How to Use Xero: Step-by-Step Guidelines in 2025?

Are you ready to simplify your business finances?

Xero is a powerful cloud-based accounting software designed for small to medium-sized businesses.

It can streamline everything from invoicing and bank reconciliation to payroll and reporting. 

This guide will walk you through the essential steps that how to use Xero.

We’ll break down the core features and provide clear, actionable instructions.

Let’s dive in!

Setting Up Your Xero Account

Think of setting up your Xero account as building the base for your small business’s money management.

If you get this part right, everything else will be much easier.

Picking the Best Plan for You

• • What does your small business do? How many bills do you pay? How many people pay you? These things matter.
  • Xero has different plans, similar to different sizes of toolboxes. Some have more tools than others, and they have names like Starter, Standard, and Premium.
  • Look at what each plan lets you do (like how many invoices you can send).
  • Think about the future. Will your small business grow? You might need a bigger toolbox later.
  • Quick Tip: You can often try Xero for free for a bit. It’s like trying on shoes before you buy them!

Signing Up and Getting In

• • Go to the Xero website on your computer.
  • Pick where your business is.
  • Choose the plan you think will work best.
  • Tell Xero about your small business (its name and how to reach you).
  • Create your login (your email and a secret password). Please keep it safe!
  • Xero will send an email to make sure it’s really you. Click the link in that email.

Getting Things Organized

• • 1. Your Business Info:
    • Make sure the name you use for your business is correct.
    • Please enter your tax number (it might be called an ABN or something else, depending on where you are).
    • Add your business’s address and phone number.
    • You can even put your company’s picture (logo) on your invoices to make them look professional.
  • 2. Money Stuff Settings:
    • Tell Xero when your business’s money year ends. It’s usually at the same time every year.
    • Pick how you want to keep track of your money. Most small businesses use something called “accrual” bookkeeping, but sometimes “cash” bookkeeping works better. Not sure which one. Your accountant can help!
    • Choose the main money type you use (like dollars or euros).
    • Set up how taxes work where you are.
  • 3. How Your Bills Look (Invoices):
    • You can change how your payment requests (invoices) look. Add your logo and colors.
    • Decide how many days people have to pay you.
    • You can even set up automatic reminders to send to people who haven’t paid yet. Wouldn’t that be helpful?
    • If you want to let people pay you online easily, you can add options like PayPal or Stripe.
  • 4. Your Money Map (Chart of Accounts):
    • Think of this as a list of all the different kinds of money your business has and uses. There are categories like money you have, money you owe, money you’ve made, and money you’ve spent.
    • Xero has a basic list already set up.
    • You can add new categories, change old ones, or remove some. Does the list make sense for your business?
    • You might want to change it so it really shows how your small business works.
• D. Connecting Your Bank:
  • Why do this? It’s like having your bank automatically tell Xero about all the money coming in and going out. It saves you a lot of time!
  • Go to the part in Xero that says “Bank accounts.”
  • Look for your bank in the list.
  • Follow the steps on the screen to connect it safely. You’ll probably need to log in to your online banking.
  • Don’t worry; it’s usually very secure.
  • What if you don’t see your bank? You can still tell Xero about your transactions, but you’ll have to do it by uploading a file from your bank. Your bank can usually help you get this file.

Mastering the Core Features

Once your account is set up, you can learn the main things Xero can do for your small business.

These are the tools you’ll likely use most often to keep your money on track.

• A. Contacts: Keeping Track of Everyone:
  • 1. Adding New People:
    • Go to the “Contacts” button. Think of this as your address book for your business.
    • Click “Add Contact.”
    • Please put in the name, email, phone number, and where they live or work.
    • You can group them into groups like “Customers” (people who buy from you) and “Suppliers” (people you buy from).
  • 2. Bringing in Lots of People:
    • If you already have a large list of customers or suppliers, you don’t have to type them all in one by one. You can usually upload a special file (called a CSV file).
    • You need to make sure your file has the right headings (like Name, Email, etc.).
    • Follow the steps Xero gives you to upload the file.
    • Double-check that all the info came in correctly.
  • 3. Keeping Info Up-to-Date:
    • How do you remember if someone changes their email? You can go back into their contact info and change it.
    • You can also add notes about them or attach files (like a contract).
    • Xero will even show you all the money stuff you’ve done with that person.
• B. Sales: Asking for and Getting Paid:
  • 1. Making Bills (Invoices):
    • Go to “Sales” and then “Invoices.” An invoice is a polite way of asking for payment.
    • Click “New Invoice.”
    • Pick who you’re sending the bill to (from your contacts).
    • Please put in the date of the bill and when it’s due.
    • For each thing you sold, write what it was, how many, how much each one cost, and if there’s any tax.
    • You can make your invoices look fancy with your logo if you set that up earlier.
    • If you’re not ready to send it yet, you can save it as a draft or approve it and send it.
  • 2. Sending Bills to Customers:
    • You can email invoices straight from Xero.
    • You can write a little message in the email.
    • Xero will tell you if the customer opened the email and if they’ve paid.

