Create a useful chart of accounts in Xero

Your chart of accounts is so important because it spans the spectrum of your accounting from data processing to financial reports.

Too often, businesses, bookkeepers and accountants just use the standard list of accounts that come with the software but this is so unhelpful.

Choose and use the account classifications that fit your business and create a chart of accounts for today and for the future.

Michael's key points from the webinar

Chart of accounts structure

• Well-structured chart of accounts in Xero serves as the DNA of bookkeeping, enabling useful financial reports and making bookkeeping easier and reporting more informative

• Use four-digit account numbers in your chart of accounts to overcome the limitations of three-digit systems and facilitate easier addition of new accounts in the future

Flexibility and future-proofing

• Include all necessary accounts today while leaving room for future additions, making your chart of accounts flexible and future-proof as your business evolves

Logical grouping

• Group related accounts together (e.g. salaries, employer's National Insurance, pension costs, and overtime) to enhance the logic and usefulness of financial reports

Customisation

• Invest time in carefully building a sensible chart of account structure in Xero, rather than relying on the standard template, to avoid being constrained by default settings

Relevant resources

• Do you have the right financial information to run your business?

• How to smartly use cloud accounting apps

• How to choose the right accounting software for your small business (2024)