General tips to speed up your use of Xero:

1. Increase your screen real estate by maximising your browser and switching off the green getting started guides.

2. Use lots of tabs - for example in the GST audit report if you want to recode a few transactions you can right click and open each in a new tab. When you have finished recoding delete those tabs and just refresh the browser on the GST audit report.

3. When reconciling, rather than selecting the account code from the dropdown list just start typing the name or number - Xero will find it faster than you can select it from the list.

4. When entering dates in date fields, tab to get today's date. If you want a different date just type it in, any date format will do, Xero will work it out. It is faster than using the drop down calendar.

5. A lot of the Xero screens have the option to select the number of items to be displayed on a page. Rather than scrolling through pages, increase the items to be displayed to the maximum eg from the standard 25 items per page to 200.

6. When you change to a different Xero organisation in one browser tab or window, any other Xero tabs/windows will be switched to that organisation the next time you do anything. You can log on to two organisations at the same time by either using two different browsers (e.g. Chrome and IE at the same time) or the same browser twice if one is in an Incognito window.

Coding tips:

1. If you need to recode a transaction either edit it or use the Remove and Redo button and reconcile it again. If you need to change multiple transactions have a look at Find and Recode on the Advisor menu.

2. Entertainment - you can split it as you go between deductible and non-deductible entertainment codes using Add Details on the reconciliation screen. However this can be a bit time consuming so if you want just code it all to Entertainment and we will make half non-deductible when we do the year end accounts. Also see our Entertainment FAQs.

3. Property managers statements - you can split these as you go to account for the expenses deducted by your property manager. This can also be quite time consuming so if you want just code all the income to rental income and we will gross up the rent and account for the deducted expenses when we do the year end accounts (we will need copies of your property managers statements to do this).

4. Xero will only let you change the account code of a paid invoice. If you need to change anything else delete the payment from the invoice by going into the invoice, drilling down on the payment and clicking the Options button and clicking Remove and Redo. Then edit the invoice to make your changes and when you are finished reconcile the payment to the invoice again. You can also use Find and Recode.

The easiest way to migrate to Xero is to do the conversion as at the end of the financial year. Assuming your financial year ends on 31 March we would take the closing balances from your old accounting system (e.g. MYOB) as at that date and enter them into Xero as conversion balances.

The process is:

1. Set up the Xero account with an appropriate chart of accounts. If you currently use MYOB we can import the MYOB chart but often it makes sense to use the Xero chart of account and just add a few you may need.

2. Set up bank accounts in Xero with bank feeds and import historical bank data from 1 April.

3. Set up credit cards in Xero and import historical data from 1 April.

4. Set up invoicing in Xero.

5. Enter sales and purchases (receivables and payables) invoices outstanding as at 31 March.

6. Enter conversion balances from your old system.

7. Enter fixed assets from your old system.

8. Training in Xero.

At this stage you would then reconcile all the transactions since the start of the financial year, this might take and hour or so depending on how many transactions there have been. The advantage of doing it this way is that you get a full years data in Xero for financial year and we are using your published financial statements as a starting point.

Alternatively we take 1 October as the Xero start date and use your 30 September balances from your old system.

Either way the cost/effort involved in doing this very much depends on the state of your old system. If we can take your profit and loss, balance sheet and receivables and payables and use these as they are then the conversion will take approximately two hours, with another two hours for one on one training. We charge this work at $150 plus GST per hour so the total cost would be $600 plus GST.

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The cashbook version (Ledger and Non-GST cashbook)  is a simplified version of Xero that is available only through Xero partners for their clients. The main differences between it and the full Xero versions (Ignite, Grow, Comprehensive and Ultimate) are that the in the cashbooks:

1. You can’t create invoices for sales and purchases (accounts receivable or accounts payable)
2. There is an "Ask my Adviser" option on the help menu in the full Xero versions this sends questions to us via email.
3. There are fewer reports available to your accountant.

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If you transfer money into the organisation (e.g. to help pay for mortgage interest for a rental property) code to 970 Funds Introduced.

If you are paying yourself a salary and paying PAYE to IRD code to 477 Salaries. The PAYE component can be coded to 477 Salaries or 477/PAYE IRD PAYE Tax (your personal preference).

Otherwise code all money you take out of the organisation as 980 Drawings and at the end of the financial year your accountant will sort it out.

Also have a look at "What do I code tax payments and refunds to FAQ"

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The easiest way by far is to set it up as a bank account with an automatic bank feed and then reconcile the transactions as you do for an ordinary bank account. Most New Zealand credit cards now have bank feeds.