Advanced Xero Features

Once you’ve mastered the basics.

Xero offers some powerful tools that can help your organisation run even smoother.

These might not be things you use every day, but they can be really helpful as your small business grows.

Payroll (Paying Your Team, If You Have One)

• • If you have employees, Xero can often help you pay them.
  • You can enter their details, the amount they are paid, and any money that is taken out for taxes.
  • Xero can help you create payslips (the paper or digital receipt they get showing how much they earned).
  • It can also help with the tricky stuff like making sure you pay the right taxes to the government.

Projects

• • If you work on different projects for clients, Xero can help you track how much time you spend and what costs you have for each one.
  • This makes it easier to bill your clients for the work you did on their projects.
  • You can also see if a project was profitable (brought in more money than it cost).

Fixed Assets

• • These are big things your business owns that will last for more than a year, like computers or machines.
  • Xero can help you keep track of these and how they lose value over time (this is called depreciation).

Budgeting

• • Want to plan your money? You can create budgets in Xero to see how much money you expect to come in and go out.
  • Then, you can compare your actual cash flow to your budget to see if you’re on track.

Tips for Efficient Xero Use

Now that you know the main parts of Xero.

Here are some extra tips to help you use it even better and save some time.

You want to work smart, right?

• A. Using Shortcut Keys: Just like on your phone or computer, Xero has some secret button combinations you can press to do things faster. Ask Xero’s help section about “keyboard shortcuts” to see if there are any that would help you.
• B. Making Your Dashboard Your Own: When you log in to Xero, you see a main screen called the dashboard. You can often change what you see on this screen, so the most important info for your organisation is right there.
• C. Using the Search Bar: If you’re looking for a specific bill or transaction and can’t find it, there’s usually a search bar at the top. Just type in a name or amount, and Xero will try to find it for you.
• D. Giving Different People Different Access: If you have employees or a bookkeeper helping you with your money, you don’t want everyone to be able to see or change everything. Xero lets you set up different user roles with different permissions, keeping your financial information safe.
• E. Letting Computers Do the Work (Automate): We talked about this a bit before, but look for ways to automate things! Setting up bank rules, recurring bills, and automatic invoice reminders can save you a lot of time and effort.
• F. Getting Help When You Need It:
  • Xero has a really good help center online. Just search for what you’re trying to do.
  • They also have videos that can show you how to do things step-by-step.
  • If you’re really stuck, you can usually contact Xero support directly. Don’t be afraid to ask for help! That’s what they’re there for.

By using these tips, you can make Xero work even better for you and your small business.

It’s all about finding ways to be more efficient!

Remember that you can often integrate Xero with other third-party tools to automate even more of your work.

While you might see information in PDF form sometimes.

The real time-savers come from those direct software connections.

Staying Updated with Xero

Just like your phone gets updates with new features.

Xero changes, too, so it’s a good idea to keep up with what’s new to get the most out of it.

• A. Following What Xero Says: Xero often writes blog posts and sends out updates about new things they’ve added or changed. Keep an eye out for these so you know what’s new.
• B. Watching Training Videos and Joining Online Events: Xero sometimes offers online classes (webinars) that show you how to use new features or improve your existing skills. These can be really helpful for seeing things in real time.
• C. Talking to Other Xero Users: There are online groups and forums where people who use Xero talk to each other. You can learn tips and tricks from other users and find out how they’re using Xero for their businesses.
• D. Keeping an Eye on Tax Stuff (Like VAT): Tax rules can change depending on where your business is. Xero usually tries to update its software to help you stay on top of things like VAT (value-added tax) if it applies to you. Make sure you understand the tax rules in your area.
• E. Exploring New Ways to Get Paid (Payment Methods): As technology changes, new ways for people to pay online or in person come out. Xero often adds support for new payment methods. Keeping up with these can make it easier for your customers to pay you.
• F. Seeing How It Works with Online Stores (Ecommerce): If you sell things online through an ecommerce platform, Xero is always trying to make it easier to connect those stores so your sales data comes into your bookkeeping automatically and in real-time.

By staying informed about these updates.

You can ensure that your small business is using Xero in the best possible way in 2025 and beyond!

Wrapping Up

So, there you have it!

You’ve taken a good look at how to use Xero to manage your business money.

It might seem like a lot to learn at first.

This is especially true if you’re a startup or one of the new users, but don’t worry!

Just take it one step at a time.

You’re already on your way to better money management.

As you get more comfortable, you can explore the cooler, more advanced features to really make Xero work for your organisation.

Remember, Xero is there to help make your business life easier.

So, jump in, give it a try, and don’t be afraid to ask for help if you need it.

You’ve got this!

Frequently Asked Questions