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Efficient Accounting with Xero
Efficient Accounting with Xero

Efficient Accounting with Xero: The definitive guide to optimizing your accounting with proven techniques and best practices

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Efficient Accounting with Xero

Xero Basics – Subscriptions and When to Use Them

As we embark on our Xero journey together throughout this book, we are going to review the ways to use Xero on a daily basis in your business. By the time you have finished this book, you will be able to fly through your daily transactions and be an ace at running the reports you need to run your business.

Using the right subscription level is critical to your use of a Xero organization. Here, we will review each of the Xero subscription levels, compare them, and give you an opportunity to find the right plan for your business. You will find the right mix of features and cost to maintain your books while cutting down on expenses.

In this chapter, we’re going to cover the following main topics:

  • Popular Xero subscription plans
  • Xero subscription plans only available as a partner
  • Determining the proper subscription for your Xero organization

A bit about Xero

As we embark on our Xero journey together, I think it is important to detail how my Xero journey began. I started the Digital CPA after a breakup with my partner at my former company. That company was built using QuickBooks for the first 5 years of its existence. Later, in 2008, I implemented a full ERP system that was e-commerce-enabled due to the inconsistencies and issues relating to our on-premise use of QuickBooks. No, this system was not cloud-based, but what I learned over the next 2+ years really helped shape me, as I built the Digital CPA a few years later.

I was approached by a prospective client about 6 months after starting the Digital CPA, who was looking for help selecting a cloud -based general ledger software that would integrate with FreshBooks, which was used to track contractor hours and perform their billing. They had one stipulation – it could not be QuickBooks. I found two viable candidates, Xero and Kashoo. After digging a little deeper, I found Xero to be the definitive winner. In my opinion, it had everything to provide my new client with the financial statements and related reports they required.

Within 2 weeks, I found myself Xero-certified and working with my Xero rep and partner consultant to fully immerse myself in the full Xero experience. I was truly excited about this switch to Xero, but I found that most of my prospective clients had never heard of it and were solely focused on using QuickBooks. When I say QuickBooks, I am referring to the desktop version; most of the business owners I encountered were not aware of using the cloud or were nervous to the point of being paralyzed in fear about putting their business data in it. As you are probably aware, this is not an issue today.

Through the years, Xero has received many enhancements, improvements, and additions. We will cover the most up-to-date version we can in this book. Keep in mind Xero releases updates on the fly and the features discussed here may change. For now, let’s see the two main subscription plans available in Xero.

Business subscription plans

You may have signed up for a Xero trial or you are currently deciding on which Xero plan fits your business best. The basic plans advertised for Xero fit the general consumer’s needs.

There are three plans you can choose from:

  • Early
  • Growing
  • Established

Each plan is set up to meet the needs of your business. We will dive into the differences between each plan in the next section.

Business subscription plan comparisons

Xero is built on a simple platform. Each subscription level unlocks features based on the needs of your business, whether it is in start-up mode, growth or scaling mode, or your business has reached maturity.

The Early plan is perfect for start-ups. The cost is low, at $13/month, yet packed with features you need to run your business. The Early plan limits the number of sales invoices and quotes to 20 per month and purchase bills (invoices) to 5 per month.

Depending on your business, this might be the perfect fit. Most of the clients I have seen (small start-up businesses) fit this plan perfectly.

Should your business model require more than 20 invoices or 5 bills per month, then the Growing plan is the solution for you. The Growing plan is Xero’s most popular plan, as it is the “complete” package for most businesses based in the US. This is the plan that most clients are on, at least those that require invoicing and purchasing.

If your business operates globally, and in multiple currencies, the Established plan is an ideal choice. In addition to multi-currency, the Xero Established plan includes Xero Projects and Xero Expenses:

  • Xero Projects allows you to track time, costs, and revenue by specific projects. You can see project profitability, send bills by completion percentage, and even track project tasks in Trello.
  • Xero Expenses gives you the ability to provide your team with an easy-to-use expense tracking and reimbursement system. Utilizing the Expenses mobile app allows a team member to snap a picture and submit expense details. You can approve expenses on the go on the mobile app and reimburse your team in the same way you pay your other bills.

All Xero business plans include Hubdoc, Xero’s bill and receipt capture tool. Using Hubdoc adds automation to a process, and I personally love automation. The following figure shows a side-by-side comparison of the Xero business plans:

Figure 1.1: Xero business subscription plans

Figure 1.1: Xero business subscription plans

Now that we have had a chance to review the Xero business plans, let’s look at the other options.