If you don't have a credit card that supports bank feeds you can still set up another card in Xero but you will need to manually import statements on a regular basis so you can reconcile them. If you do this we have found that the best way to avoid missing or duplicated transactions is to:

1. Set the import start date as the day after the last transaction imported.

2. Set the end date at least two business days before the day you do the import (some banks like to change the transaction dates a day after the transaction has turned up in internet banking).

3. Import once a month or so - don't leave it too long as some banks only hold three months of transactions online.

4. When importing if you get prompted to enter a date format select DD/MM.

Remember if you have the card setup as a bank account when the payment goes out of your transaction account to pay the bill code this as a Transfer not a payment (see transfers below).

If you don't set the card up in Xero then when you pay for the credit card bill from one of your business bank accounts the payment will come up as a transaction to be reconciled. When you reconcile the payment in Xero use the Add Details link on the Create tab to add line items for each of the purchases the payment is paying off, coding each to the correct account code. This will only work if you always pay off the full amount rather than the minimum payment and it is time consuming if you have lots of credit card transactions.

There is a good explanation of how to manage credit cards at the Xero help centre here.

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If you use it mostly for business then set it up as a business credit card as above and code any personal transactions to Drawings.

If you find you have a lot of personal transactions then you can still use it in Xero. You may want to set up a bank rule that codes everything on that credit card account to drawings by default and then when it isn't drawings just click the don't apply rule link on the reconcile screen.

Or if you use it mainly for personal use and occasionally make a business purchase then it may be easier to keep it out of Xero and claim the expenses back as detailed in the next FAQ.

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For individuals and small businesses we recommend keeping a breakdown of expenses in a spreadsheet and periodically making a payment from the business account to yourself for the amount of the expenses. When you reconcile the payment in Xero create a transaction and use Add Details to add a line for each of your expenses selecting the appropriate expense code.

If you have a version of Xero with invoicing (i.e you have the option to Add a Sales invoice or Bill on the dashboard) then a fast and easy way to reimburse yourself is to use an Accounts Payable Invoice (now called a Bill) in Xero.

On the dashboard click New Bill:

When the bill is complete, Approve it and then either transfer the money to pay you the total of the invoice or pay it out of funds introduced. Coding it to Fund Introduced adds it to the amount the business owes you and it will be offset against drawings at year end.

If you don't have invoicing you can use an Expense claim - it is a lot more convoluted but it gets there. The steps involved are:

1. Create - On the Business tab under expense claims add receipt(s) to create an expense claim.

2. Submit for Approval - When you have finished adding receipts and want to pay the claim tick them all and click Submit for Approval (in

Accounts/Expense Claims/Current Claim).

3. Approve and Authorise - In Accounts/Expense Claims/Awaiting Authorisation click into the claim then click the Approve button. Enter the payment date and reporting date and click Authorise (use the same date for everything - this is the date it will go into the accounts and GST return).

4. Pay the Claim - It is easiest to pay from Funds Introduced. In Accounts/Expense Claims/Awaiting Payment click into the claim, enter the amount paid as the total of the claim, enter date paid same as the date in 3 above, in paid from select Funds Introduced and click the Paid button.

Regardless of which way you do it make sure you put plenty of detail in the description field so you don't have to go hunting later to find out what the payment was for. Have a look at the next FAQ item for more details on Bills (Accounts Payable invoices) and Expense Claims.

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First off you need to know what home office costs you can claim and the the percentage of your home you will be claiming for (see "What home office costs can I claim?" in General FAQs).

If you have a version of Xero with invoicing (i.e you have the option to Add a Sales invoice or Bill on the dashboard) then a fast and easy way to enter you home office costs into Xero is to use an Accounts Payable Invoice (now called a bill in Xero). If you don't have invoicing you can use an Expense claim - it is a bit more convoluted but it gets there.

Alternatively you can just give us the information at the end of the year and we will add it into the final accounts for you!

Using a bill

Create a new bill dated the last day of the financial year (e.g. 31 March) and add a line for each cost you are claiming.

1. Set the reference to Home Office and the amounts to be Tax Inclusive (if you are GST registered).

2. Enter the percentage you are claiming in the quantity field (e.g enter 10% as 0.10) and the full amount of the expense in the unit price field.

3. Code all home office costs to Office Expenses.

4. If you are entering interest on your mortgage make sure that you set the tax rate to No GST for that line. When the bill is complete Approve it and then pay it from Funds Introduced with the Payment date set to the same date as the bill. If you need to change the bill after you have paid it just click into the paid bill, click into the payment and delete the payment. Then you can edit the invoice and add the payment again.

