The ultimate guide to bookkeeping using Xero Accounting Software

Running is a business is not a piece of pie, and it gets harder when the data is not organized well. Bookkeeping has become exceedingly essential for all small as well large-scaled businesses as it helps keep you onside with the taxes levied. But let's admit it that it is an incredibly boring task. So, here we are disposing some Xero accounting assignment help for all the newbies or the ones who are planning to switch to digital mode of bookkeeping.

What is bookkeeping?

Bookkeeping is the task of organizing and managing the data and records that classifies all the transactions involved in the running of the business. It takes account of both inflow of cash and outflow of cash, in all the modes. Basically, it is a way of calculating how much you earned and how much you spent on knowing the profit or loss percentage.

Earlier, these tasks were carried out using large books or ledgers, and therefore it is named as 'bookkeeping.' But now there are numerous software that aid in bookkeeping that is often taught in variance accounting assignment help if you pursue a specialization in Finance.

Why is bookkeeping essential?

If you run a business, then you can understand that on a daily basis, you make numerous transactions that include both incoming and outgoing of cash. Just wonder what will happen if you do not maintain a record of all this? Will you sustain in your business? So, bookkeeping is the start of organizational business. Here's what all it serves:

• It helps you know whether you are making a loss or profit.
• Provides you reliable and accurate numbers for budget planning.
• It can be used for scheduling a fixed date for paying the suppliers or other resources that contribute to your business.
• Avoid unnecessary expenditures.
• Helps in cost-cutting.
• You can locate the frauds or incorrect fixing of cash that is done by the employees responsible for Finance.
• It will help in calculating the tax returns.
• It will make it easier for you to evaluate the rate list.
• You can easily work in close association with lenders, investors, and accountants.

How to start with bookkeeping?

If we talk in a nutshell, then there are only two parts of bookkeeping; recording and reconciliation. Let’s learn about them in detail.

1. Recording

This involves recording each transaction, whether incoming or outgoing. Traditionally, it was done using the manual methods of pen and paper, where everything was laid down in a large book that was kept in a storage room for maintaining the records. These days it is all about updating them in a spreadsheet and accessing it from all the corners of the world.

You can choose to create separate sheets for inflow and outflow of cash. It makes the tasks more organized and easier to calculate.

1. Reconciling

Reconciliation involves cross-checking the data with the bank statements to ensure the match of the balance. If not, then you are required to identify the glitches and hold the responsible departments or individuals for misconduct.

Bank reconciliation should be done after a regular interval of time. Some do it on a daily basis while others on a weekly or monthly basis. It all depends upon the size of the business and the number of transactions involved. Generally, businesses with multiple transactions are required to reconcile more frequently.

The sooner it is done, the earlier you can catch the glitches and the culprits if any.

Digital bookkeeping V/S traditional bookkeeping

Xero Accounting Software

Xero is a software that was developed in 2006 by Rod Drury and Hamish Edwards, who was his personal accountant. It was invented to bring bookkeeping assistance for small and medium-scale businesses; however, today, it is used by almost all large-scale companies.

It offers a cloud-based bookkeeping method and is sold by subscription that is dependent on a number of company entities managed by the subscriber. It was launched in New Zealand but now is expanded to over 180 countries, including the USA, UK, Singapore, and Australia. Students pursuing Finance often seek Xero accounting assignment help.

How to use Xero in 11 steps..!!

1. Watch the video in the Xero dashboard that can be found on the top left corner.
2. Fill the details of your organization. This includes:

• Display name
• Legal name
• Email address
• Registration number
• Description of the company
• Physical address
• Registered address
• Type of organization
• Phone number
• Fax number
• Logo
• Official website
• Social media links

1. Set financial settings. Go to Settings> Advanced Settings> financial Settings and add all the required details like Financial year-end and Sales Tax/ VAT details like VAT number and period.
2. Add the company’s branding by setting up your invoices. Go to Settings> Invoice Settings. You can choose the terms of payment that suits your requirements the best.
3. Set the accounting charts by going to Accounting > Charts of accounts. Here you can add, customize, and delete the charts as per your wish. You can also the default Xero chart.
4. Set the banking details that include credit card and PayPal accounts.
5. Reconcile at least once in a week to know about the glitches or imbalances. It will give a better picture of the cash flow.
6. Set your payroll. If you are transferring the data from another system before the end of the financial year, remember to add opening balances.
7. Active the Xero payment services that include Paypal, Stripe, and GoCardless. It becomes easier for the customers to pay you.
8. Add reminders for your payments because organizing the credits helps get paid faster. This can be done by going to Settings> Invoice Settings> Invoice Reminders.
9. Go to Settings and add users; this includes accountants, bookkeepers, and other important stakeholders.

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