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.

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

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

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

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

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.