To set up Xero properly, you need more than a new account and a bank connection. Your Chart of Accounts, opening balances, bank feeds, payroll, invoice settings, tracking and existing financial data should all reflect how your business actually operates.
A well-planned setup makes bookkeeping easier and gives you more useful financial information from the start. This guide explains the main steps Australian small businesses should consider when setting up Xero.
Quick summary
- Set up your organisation and financial settings first.
- Build or customise your Chart of Accounts around your business.
- Enter accurate opening balances if the business is already trading.
- Connect your business bank accounts and bank feeds.
- Configure payroll correctly if you employ staff.
- Set up branded invoices and payment settings.
- Use tracking categories where they will improve reporting.
- Carefully migrate existing accounting data if moving from another system.
What should you set up in Xero first?
Start with the foundations of your accounting file before worrying about day-to-day transactions.
Your organisation details, financial settings and accounts affect how information is recorded and reported later. Taking time to get these settings right can reduce the need to clean up your accounts after months of trading.
The exact setup will differ between businesses. A consulting firm, construction company and retailer may all use Xero, but the accounts and reporting structure each business needs can be very different.
1. Set up your Chart of Accounts
Your Chart of Accounts determines how transactions are categorised in Xero. It typically separates items such as revenue, expenses, assets, liabilities and equity into accounts that can then be used in your financial reports.
Xero provides a starting structure, but the accounts can be customised to suit your business.
For example, a generic sales account may be enough for one business. Another business may want separate revenue accounts for different services so management can see which parts of the business are generating income.
The aim is not to create as many accounts as possible. Your Chart of Accounts should provide useful information without making bookkeeping unnecessarily complicated.
If you want the accounting structure configured around your business, our Xero setup services in Perth include a custom Chart of Accounts as part of eligible setup and migration packages.
2. Enter the correct opening balances
If you are setting up Xero for an existing business, your accounting file needs an accurate starting point.
Opening balances can include amounts such as:
- business bank balances
- outstanding customer invoices
- unpaid supplier bills
- business loans
- assets and liabilities
- GST and tax balances
- equity balances.
This is one of the main differences between starting Xero for a brand-new business and migrating an existing business into Xero.
Incorrect opening balances can flow through to later reports, which is why existing accounting records should be reviewed carefully before they are transferred.
3. Connect your bank accounts and bank feeds
Bank feeds allow supported bank transactions to flow into Xero so they can be reviewed and reconciled against your accounting records.
Rather than manually entering every transaction from a bank statement, connecting the relevant business accounts can make ongoing bookkeeping more efficient.
When setting up Xero, check that you have included every account that forms part of the business records, such as:
- operating accounts
- savings accounts
- business credit cards
- loan accounts where relevant
- payment accounts used by the business.
You should also make sure the account in Xero corresponds to the correct real-world bank account before transactions begin flowing through.
4. Configure payroll if you employ staff
Australian employers also need to consider payroll when setting up Xero.
Depending on your business and Xero plan, payroll setup can involve employee information, pay rates, pay calendars, leave settings, tax details, superannuation and Single Touch Payroll reporting.
This is an area where correct setup matters. Payroll data is not simply an internal record. Australian employers use Single Touch Payroll to report relevant payroll information to the ATO.
If payroll is part of your Xero implementation, check the configuration before processing your first live pay run.
5. Set up your invoice template
Your Xero setup should also reflect how customers interact with your business.
A branded invoice template can include your business details and provide a consistent format for invoices issued through Xero.
Review details such as:
- business name and contact information
- ABN details where relevant
- logo and branding
- payment terms
- bank or payment details
- standard invoice wording.
Setting this up at the beginning helps avoid repeatedly correcting invoice details after you start using the system.
6. Decide whether you need tracking categories
Tracking categories can be useful when you want to understand the performance of different areas within the same Xero organisation.
For example, a business operating from several locations may want to compare each location. Another business might want to report on separate departments or cost centres.
The key question is whether the extra information will actually help you make decisions.