When the bill is complete Approve it and then pay it from Funds Introduced with the payment date set to the same date as the bill.

If you need to change the bill after you have paid it just click into the paid bill, click into the payment and delete the payment. Then you can edit the invoice and add the payment again.

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Using an Expense Claim

Create a new expense claim as detailed in the FAQ above and enter the home office costs.

1. Set the line amounts to be tax inclusive.

2. Add a line for each cost you are claiming, enter the percentage you are claiming in the quantity field (e.g enter 10% as 0.10) and the full amount of the expense in the unit price field.

3. Code all home office costs to Office Expenses.

4. If you are entering interest on your mortgage make sure that you set the tax rate to No GST for that line.

Once you have your claim completed then you can submit it, approve it and pay it from Funds Introduced.

Important: When you approve the claim you are asked to enter the payment and reporting dates and authorise it - use the date you want it recorded in the accounts (usually the last day of a GST period or the last day of the financial year). Once the claim has been Authorised you can only change it using the Advisor/Find and Recode feature.

From a tax and GST point of view it doesn't matter as long as the GST is correct and is treated the same way when you code the expense and also the corresponding payment from the client.

However if you have a lot of these expenses it is best to separate them out so a) you can find them easily and b) they don't get included in your normal business expenses and overheads. To do this create a Reimbursable Expense expense code and code all the expenses you are going to invoice client for to this code when they are incurred. When you invoice the client also code the income to this expense code. The balance of this account then always shows what you haven't yet invoiced clients for.

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In other accounting systems you would usually set up separate ledger codes for each rental property then code the transactions to these. This gets unwieldy as you end up with a lot of account codes that are effectively the same thing. Xero has a better way of doing it called "Tracking". You set up a tracking category (e.g. Rental Properties) and then add each rental property as an item (e.g. 53 Marine Parade, 17 Hill St) and whenever you reconcile a transaction you can select the category and property that the transaction relates to from a drop down list. The Xero reports have options that allow you to report by tracking category.

There is more detail on this at the Xero help centre here.

For purchases of equipment less than $500 (excluding GST) per item code to the appropriate expense code (e.g. for a printer code to 'Computer Expenses')

Equipment costing $500 or greater (excluding GST) is treated as a fixed asset and should be coded to an asset account (e.g. 'Office Equipment'). At the end of the financial year we will calculate the depreciation for the assets and code it to the assets depreciation account.

Usually entertainment expenses (meals and drinks consumed off the office premises) are 50% deductible so you code half of the payment to Entertainment and half to Entertainment  Non deductible. You can do this in Bank Reconciliation by clicking the Add Details link on a transaction and adding a second line. If you put 0.50 in the quantity field Xero will do the maths for you. Alternatively as this can be a bit time consuming you can code it all to Entertainment and we will make half non-deductible when we do the year end accounts.

If you bring food or drinks into your office (e.g because people are working late) then it is usually fully deductible - code to 'Office Expenses'.

If you are travelling for work any of your accommodation and associated costs (meals etc;) are fully deductible - code to one of the travel expenses codes. However if while travelling you are paying for meals for work related guests then the cost of the meal is only 50% deductible - code 50% to travel and 50% to Entertainment - Non deductible.

Definitive answers on what you can and can't claim are contained in the IRD's IR268 booklet on entertainment here.

Refunds you receive will appear as receipts in the bank reconciliation. Code them to the same account you coded the original payment to.

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You can only claim back New Zealand GST that you have been charged

If you are travelling overseas then there will not be any GST to claim on your overseas purchases and travel. When you reconcile the payment make sure you click Add Details and select No GST or create a ledger code specifically for the overseas expenses that defaults to No GST. Don't be fooled by the Australian GST - its not the real thing and you can't claim it in New Zealand, it is just a part of the purchase price.

If you are importing goods into New Zealand then there may be GST you can claim. Some of the invoices you get from the freight forwarders can be quite confusing so you may have to look carefully to find these costs:

1. Those costs without any GST  e.g. overseas freight, insurance and admin fees, duty. Code to the appropriate code in Xero with Tax Rate No GST.

2. Those costs that do have GST on them  e.g. NZ freight, insurance and admin fees. Code to the appropriate code in Xero with Tax Rate 15% GST on Expenses.

3. The GST on imports that customs charge you. Code to 820 GST with Tax Rate GST on Imports. This makes sure it shows up in the Xero GST return as GST you have paid.

