This article is part of a larger series on Accounting Software.
Welcome to the Fit Small Business free Xero tutorials. Whether you’re new to Xero or could benefit from a more in-depth understanding of the software, we have five tutorials that will help you. Each Xero tutorial includes an in-depth lesson, complete with text and images..
You’ll find that these tutorials are much more useful if you have a copy of Xero open in front of you so that you can follow along with your own data.
Tutorial 1: How To Set Up Your Company in Xero
In this tutorial, we’re going to cover how to set up your company in Xero, which includes adjusting your settings, adding users, viewing and modifying your chart of accounts, and importing contacts.
Do you want to learn more about other options? Read our picks for the best small business accounting software where we ranked Xero as the best platform for unlimited users.
Step 1: Adjust Your Settings in Xero
Once you have entered your company information, it’s time to adjust your settings in Xero. To navigate to Settings, follow these steps:
- Step 1: Click on the drop-down menu in the upper left corner of the screen and select Settings.
- Step 2: Click on Organization Details.
Basic Information & Contact Details
On the Organization Details screen, you can enter your company’s information, such as name, address, phone number, website and email address, business registration number, taxpayer ID number (TIN), and employer identification number (EIN). You can also upload a logo and specify your line of business and organization type.
If your company has international clients, you can add different currencies to your account. To do this:
- Step 1: From the Organization Settings screen, click on Currencies.
- Step 2: Click on Add Currency.
- Step 3: Select a currency in the drop-down menu, then click the green Add Currency button. The most recent exchange rate will be provided by XE.com automatically.
You can also tailor the emails that you send from Xero and specify a reply-to email address. This can be accessed from the Organization Settings screen.
- Step 1: Click on Email Settings.
- Step 2: Select from the list of eight standard templates by clicking Edit.
- Step 3: Choose the template that you want to change and select Basic.
- Step 4: This will bring up the template, which allows you to edit the subject line and message.
- Step 5: When you’re finished, click the green Save button.
Step 2: Add Users to Xero
Xero allows you to add unlimited users and accountants to your company, free of charge. To do so, your user role must include the Manage Users permission. Once you invite a user, they will be sent an invitation that they need to accept or decline. The invite expires after 14 days, but you can resend it if necessary.
To invite a new user from the Organization Settings screen:
- Step 1: Click Users.
- Step 2: Select the green Invite a user button in the upper right corner.
- Step 3: Enter the new user’s first name, last name, and email address. The email address you the send the invite to will be the user’s login email address.
- Step 4: Check the Business and Accounting box and select which features you want them to access, and a user role for each feature.
You will then be asked to specify the permissions for each user you invite. This includes accountants, who will be invited as an Advisor. Available user types include Invoice Only, Standard, Advisor, and Read Only. Here’s a short description of each:
- Invoice Only: This limited role suits users who create quotes and invoices or enter bills, but don’t need access to bank accounts or reports.
- Standard: The standard user has almost full access to Xero, with optional access to cash coding and reports.
- Advisor: Advisors have full access to all areas of Xero. These are the permissions that you will give your accountant. If the advisor is not the subscriber, they will not be able to change the pricing plan or payment details.
- Read Only: These users can view most areas of Xero, but are not able to create or edit transactions, or run new reports.
Once you have specified the user role and permissions, you can add a personal message if you like, and then click the green Send Invite button at the bottom right.
Step 3: View and Modify Your Chart of Accounts
The chart of accounts is a list of all accounts you can use to record your transactions. It helps you categorize your transactions correctly and group similar accounts together to generate reports about your business. When you set up your company, Xero will assign a default chart of accounts. If you prefer, you can import either a chart of accounts from your previous accounting software or your own custom chart.
Add a New Account Manually
To view your chart of accounts, click on the Accounting drop-down menu at the top of the screen and then select Chart of Accounts.
