How to start a new business with Xero?

Starting a New Business

Are you wanting to start a new business with Xero Accounting Software?

Starting a new business can be challenging, including getting new clients, upskilling to provide a service or selling a product that has strong demand. If you are looking to maintain the bookkeeping of your business and even start to pay employees later down the track, you should consider tracking your income and expenses with Xero. Xero is a cloud-based online accounting software that enables you, as a business owner, to track your expenses and record-keeping to ensure that you are staying compliant.

1. Choose your Xero Package

Firstly, you would consider the software plan that suits your needs. This could be as simple as tracking cash flow with the Ignite package, or Ultimate 10 for more complex tools with analytics to automate payroll and super. Next, you would need to input your business details. Connect your bank accounts to the cashbook setup your chart of accounts. Add your contacts and customers that you want to bill later on. You can create invoices within Xero that will enable you to receive payment from your customers. However, if you plan to add payroll, you may need to select the right Xero software package to ensure that you are getting access to the payroll functions within Xero. Finally, you can add employees, set pay schedules, and accurately calculate payroll for paying employees.

2. Reconcile your Accounts

There are bank reconciliation tools that enable you to automatically reconcile your bank feeds. In addition, this can assist to help to accurately track your expenses throughout the year. You can use the Xero app or other apps that can sync with Xero. One example is HubDocs to track expenses and keep accurate receipts. Furthermore, this allows you to verify the expenses incurred for your business. Once you have started to track your income and expenses, you can start to review your profit and loss statement. Reviewing the P&L and balance sheet provides live updates on how your business is performing. This can be useful when planning cash flow and future expenditure. It is paramount that you have enough cash in the business to meet ongoing financial obligations.

3. Grow your Business with Xero

Once established, you are getting on top of the bookkeeping. You should be looking for ways to optimise and grow your business. To stay profitable, it is important to identify what is working well in the business. This also identifies where you have room to grow and improve. The financial analysis uses real-time reporting to provide accurate data. Furtheremore you gain insights to help guide decision-making for the trajectory of the business. Reviewing the margins of the business can optimise expenses, and reviewing your most profitable services or products. This can assist with guiding you on where to invest and grow different areas of the business.

Working with an Xero Certified Advisor can offer insights into how your business is tracking and areas for growth. Firstly, this can be done at a compliance level with the assistance of a bookkeeper. Next, at a higher level, with the assistance of an accountant. Lastly, at a more strategic level of the business, with a tax and financial advisor. Engaging professionals at different stages can fuel the growthof the business whilst staying tax compliant.

By optimising your tax planning, you can improve cashflow of the business. In addition, improving the profit margins of the business and structuring the expansion of the business at appropriate stages, of the business you can grow and scale the business into the future with Xero. In summary, if you would like to get in touch with an Xero Certified Advisor, visit DF Business Advisory to book a free 15-minute tax consultation to get started. The information provided in this article is general in nature and not specific advise please speak to a professional for tailored advice.