Doing and maintaining bookkeeping in Xero accounting software is simple and easy. All you have to do is follow these simple steps.
Set up Xero file:
The first set to get started with is setting up your Xero profile and adding details of your organization. This step includes filling information for your financial year, choosing sales tax settings, setting time zones, choosing your business’s transaction category, etc. You can also check out our list of requirements to set up a Xero file.
Set up bank feeds:
This step has the utmost importance to maintain the financial viability of your business. This step includes adding your bank details and setting up bank feeds. There are three types of bank feeds in Xero, which are Direct feeds, Yodlee feeds and PayPal feeds.
Enter bills in Xero:
The process to enter bills in Xero is rapid and Xero provides two different ways to do so. You can enter, edit, or create bills in Xero or you also have the option to import your bills by using the template file provided by Xero.
Enter invoices for sales:
You can enter invoices for sales in Xero or you can easily import them from various sales software. You can also set up details related to invoices like payment terms with other organizations, branding invoices or setting up themes for them, adjusting outstanding bills, etc.
Matching transactions with the bank feeds:
In this step, you need to check and match the debit/credit transactions of purchase and sales with your bank feeds; so you can make sure you have paid your expenses and have received the number of your invoices.
Reconcile the bank statement:
This step makes sure that your bank statement reconciles with the transactions that have occurred during a financial year. The main motto of this step is that you analyze and match the bank statement with the recorded transactions in the Xero software which will ultimately help you eliminate any errors.
Ensure your balance sheet makes sense:
The best way to make sure the soundness of your balance sheet at the end of the financial year is to check and scrutinize it with the information of purchase and sales, assets, expenses and income, checking bank transactions’ details recorded in the balance sheet. This step is very crucial, as the balance sheet reflects the financial nitty-gritty of any business.
Adjustment is done at the year-end:
The last step for doing bookkeeping in Xero is to add year-end adjustments. We include tax liability, accruals, work in progress, depreciation, loans, sales tax adjustments, etc. in the year-end adjustments.
Bookkeeping in Xero is simple and time-saving, you can operate it from anywhere and that’s what makes it helpful for businesses.