Adding tracking simply because the feature exists can make transaction processing more complicated. When it is planned around useful management reporting, however, it can give business owners much clearer information.
7. Review your dashboard and reporting requirements
Your accounting software should help you understand the business, not simply store transactions.
Consider what information you regularly need to see. This might include outstanding invoices, bills, bank balances, cash flow or particular areas of business performance.
The way your accounts and tracking are configured will also affect the quality of your reports. This is why accounting structure and Xero configuration should be considered together rather than treated as separate jobs.
8. Migrate existing data carefully
If you are moving from another accounting platform or desktop accounting package, decide what information needs to come across to Xero.
Depending on the migration, this can include:
- opening balances
- current accounting data
- customer and supplier contacts
- fixed asset information
- bank accounts
- outstanding invoices and bills.
A migration should leave you with a usable Xero file that agrees with the financial records you are moving from.
We offer a Desktop to Xero migration service for businesses moving from traditional desktop accounting software, including opening balances, current accounting data, contacts, fixed assets and team logins.
9. Give the right people access
Once the accounting file is configured, consider who needs access and what they need to do inside Xero.
This can include business owners, internal accounts staff, bookkeepers and accountants.
Access should be set up intentionally rather than sharing one login between several people. This helps keep responsibilities clearer and allows the business to manage who can work with its accounting information.
Should you set up Xero yourself or use an accountant?
A straightforward new business may be comfortable handling parts of its own Xero setup. The more existing data, employees, reporting requirements or business complexity you have, the more valuable professional setup can become.
Getting help can be particularly useful when:
- you are moving from another accounting system
- you have existing balances that need to be transferred
- you are unsure how to structure your Chart of Accounts
- you need payroll configured
- you want meaningful management reporting
- different business divisions or locations need to be tracked
- your internal accounts team needs ongoing Xero support.
We are a Xero Gold Partner and provides setup, migration and ongoing Xero support for Perth businesses. Rather than treating Xero as a standalone piece of software, we can configure it around how your business records, manages and uses its financial information.
You can also combine Xero with ongoing bookkeeping services if you want support keeping transactions, reconciliations and financial records up to date after the initial setup.
What does professional Xero setup cost?
We offer different Xero packages depending on where your business is starting from:
- New Business Xero Setup: $500 one-off
- Desktop to Xero: $1,650 one-off
- Xero Support: $250 per month
- Custom to Xero: custom conversion option shown from $0
The right option depends largely on whether you are starting fresh, moving existing accounting records into Xero or already using Xero and needing ongoing assistance.
View the full inclusions and pricing for Xero Setup Perth.
FAQs
How long does it take to set up Xero?
The time required depends on your business. A new business with no existing accounting records is generally simpler to set up than an established business that needs opening balances, contacts, assets and transaction data migrated from another system.
Can I set up Xero myself?
Yes. Business owners can set up Xero themselves. Professional assistance can be useful when you need to migrate existing records, configure payroll, customise your Chart of Accounts or structure reporting around a more complex business.
What information do I need before setting up Xero?
Useful information can include your business details, bank accounts, existing accounting records, opening balances, employee payroll information, invoice details and the reporting structure you want to use.
Do I need a custom Chart of Accounts in Xero?
Not every business needs a highly customised Chart of Accounts, but the account structure should reflect how your business operates and the financial information you need to report on.
Can I move from desktop accounting software to Xero?
Yes. Existing businesses can migrate accounting information into Xero. The information transferred depends on the existing system and the scope of the migration, but it can include opening balances, current accounting data, contacts and fixed asset information.
Can an accountant help after Xero has been set up?
Yes. We offer ongoing Xero Support from $250 per month for businesses with internal accounts teams that need help with Xero, Xero Add Ons and accounting queries.
Need Help Setting Up Xero?
A good Xero setup gives your business a cleaner starting point for bookkeeping, payroll and financial reporting. We can help you set up a new Xero organisation, migrate an existing accounting system or provide ongoing support to your internal accounts team.
Learn more about our Xero Setup Perth services or book a free strategy session with our team.
