Starting with a clean Xero account ensures that your bookkeeping foundation is solid. This article explains each step of the setup process, from signing up and entering business details to adding bank feeds, tailoring your chart of accounts and importing historical data. With clear instructions, you’ll be ready to use Xero efficiently.

Stuart Kerr | Published 04/11/25 | Updated 04/11/25

Whether you’re switching from spreadsheets or another accounting system, setting up Xero correctly from the start saves headaches later. Follow this comprehensive checklist to get your business up and running.

1 Create your Xero account and organisation

Visit Xero.com and sign up for a free trial or paid subscription. Verify your email address and log in. Next, create a new organisation by entering your business name, industry, country, base currency and financial year end. Bookkeeper Hub notes that entering the correct financial year end is critical for accurate reportingbookkeeperhub.com.au.

2 Configure financial settings and chart of accounts

Navigate to Settings → Financial settings to set your tax defaults and accounting method. Then customise your chart of accounts. Xero provides a standard chart based on your region, but you can add, edit or archive accounts to reflect your business’s needsbookkeeperhub.com.au. Group similar accounts for better reporting, and assign default tax rates to each one.

3 Connect bank accounts and set up bank rules

Add your bank and credit card accounts under Accounting → Bank accounts. Connect to bank feeds where possible; otherwise, import statements manually. Establish bank rules for recurring transactions so that expenses like merchant fees or subscriptions are coded automatically. This saves time during reconciliation.

4 Manage users and permissions

If you have colleagues or an accountant, invite them to your Xero organisation. Assign user roles to control what they can see and do—such as invoice creation, payroll access or full administrationbookkeeperhub.com.au. Granting the right permissions protects sensitive information while promoting collaboration.

5 Set up invoicing templates and payment services

Customise your invoice template with your logo, payment terms and contact information. Connect payment services like Stripe or PayPal so customers can pay online. Configure email settings to send invoices automatically and set up reminders for overdue invoices.

6 Implement payroll settings (optional)

If you plan to run payroll within Xero, activate the payroll module now. Configure tax references, pay calendars and employee details as discussed in the payroll article. Early setup integrates payroll transactions seamlessly into your accounts.

7 Integrate add‑ons and apps

Xero’s marketplace offers hundreds of add‑ons for inventory, expenses, CRM and more. Evaluate which apps suit your business and connect them to reduce data entrybookkeeperhub.com.au.

8 Import historical data and opening balances

To maintain continuity, import your historical invoices, bills and contacts. Use Xero’s CSV templates to upload data. Enter opening balances for your bank accounts, debtors and creditors so that your new system matches your old records.

9 Perform regular maintenance and reporting

Once set up, develop a routine for reconciling bank accounts, reviewing aged receivables/payables and running monthly reports. Regular maintenance ensures that your data stays accurate and your business decisions are based on up‑to‑date informationbookkeeperhub.com.au.

By following this setup checklist, you’ll lay a solid foundation for your bookkeeping in Xero and make future tasks—such as VAT returns, payroll and reporting—much easier.

About the Author

Stuart Kerr, Partner in Bookkeeping Packages. You can contact him on stuart@bookkeepingpackages.co.uk.