To add a new account, simply select Add Account and fill out the required information. You can click on any account in the list to learn more detail or click on an account balance to view a list of transactions that use that account. If you have created your own chart of accounts or are using the default Xero chart of accounts, be sure to include all of the active accounts you used in your previous accounting system.
You’ll need to enter the following components to add an account to the Chart of Accounts:
- Account type: Each account has an account type, which Xero uses to determine where the account appears in your financial reports. You can change the account type at any time by editing the account.
- Code: Each account has an account code of up to 10 characters. The code is used to group similar or frequently used accounts together in your chart of accounts. You can use any code for any account as long as it’s unique.
- Name and description: Every account in Xero must have a name of up to 150 characters. The account description is optional for all accounts except for bank accounts. Use letters, numbers, or symbols for this account, up to 1,000 characters. You can edit the account name and description if needed.
- Tax: Each account has a default tax rate. When you add an account, you can choose the tax rate for the account. You can change the tax rate on the account at any time by editing the account
Edit an Account
To edit an account, select the account from the chart of accounts that you wish to edit, as shown below. Then, update the information and click the Save button to update the data.
Import a Chart of Accounts
If you’re importing a chart of accounts, the file you import must be a comma-separated values (CSV) file. The name of your file should end with .csv or .txt.
When you import a chart of accounts into Xero, it replaces the existing categories exactly as per the import file. It doesn’t allow you to add to Xero’s default chart of accounts with newly imported accounts because all existing accounts will be deleted when you import a new one. If you don’t want to make changes to an account and want it to remain in the company, keep it in the import file. If you delete the account from the file, Xero will archive the account when the files are imported.
You can import a maximum of 1,000 rows, including the column header. Xero recommends a limit of 699 accounts per company to avoid page loading issues. If your file includes account balances, these will overwrite any existing balances or coded transactions you have in Xero. If you don’t want to overwrite them or you’re unsure, leave the Balance column in the import file blank.
To import the file into Xero:
- Step 1: In the Accounting menu, select Advanced, then click Chart of Accounts.
- Step 2: Click Import.
- Step 3: Since you’re using a Xero accounts template, leave Xero as the system you’re importing from.
- Step 4: Select whether your file includes balances. If yes, enter your conversion date.
- Step 5: Click Browse to locate the saved file on your computer.
- Step 6: Select Import, then a summary will appear that displays all of the new accounts.
Step 4: Import Contacts from Another System
You can also import your contacts—both customers and suppliers—into Xero. Imported contacts are categorized automatically into the All contact group when first created. Once you’ve entered an invoice, bill, or credit note transaction for a contact, Xero will assign them into a Customers or Suppliers contact group. It isn’t possible to move contacts between the default groups manually, but you can create a new contact group besides Customers and Suppliers.
To import contacts into Xero:
- Step 1: In the Contacts menu at the top of the screen, click on All Contacts.
- Step 2: Click on Import Contacts.
- Step 3: Click on Select File and select your saved file.
- Step 4: Under On importing an existing contact (so that empty fields will be ignored), select Be ignored.
- Step 5: Click Next.
- Step 6: Review the information you’re importing, and then click Complete Import.
Add a New Contact Manually
When you add a new contact, it displays in the All tab. The same contact also displays in the Customers or Suppliers tab after you enter an invoice, bill, or credit note transaction for them.
To add a new contact to Xero manually:
- Step 1: Click on New Contact.
- Step 2: Enter your contact’s name. If a contact already exists with that same name, you’ll see it listed here.
- Step 3: Enter your contact’s details, which include the primary point of contact and information, such as phone number, email, website, and street address. You can also enter financial details related to W-9 business classification and a credit limit amount. These details will vary depending on the type of contact.
- Step 4: Click Save when you’re finished.
You have now set up your company in Xero. Be sure to check out our other four free Xero tutorials. Our next tutorial is “How to Manage Customers and Send Invoices,” which will cover how to adjust settings for your customers and preferences for sending invoices. Read our Xero Review to learn more about pricing and features.