Partner subscription plans

If you run or are part of an accounting, bookkeeping, or tax organization, Xero has an awesome partner program. A main benefit of being a Xero partner firm is having access to its partner subscription plans.

There are two Xero partner plans you can choose from:

  • Ledger
  • Cashbook

Each plan has its own value and potential benefits for your firm. We will dive into the differences between each plan in the next section.

Partner subscription plan comparisons

The Xero Ledger plan is just that – a ledger. It has the most basic features, a reporting function, and the ability to post manual journals, which we will dive into later in Chapter 11.

Firms that use the Ledger plan are usually early in their Xero adoption, capture client financial details in order to use the Xero reporting function, or use the extensive app marketplace to add value or efficiency to their workflow.

Cashbook, the remaining partner plan, is one of my favorites and the other plan most of my clients use. This plan is similar to the Growing plan with the invoicing and purchasing functions removed. In the following figure, we can see the Xero partner plans side by side:

Figure 1.2: Xero partner-only plans

Figure 1.2: Xero partner-only plans

Xero has a subscription plan for you and your business, whether you work with a Xero advisor or not.

Summary

As we have seen in this chapter, Xero has several subscription plans, including partner plans (Ledger and Cashbook) and business plans (Early, Growing, and Established). Each of these plans meets the unique needs of diverse business owners, regardless of where they are in the business life cycle.

In the next chapter, we will jump right into the heart of Xero – bank feeds. This is where the fun begins.

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Key benefits

  • Become well-versed with the latest features of Xero to confidently manage all your bookkeeping tasks with ease
  • Master the use of Xero and implement best practices to avoid costly errors
  • Learn techniques for recording and managing financial data efficiently

Description

Xero empowers business owners to gain insights into their business and performance and collaborate seamlessly with their accountants and tax professionals. This book goes beyond the basics and explores the more advanced Xero features, techniques, and best practices for managing sales taxes, budgeting, and reporting. You’ll begin by diving right into Xero, setting up a bank feed, and exploring its power while experiencing just how easy it is to use. The book will guide you in setting up Xero the right way to ensure that you succeed in each of your transactions. As you progress through the chapters, you’ll learn what spend money and receive money transactions are and be able to easily send invoices and collect receivables or payments, collect and pay bills, and even track your business assets with Xero. Toward the end, you’ll be proficient at producing powerful reports, giving you the keys to running or advising any business. By the end of this Xero book, you’ll have gained the confidence to add a company to Xero, set up the bank feeds, reconcile the transactions, send invoices, and pay bills, ending up with beautiful financial statements.

Who is this book for?

This book is for small and medium business owners (SMBs) and bookkeepers or accountants who want to learn how to properly use and master Xero. Little to no knowledge of Xero is assumed. However, prior understanding of basic bookkeeping and accounting principles is required.

What you will learn

  • Understand why Xero is the best choice in accounting software for your SMB
  • Easily set up or convert to Xero for a service- or product-based business
  • Reconcile cash and related transactions effortlessly
  • Track and depreciate capital assets purchased by and used in the business
  • Produce customized reports tailored to your specific need
  • Use Xero to make informed and timely decisions and become a better business owner or advisor
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Table of Contents

26 Chapters
Part 1: Hitting the Ground Running Chevron down icon Chevron up icon
Chapter 1: Xero Basics – Subscriptions and When to Use Them Chevron down icon Chevron up icon
Chapter 2: Exploring Bank Feeds – the Heart of Xero Chevron down icon Chevron up icon
Chapter 3: Setting Up Your Organization’s Financial Settings in Xero Chevron down icon Chevron up icon
Chapter 4: Restarting with the Fresh Start Method Chevron down icon Chevron up icon
Chapter 5: Conversion to Xero Made Easy Chevron down icon Chevron up icon
Part 2: Handling the Day-to-Day Processes Chevron down icon Chevron up icon
Chapter 6: Recording and Reconciling the Bank Chevron down icon Chevron up icon
Chapter 7: Invoicing and the Sales Process Chevron down icon Chevron up icon
Chapter 8: Managing Bills and Purchases with Procure-to-Pay in Xero Chevron down icon Chevron up icon
Chapter 9: Using Xero on the Go Chevron down icon Chevron up icon
Part 3: Closing Out the Accounting Period Chevron down icon Chevron up icon
Chapter 10: Managing Fixed Assets in Xero Chevron down icon Chevron up icon
Chapter 11: All You Need to Know about Manual Journals in Xero Chevron down icon Chevron up icon
Chapter 12: Correct Your Mistakes with Find and Recode Chevron down icon Chevron up icon
Part 4: Reporting – Knowing About the Performance of Your Business (KPIs) Chevron down icon Chevron up icon
Chapter 13: Running and Customizing Basic Reports in Xero Chevron down icon Chevron up icon
Chapter 14: Business Analytics with Business Snapshot and Short-Term Cash Flow Chevron down icon Chevron up icon
Chapter 15: Creating Custom Reports in Xero Using the layout editor Chevron down icon Chevron up icon
Part 5: For the Advisor Chevron down icon Chevron up icon
Chapter 16: Run Your Practice with Xero HQ Chevron down icon Chevron up icon
Chapter 17: Exploring Practice-Wide Report Templates Chevron down icon Chevron up icon
Chapter 18: Exporting Your Data and Reports Out of Xero Chevron down icon Chevron up icon
Chapter 19: Increasing Your Powers with Apps and Xero Chevron down icon Chevron up icon
Index Chevron down icon Chevron up icon
Other Books You May Enjoy Chevron down icon Chevron up icon