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We have found there is some confusion over where to code various tax payments to IRD to  it's not surprising as there are a lot of them! To simplify things for our clients we have removed some extra codes that are not needed and renamed the remaining tax codes. You should code the multitude of IRD tax payments/refunds as follows:

A couple of things to note:

1. Don't code anything to 505 Income Tax Expense at Year End  it's for us to use when finalising the tax position at year end.

2. If you type IRD in the account code box on the reconciliation screen it will bring up all the relevant codes for all taxes except GST.

3. If in doubt code to 830 IRD Income and Provisional Tax.

Code all GST payment to IRD / refunds from IRD to 820 GST.

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You can file your GST return directly with the IRD from within Xero. To do this you need to have a myIR login with IRD (if you haven't got one yet see the General FAQ titled "How do I register for a myIR username at IRD?").

First of all make sure you have reconciled all your transactions in Xero to at least the end of the GST period, run the Xero GST report and checked the Xero GST audit report.

When you are ready to file your GST return you need to let Xero know you are doing this by saving the report as a final version using the green Save button at the bottom of the GST report. Xero uses this information so that it can work out if any adjustments are needed in future reports due to transactions in previous periods being edited.

Once you have finalised your GST return in Xero you get a "File now with IRD" button at the top of the return.

When you press the "File now with IRD" button you will be prompted to enter your myIR username and password and then the GST return will be filed and you will be returned to Xero. You know the return has been filed correctly as instead of the File now button you will see a successfully filed message.

Now all you need to do is pay the GST to IRD or if its a refund watch it come into your bank account. If you are also paying provisional tax we recommend you do separate bank payments for each as it makes your reconciling easier. Remember when you reconcile the payments or refunds in Xero code GST to "820 - GST" and Tax to "830 - IRD Income and Provisional Tax".

If you get an error message when you file your GST return with IRD that says "Could not file due to invalid return type" then it probably means that your GST settings in Xero don't match IRD. To fix it in Xero go to Reports/GST Return and click the Edit GST Details link

Change the Tax form. There are only two options GST 101 and GST 103 so change it from whatever you have to the other one, save the settings and then try filing the GST return again. If it still doesn't work log a call with Xero or contact us.

If for some reason you don't want to file your GST return from Xero to IRD you can still do it the old way - that is you go to the IRD website and follow the "Get it done online" link on the main page to get to the GST return. Once logged on to myIR click on the GST return link in your Things to Do list on the right of the screen and follow these steps:

1. Select "I know the GST components and need to work out the total sales and purchases".

2. Select No for the "Is this the last GST return for this GST number?" question.

3. Complete the Sales and income and Purchases and expenses sections using the numbers from the Xero GST return.

4. If you have adjustment either a credit or debit adjustment in your return the IRD likes to know what it was for. If in doubt then select "Other" from the list of choices

5. Check the totals match the Xero GST return.

6. Review the return and submit it.

These get coded to 830 IRD Income and Provisional Tax. At the end of the year your accountant will calculate total amount of tax expense for the year and use 505 Income Tax Expense at Year End to record that.

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Code to 477/PAYE IRD PAYE Tax. If this code is missing use 477 Salaries.

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You can edit a reconciled transaction to change any details (including GST) using the Manage menu insert link then clicking Account Transactions:

1. Click the transaction you want to delete by selecting the tick box on the left

2. Click on the Remove and Redo button to redo the transaction and reconcile it

Then go back into the reconciliation screen  the transaction should appear there and you can reconcile it with the correct code.

If you have a lot of transactions that need to be changed have a look at Find and Recode on the Advisor menu.

If you want to see all transactions coded to a particular code then Settings/Chart of Accounts, find the account code and click on the number to drill down and see all transactions coded to that code (oldest to newest). Alternatively you can use Reports/All Reports/Account Transactions, select the account code and date range and click Update. Note these are all GST exclusive amounts.

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In Xero you can code transfers between bank accounts directly in the reconciliation screen. On the right hand side of the reconciliation screen there are Match, Create, Transfer and Comments tabs.

1. Source account: When reconciling a transfer select the Transfer tab and then select the bank account the transfer is going to. Click Ok.

2. Destination account: When you reconcile the transfer transaction Xero should match it up with the transfer you created in the source account and show it on the Match tab. Click OK to reconcile.

There is a really good explanation of credit notes on the Xero Help site here.

You can apply a part payment to an invoice from within the bank reconciliation screen. In the reconciliation screen click the Find and Match link.

