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Customising Your Xero Codes And Chart Of Accounts

June 18, 2021
Bill Kimball

xero sub accounts

Code – this will be the fixed code that will be used each time, try to keep the codes in line with other ‘Account Types’. For example, all 4000 codes will relate to Revenue. If you’re happy to get a little ‘hands on’ with the internal workings of Xero, it’s possible to amend or create these codes yourself. The Chart of Accounts uses numerical codes to track every incoming and outgoing transaction you carry out in the business. For example, ‘Sales’ are coded against the 200 code, ‘General Expenses’ are logged under the 429 code and ‘Printing & Stationery’ is assigned to the 461 code. It’s a way to codify your costs and income so you can make more sense of them. Access all Xero features for 30 days, then decide which plan best suits your business.

xero sub accounts

The cards operate differently from our old Westpac Cards. While all expenditure items appear against each card, the repayments are shown against one “master” card. Select “Transfer Money” again, and enter the amount for the second account and save. We have a few clients that have this very same scenario with 2 corporate cards with both Bank of American and Chase. I think that someone would need to see exactly what is happening in the feeds to be able to advise any further.

Technically they should be applied to the credit card feeds but you can’t transfer money to two separate card transactions. Create your chart of accounts at the lowest level of detail you need, then create templates for your reports that structure these accounts in whatever hierarchy you like.

We don’t use hierarchical accounts in Xero – to keep things simple we use a flat structure but there are a couple of things you can do to expand/report. Would it work if you journal the full amount from AB & AC across to A each month which will move the balance of AB/AC in a positive direction and A in a negative direction. Part payments into A will pay off some of the balance of A and the individual transactions will still be showing in AB/AC.

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Very hard to see how Xero is better for these real uses. In the reporting function you can then say ‘group by anything starting in 61 or 62’ rather than clicking different codes to allocate.

This means that there is the potential for data to be deleted or for users to go back and make errors in periods where reports and tax have been finalised. If you don’t do it, you can potentially change the historical record of what has already been reported to the tax authorities. Every business owner should know the difference between cash and accrual accounting. Cash accounting means that transactions are recorded in the accounting system when the transfer of cash occurs. Whereas accrual accounting means the transaction is recorded when the transaction itself happens.

If you don’t have them set up with the right names, you run the risk of items being incorrectly coded. As a result, reports won’t be as clear about how your business is performing. On a cloud accounting system like Xero, the data is always live. Cash accounting is the method of recording transactions in the accounting system as and when the transfer of cash occurs.

Sign up to our newsletter for the latest tips on running your business more efficiently. The FD Works team of accountants are here to help you to get control of your financial destiny and achieve your key goals. From our Bristol and Bath offices our team help startups, scaleups and established firms throughout the South West and across the UK embrace their numbers and succeed. If you’d like any help with customising your Chart of Accounts and Xero codes, we’re always at the end of the phone line. By making it easy to track the numbers that matter, you get an instant, real-time overview of the health of the business. And that’s a huge advantage when it comes to managing your finances, planning your future months’ activity and making important business decisions.


As Xero automatically matches your accounting record with statement lines, a lot of small business owners mistakenly think they can skip this particular step in both the initial step up and daily use. But reconciling your bank is vital to ensuring an accurate account, allowing you to pick up on any missing or duplicated transactions. It’s good practice to use the accounts space wisely, conglomerating reporting unless it is necessary for separate items like key expenses. Make sure you set these up using the correct names so they are later coded accurately, to ensure you get a clear view of how your business is running. Consider our guide more of a companion piece, a set of tips to help streamline the process, learned over years of getting to grips, and watching others attempt to get to grips with the realigning to Xero. Your profit & loss (P&L) and balance sheet reports will show you each account code as a separate breakdown in your reporting, with the option to compare against previous months, periods or years.

  • It is very important that you get friends to VOTE, even if they do not have time to comment.
  • In addition to Peter’s remedy, and this may prove to be more time, but you could make 2 separate credit card payments; 1 for one card account, and 1 for the other.
  • Code – this will be the fixed code that will be used each time, try to keep the codes in line with other ‘Account Types’.
  • Amending your Xero codes so they’re more suited to the needs of the business makes a lot of sense, and adds real value to your Xero reporting.
  • Access all Xero features for 30 days, then decide which plan best suits your business.
  • Hopefully the process of creating an account is self-explanatory.

The bank reconciliation process is a key check to pick up missing transactions or duplicated transactions in Xero. Because Xero automatically matches statement lines with the accounting record, a lot of people think they can skip this step. This is a crucial process and still needs to be done with Xero to make 100% sure that Xero has imported your bank statement lines properly. If you are using an external Payment Gateway like Stripe, these funds are transferred into your business bank account as daily batches rather than individual transactions. This means individual sales and processing fees aren’t accounted for fully.

We’ll help you to improve your scorekeeping and performance management, and will provide you with the important numbers you need for managing the business. Name – this will be the name that appears in your reports, so it’s important to choose a term that everyone in the business will understand. To add a new code – select ‘Add account’ at the top of the page and populate the ‘Account Type’, ‘Code’, ‘Name’ and ‘Tax’ fields. ‘Description’ isn’t mandatory but feel free to add this if you like (it won’t appear in any reports but can be a helpful reminder). Amending your Xero codes so they’re more suited to the needs of the business makes a lot of sense, and adds real value to your Xero reporting.

