Insights · Systems · 31 October 2026

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Setting up Xero properly: a checklist for small business

Most messy books start with a rushed setup. Getting the basics right in Xero, or any cloud accounting software, saves hours every BAS and gives you numbers you can trust.

The setup checklist

1. Organisation details: legal name, ABN, financial year end (30 June), and the right GST basis (cash or accrual) and reporting period. See GST registration and BAS cycles.
2. Chart of accounts: keep it short and mapped to how you want to see the business. Separate accounts for owner drawings, loans and tax.
3. Tax codes: check default GST codes on accounts and contacts. Wrong codes are the most common BAS error.
4. Bank feeds for every account and card, plus bank rules for repeat transactions.
5. Payroll: employees, pay items, super funds and Single Touch Payroll. See STP basics and Payday Super.
6. Invoicing: branded templates, terms, online payment and automatic reminders: get paid faster.
7. Receipts: capture bills with an app so nothing lives in a shoebox.
8. Access: give your bookkeeper and adviser their own logins; never share yours.

The monthly routine

Reconcile weekly, review aged receivables, and close each month: month-end close checklist. Under the TPB rules, setting default GST codes for a client is a BAS service, so if someone sets up your file for a fee they should be a registered BAS or tax agent: BAS agent vs accountant.

Quick answers

What is the most common Xero setup mistake?

Wrong default GST codes on accounts and contacts, which flow straight into BAS errors.

Who can set up my accounting file?

Setting default GST codes for a client for a fee is a BAS service under TPB guidance, so use a registered BAS or tax agent.

Sources

• TPB: BAS services (includes installing software and determining GST codes)
• ATO: Single Touch Payroll

General information only. This article does not take into account your circumstances and is not tax, legal or financial advice. Rates and rules change; check the sources above and get advice for your business before acting.