As a small business owner, once Xero is installed, many think that’s the end of the road in terms of having a good accounting system to ensure the best chance of business success.
Sorry but the fun doesn’t end there. Your accounting system is only as good as the way you set it up, run it, and the type of information inputted into it.
Just because you have a great system like Xero in your business, the old adage ‘Garbage in, Garbage out’ still applies.
By noting the following ten guidelines you’ll help ensure a more meaningful outcome for your business.
- Having your chart of accounts follow an accurate report coding pattern. This creates tailored and pre-set reports allowing for
detailed business analysis.
- Activating automated bank feeds on all types of bank accounts, credit cards and PayPal accounts. Also ensure the opening balance reconciles to your bank statement balance for accurate understanding of your cash position each day.
- Sharing appropriate access levels with all staff and advisors so you can accurately monitor who accesses what, have a clear audit trail of who’s done what and also have your accountant/bookkeeper easily review and monitor your business performance and book entries. Did you know that Xero has an inbuilt audit trail which details what changes were made and by whom?
- Using Xero for file management such as uploading copies of bills and warranty certificates against the invoice for easy access and review. If your business is selected for a BAS/Income tax review or audit by the ATO, there will be no need to find your box of receipts, it is already filed neatly against the actual transaction.
- The ease of paying staff using the Xero payroll function will ensure accurate PAYG withholding and accounting of super and leave entitlements. You can also pay every staff member’s superannuation using a 2 minute process thanks to their auto-superannuation feature.
- Have your financial settings set up to account for GST, PAYGI and PAYG withholding amounts correctly.
- Ask your accountant for help in setting up loans to ensure repayments are correctly split between interest and principal for accurate expense allocation.
- Are you confident in your entry of expenses between a capital and non-capital nature? For example capital items may not be expensed and have to be capitalised and depreciated over time. Incorrect entry could mean inaccurate profit understanding and GST claiming.
- Are you splitting your revenue and expenses sufficiently such that you can easily understand your business performance and where you can improve.
- Do you have different business units, cost or profit centres that you should be using the tracking feature to track different costs and revenue on each? This will give you greater insight into which parts of your business are performing better or worse.
This is just a sample of the ways you could be getting better, more meaningful information out of your Xero business accounting system.
Contact EASE’s office today for an obligation free review of your Xero set up for tips and further guidance.
Ph: 08 9317 8045 or email firstname.lastname@example.org