I have an account named ‘refurbishment’ which contains all sorts of items from purchase of furniture through to replacement of flooring, and numerous other expenses all lumped together. When a report is created, it’s very hard to discern what went where and when, other than seeing a very large number at the bottom. While I think that having sub accounts would indeed be a helpful thing for Xero to implement, in your case, as already said, tracking would work better. Within my company sales, we sell items that fall under various sales categories. I would like to create a sub-account within Sales so that I can run reports on each item. you can informally structure your chart of accounts – it is one of the first things I did on taking over here.

Setting Up Departments (tracking?) Limited To Two?

These may include services like PayPal, Stripe, or GoCardless. With a larger variety of payment options, it is easier for customers to pay you. You should reconcile weekly, if not daily, to ensure that your accounts are as accurate as possible. Small businesses, accountants and bookkeepers in your neighbourhood and across the world trust Xero with their numbers. Xero integration with your CRM allows you to create and update customer information in Xero from the CRM. You can then create invoices from Opportunities in Xero.

i.e. 61nnn is always Office Costs, 62nnn is always employment related. That’s a shame, I guess it’s good practice in most cases. Another idea is create a manual transaction in the bank account and make it a transfer type .

For free support you could invite Xero Customer Care in as a User to your ledger, then send them an email. Or I can do a live support session with you and advise you accordingly in real time.

I’d like to perform fund accounting to track grants and other restricted funds. Xero’s philosophy of being “beautiful” really shines here. Instead of having a bloated and clunky chart full of sub-accounts, Xero has two functions available to all users – report grouping, and tracking. Marketplace section of the Starling app and you should see a Xero tile visible on this page. If you don’t see this, simply follow the steps above as if connecting for the first time. For those with the tile showing, you should click on this and then select Remove to delete Xero from your Starling account.

For example – if we were to sell hotel rooms, all the hotels fall under Sales but I want to run a report on the Sales of one specific hotel. As Catherine mentioned in her post & something I only just realised – the account numbers can go to decimal points. I could probably do the same by bot using feeds and just pushing the qfx into one account but then I loose the ability to see that nice granularity.

The Chart of Accounts is the underlying heart of Xero, and by customising your account codes to the precise needs of your business you can record and track each element of your finances. At the centre of your Xero system is something accountants refer to as the ‘Chart of Accounts’ – a full list of all the codes used within your accounts. Ideally I would be able to transfer two sums, to each credit card account, that would reconcile with the single sum on the current account statement. I am a Xero Certified Advisor and Xero’s award winning Most Valuable Professional. I support small businesses in NZ with professional accounting services and offer paid Xero support and implementation advice to clients all over the globe.

Xero’s default reminders are sent at 7, 14, and 21 days after each invoice due date. If you don’t need this level of detail, we have a shortcut for you. Following these steps will help you to calculate the sales tax on transactions in Stripe, which your bookkeeper can then add to Xero with a manual journal. Most of Bean Ninjas’ clients are online businesses like coaches, consultants, info products, e-commerce, SaaS, and others. So, it doesn’t make sense to have 5 different lines for office expenses. For example, office expenses, printing and stationery, subscriptions, general expenses, and light and power.

If the balances don’t equate, then there are most likely missing or duplicated transactions which need to imported or removed. It is crucial that this process is done within Xero so that you can be sure that Xero is importing your bank statement lines correctly. For instance, if you’re a strictly online business, it makes no sense for you to waste 5 lines of your chart on office expenses. If you don’t require this detailed an overview, then you can use the following shortcut to calculate the sales tax on transactions in Stripe, which can add to Xero using a manual journal. Let’s run with Stripe as the example external payment gateway. The one downside of using integrated apps like Stripe is that sometimes they do incur a little extra work on instalment, but, when considered next to the long-term time and cost savings, it’s more than worth it.

So, if you accept say AUD and USD, connect it up to Xero with two accounts, and you will solve the missing data issue. A lot of people know you can connect PayPal accounts to Xero, but it can present problems when you accept multiple currencies. This is solved by having a PayPal account set up in Xero for each currency. If you’re unsure about the settings, make sure to check with your bookkeeper or accountant as part of your Xero Setup process. I prefer to only have accounts within the Chart of Accounts, where we are reporting on these items separately. The Xero Chart of Accounts is a list of all of the accounts hat transactions can be allocated to. For example, telephone expense is an account within the Chart of Accounts.

The next step is to set up your bank account feeds, including credit card and PayPal accounts, if you have them. This option works well for businesses that do need that level of detail in Xero; however, it can also create additional work if there are heaps of transactions. However, there are a few methods to treat this in Xero. If your business requires specific detail in your transactional history, you can add on an app, like Silver Siphon, which will push the data onto Xero. Decide how long customers will have to pay your invoices and commit it to writing.

xero sub accounts

I hope you also say that you disapprove of Xero using the Best Reply feature to state its position, in a way that stifles debate over new features. Templates are also useful if your accountant prefers to classify/name accounts differently to your own preferences. You aren’t limited in Xero to the name of accounts – you could call them 123, or 123XYZ etc. Also, the P&L layout can be altered as you wish, so you can group particular accounts together – for instance, any accounts starting with 123 at the start goes into Halls etc. Possibly you can try this out in the Trial or Demo, go to Reports, P&L, then at the bottom you should be able to see the layout options. None of the methods in Xero will scale as well as they pollute the top level chart, etc.

As Xero is connected to your bank, transactions are pulled through automatically. Xero remembers the last time you categorised a transaction, so you can simply click ‘OK’ if you want it to go to the same category.

If this is the first time you are linking your Starling accounts, it is recommended that you select the option to create a new Xero account. If you linked your accounts previously, you should select your previously linked Xero account on this page.