On the Find and Match screen tick the invoice or expense claim that you want to apply the partial payment to:

Then click the blue "Split" link on the line you just ticked and enter the amount.

Click Split then Reconcile to save it.

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You can apply a payment to more than one invoice from within the bank reconciliation screen. In the reconciliation screen click the Find and Match link.

On the Find and Match screen tick the invoices that you want to apply the partial payment to then click Reconcile.

If the total of the payment is less than the total of the invoices then use the Split option described in the previous FAQ.

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To process an overpayment (e.g. a customer pays $450 on a $400 invoice, overpaying by $50):

1. On the $450 payment on the reconcile screen click Find and Match

2. Tick the invoice the payment is for - this leaves the total out by $50

3. Click the Create new transaction +New button and select the Receive Money option

4. On the Receive Money transaction click the Direct Payment button and select Overpayment

5. Change the From to be the contact name (if not already set correctly)

6. Check the amount is the correct amount of the overpayment and click Save Transaction

7. Now on the Find and Match screen two items will be selected, the $400 invoice and the $50 overpayment adding up to the $450 paid - click the Reconcile button

The end result is that the payment is reconciled and there is a special type of credit note created in Account Receivable/Awaiting Payment for the overpayment. The next time you invoice the customer Xero will ask you if you want to apply the credit.

If you want to refund the overpayment to the customer then go into the credit note and at the bottom fill in the Make a cash refund section, entering the amount being refunded (usually the full amount of the overpayment), the date you are refunding them and the bank account the refund will be paid from and click Add Refund. Then when the refund has been paid and you go to reconcile the transaction it will match the overpayment credit note.

The screen shots below show the process in more detail.

On the $450 payment on the reconcile screen click Find and Match, tick the invoice the payment is for - this leaves the total out by $50, click the Create new transaction +New button and select the Receive Money option.

On the Receive Money transaction click the Direct Payment button and select Overpayment.

Change the From to be the contact name (if not already set correctly).

Check the amount is the correct amount of the overpayment and click Save Transaction.

Now on the Find and Match screen two items will be selected, the $400 invoice and the $50 overpayment adding up to the $450 paid - click the Reconcile button.

If you want to refund the overpayment to the customer then go into the credit note and at the bottom fill in the Make a cash refund section, entering the amount being refunded (usually the full amount of the overpayment), the date you are refunding them and the bank account the refund will be paid from and click Add Refund.

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Before you start you will need to set up a chart of accounts code for the prepayments. It needs to be of type Current Liability and if you are GST registered should have a tax rate of GST on Income. Call it something like Income Received in Advance as the term prepayment is confusing - it is also used for expenses you pay in advanced (prepaid expenses).

From here on the process is similar to reconciling an overpayment (see the preceding FAQ). Start the same way by using Find and Match, clicking the New / Receive Money button and then change the Received as from type Direct Payment to type Prepayment.

Fill in description and in the Account field select the Income in Advance account you created and click Save Transaction then Reconcile.

The prepayment then sits in the system a bit like an accounts receivable credit note. You have the option of refunding it by adding a refund to the prepayment "credit note" (same as overpayment) or creating an invoice and allocating the prepayment to it.

Note: Income in Advance shows on the balance sheet report as a liability (GST exclusive).

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You can adjust for small differences (cents rather than dollars) between what was invoiced and what was paid using the adjustment option in the reconciliation screen.

For larger differences you can do a find and match to match the invoice and then click the receive money button on the find and match screen to create a receive money transaction for the remaining amount. If it is an overpayment then have a look at the Overpayments FAQ item.

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To change the email address you log on to Xero with:

1. Log on to Xero

2. Click your name on the top right hand side of the screen

3. Click the Account option of the drop down menu

4. Click the Change link next to your email address

5. Enter your new email address and confirm it by entering your password, then click Save

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Yes and no.

Xero isn't hard to use but it is different to traditional desktop accounting systems. If you use it the "Xero way" it is blindingly efficient, if you use it as you would other accounting systems then you end up creating extra work for yourself.

If you enjoy reading manuals and watching how-to videos then you can absolutely teach yourself how to use Xero effectively in a few hours or less.

However if you are like most of us and you just want to start using it we recommend strongly that you get some one on one Xero training to point you in the right direction. It will save you a lot of time down the track. We can provide this training.

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Xero is constantly being improved and early in November 2016 the Dashboard got a makeover - it is now prettier and faster. As part of this the Manage button is gone, replace by three little dots.

Before:

After:

When you click the manage dots this is what you get: