding invoices or credit notes and you can move onto the final step. If you entered a balance against Accounts Receivable and/or Accounts Payable, youll be prompted to enter the individual invoices/credit notes that make up these balances. These are the invoices/credit notes that are currently unpaid with an invoice/credit note date before your conversion date NOT those with a date after your conversion date which youll need to enter into Xero after you have completed the set up process. 1. 2. Enter each invoice/credit note that makes up the Accounts Receivable or Accounts Payable account balance entered. Keep the invoice/credit note number, account(s) and tax rate(s) the same as when it was entered into your previous accounting system. Xero will default the invoice/credit note date to the day before the conversion date you've chosen and you should leave it at this. You can change the date as long as it remains before the conversion date. Enter the outstanding
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amount as at the date you are converting to Xero (this might not be the original invoice/credit note amount if the invoice/credit has already been partly paid). 3. Once in Xero youll see these invoices and credit notes listed on the Awaiting Payment tab in Accounts Receivable or Accounts Payable where they can be processed when payments are received or made. 4. 5. In Xero you will only be prompted to edit these historical items if you make a change to your conversion date or balances. View the Add Accounts Receivable Invoice help, Add Accounts Receivable Credit Notes help, Add Accounts Payable Invoice help or Add Accounts Payable Credit Notes help.

Done!
Before you give your set up information the big tick you have a chance to go back and review and change anything youve entered and its not too late to invite your financial advisor in to take a look at what youve done. Once you click Finish, Xero will create all the necessary journals behind the scenes and youll be ready to start using Xero. If you have a Trial Balance from your current accounting system its a good idea to go straight to Xeros Report menu to generate a Trial Balance Xeros version should match the one you already have. If you need to make any changes to the information you added during the set up process you can access the same screens again from the Settings menu. NOTE: your accounts are automatically locked as at your conversion date so that your set up data cant be inadvertently changed. If you do need to change it, only a user that has Financial Advisor permissions (access rights) can do this. You can access your own user information to change your permissions to this if necessary, from Settings > General Settings > Users. What next? Now you are ready to start using Xero on a regular basis to record and report on normal business transactions. There is full online help and tips on each screen in Xero if you need them. Its really up to you what you do next. How about: Set up your bank accounts (if you havent already). Import your online bank statements from the date you started using Xero and reconcile them to transactions already created or create them as you go. If your conversion date is a while ago, we recommend you download your transactions month by month so theyre easier to keep track of. Set up an automatic bank feed or manually import bank statements to reconcile to transactions you enter in Xero - once your bank account is added, Xero will tell you if a bank feed is available. Add invoices, transactions and expense claims. Set up repeating invoices for those invoices you regularly send or receive. Import Contacts or add to Contacts the people you regularly transact with. Set up tracking categories (cost centers). Create inventory items for things you regularly invoice or get invoiced for.
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Create a budget. Run reports over your data. Use My Xero to change your password, add another organization or manage your billing plans.

Your Dashboard is the first thing youll see and it includes an introductory tour of the dashboard and Xero features view the Dashboard help. Help At any time on any screen in Xero you can get help for that screen from the Help menu. All the screen help and more is also available on its own searchable website http://help.xero.com you dont even need to be logged into Xero to have access to this. In Xero, search the Help Center by entering keywords in 'What would you like help with?' or email us at any time on support@xero.com

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