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Megan Hanna Aug 05, 2023
Full star icon Full star icon Full star icon Full star icon Full star icon 5
An avid reader of all things business, finance, and accounting-related, I was excited to receive a copy of this book from the publisher. One of my favorite things about this book is the simple introduction to the topic at the start of each chapter. The introduction makes it easy to understand what's covered in the rest of the chapter without needing to read or skim the whole section. This is a handy feature for busy professionals needing a quick reference tool.If you want or need to dig in deeper after reading the chapter introduction, most chapters include step-by-step instructions on how to complete the task in Xero. Plus, the book includes excellent screenshots from this accounting system so you can visualize each step. The way the book is laid out makes it good for those shopping around to see if Xero might work for their business, as well as for Xero users in search of an easy-to-understand reference guide written by an accounting and technology expert.
Amazon Verified review Amazon
Tasha Drake Jul 19, 2023
Full star icon Full star icon Full star icon Full star icon Full star icon 5
I adore learning new things as it keeps my mind active. As a Tax & Bookkeeping Professional and Entrepreneur, I have used a few systems in the past, but this is my first exposure to Xero. I had the excellent opportunity to read Jay Kimelman's "Efficient Accounting with Xero" since I was very anxious and inquisitive. Reading this book has helped ease my curiosity and became a graceful guide through the Xero software system. This book provided fundamental principles with added specifics. I will continue to explore more with Xero and begin utilizing this platform. Whether you are operating your own business or assisting another business owner, I strongly advise purchasing this book and exploring Xero efficiently!
Amazon Verified review Amazon
Darren J Guenther Jun 02, 2023
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I recently had the opportunity to read the book "Efficient Accounting with Xero: The definitive guide to optimizing your accounting with proven techniques and best practices," by Jay Kimelman and I found it to be a useful resource for navigating the world of Xero.The book takes a beginner-friendly approach, gradually introducing the platform's financial management concepts and guiding readers through the necessary steps to efficiently navigate and utilize Xero. Practical screenshots throughout the chapters enhance the learning experience, allowing readers to follow along with the step-by-step instructions and gain a better understanding of how to perform various financial tasks within Xero.Covering essential topics such as setting up bank feeds, reconciling transactions, configuring organizational settings, managing the chart of accounts, and utilizing tracking categories, the book provides a comprehensive outline that ensures readers receive a thorough understanding of these key areas.Overall, "Efficient Accounting with Xero" is a valuable resource for individuals seeking to navigate the world of Xero. Its clear approach, accompanied by practical screenshots and a comprehensive outline, makes it an excellent starting point for beginners looking to gain proficiency in using Xero for their small business accounting needs.
Amazon Verified review Amazon
Logan May 19, 2023
Full star icon Full star icon Full star icon Full star icon Full star icon 5
This guide is very comprehensive and lays the topics out in a way that's easy to read and understand. I have now learned about tools that I didn't know existed in Xero & have already started using them. Thank you!
Amazon Verified review Amazon
Win Nguyen Feb 07, 2024
Full star icon Full star icon Full star icon Full star icon Full star icon 5
Jay made it really simple to follow how to set up and use Xero for accounting and bookkeeping needs in this book. This is applicable for both small businesses and accountants and bookkeepers alike!Would highly recommend.
Amazon Verified review Amazon
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