What to Prepare Before Setting Up Xero for Your Business

Summary

Setting up a new Xero file often feels heavier than it should, but it actually requires basic business information rather than advanced software skills or prior knowledge of the platform.

This guide focuses on five key preparation areas:

your business identity,
your tax registrations,
the Xero start date,
your money map or your banking, and
being clear on how your business actually operates day to day.

None of these require accounting expertise. They simply require clarity. Getting these right upfront saves time, reduces rework, and prevents many of the common setup frustrations I see later on.

Setting up your Xero is like packing for a long trip: you do not need to know every turn the road will take, but having your essentials organised before you leave ensures you can adjust your plans comfortably once you are on the move.

If you want to know more, read the post below 👇

Introduction

Setting up a new Xero file often feels heavier than it should. Not because Xero is difficult, but because it feels permanent. Like every choice matters, and one wrong step could cause problems down the track.

That fear is completely understandable … and also misplaced.

A stress-free Xero setup is not about knowing the software or about reconciliation or doing it properly from day one. In practice, most setup problems I fix have nothing to do with Xero skills at all. They come from starting before the basics were clear.

So, let me be very clear upfront.
You do not need to understand Xero … before you begin.
You do not need to know how reconciliation works … yet.
You do not need to have everything figured out.

What you do need is a small set of basic information and decisions that already exist in your business, even if they are currently written down somewhere messy or only half-formed in your head.

When those are in place, setting up Xero is straightforward.

This guide walks you through exactly what to have ready before you open Xero, so you can start the setup process confidently.

1. Your business ID

Every business, even a brand-new one, has its legal and basic information. These details might feel obvious or unimportant, but they form the foundation of your Xero setup.

Before setting up a file, you need to know:

your business structure (sole trader, company, partnership, or trust etc.)
your legal name and trading name
your business registration numbers (like ABN or ACN in Australia)
your business address and main email
your logo, if you have one

Your business structure must be confirmed and your business properly registered before the setup. Xero uses this information to apply the correct rules and templates in the background. If it turns out later that the selected structure was wrong in Xero, the cleanest solution is often to start again. So, getting this right from the beginning saves you time and frustration.

If you don’t have a logo yet, that’s fine. It does not prevent you from using Xero effectively. Invoices and templates can be updated at any time.

2. Your tax settings

Tax is where most new users freeze, even before Xero is opened, usually unnecessarily. In reality, this step is much simpler than it sounds. At this stage, Xero is not asking you to calculate anything or interpret legislation. It simply needs to know which registrations apply to your business.

You need to know:

whether you are registered for GST, VAT, or sales tax (country dependent, of course)
your financial year end (30 June, 31 Dec, 31 March or something else?)
your GST accounting method (cash or accrual)
your BAS reporting cycle (monthly, quarterly or annual)
whether any withholding or other specific taxes apply

If you are unsure about any of these, that does not stop you from starting your Xero file. These settings can be reviewed and adjusted later once confirmed. The only real rule here is this: don’t lodge your first BAS or tax return until they are confirmed

3. Your Xero start date

Your Xero file does not have to start on the day you sign up. Oh, no … you can choose (practically) any date as your Xero start date.

The right start date depends on:

when your business began trading
whether you already have business transactions before the signup date
whether this is your first accounting system or you are moving from another one

New businesses that haven’t traded yet usually start from their official registration date.

If your business is new but you have already been trading for a short period, your start date can still be the registration date, with the additional step of importing those earlier transactions into Xero.

If you are switching from another system, you have more flexibility. You can choose any start date that suits your business. The key decision is whether you want to import your full transaction history or set a clean cutoff date, bring in opening balances, and continue from there. While this decision can be more complex, in my experience, choosing a financial year-end cutoff is often the most practical and least painful option.

Once these basics are in place, even choosing the right Xero plan becomes much clearer. You can read more about how to choose the right Xero plan here.

4. Your money map

At this stage, you want a clear picture of how money moves in and out of your business.

List all bank accounts and payment providers your business uses, including

your main business bank account,
credit cards,
loan accounts, and
payment services such as Stripe, PayPal, or Square.

For each account, ensure you have the account name, BSB or routing number, and account number at hand. If you operate internationally, remember to include all your foreign currency accounts as well, and be sure to note their respective currencies.

If you are migrating to Xero, gather bank statements as at your chosen Xero start date (and not the signup date!).

Bank feeds are one of Xero’s strengths, but they do not need to be set up immediately. Accounts can exist without feeds, and feeds can be added later.

5. How your business actually operates

You do not need a perfect sales process to start Xero. What matters is understanding how your business really works.

Here’s an extensive list of questions that map out the main characteristics of your business operation:

what you sell: Is it products, services, or a combination of both?
whether you send a quote first or do you invoice directly?
what your starting invoice number is: you do not need to begin at INV-001. If you want to appear more established, you can choose a higher starting number.
how and when customers pay
your payment terms to clients
whether you offer credit
how you handle supplier bills and expenses
whether you use a business card for expenses
how you keep a record of the receipts: just a hint: Hubdoc is a super receipt capture tool and it comes free with most paid Xero subscriptions
whether you want tracking by project, location or something else
whether you have existing customer or supplier database to import

This may feel like a lot, but the clearer you are about how your business operates in real life, the easier it will be to set Xero up in a way that supports you rather than complicates things.

One important reminder: you do you. Xero is a tool. It should fit your business, not force your business to fit the software.

A final note

Xero is not a one-chance setup.

You are not locked into every decision. You do not need to complete everything in one sitting and you do not have to get it perfect immediately also. Almost everything can be edited later. If you upload the wrong logo or use an incorrect address, those changes can be made in seconds.

The biggest barrier I see for new users is not the lack of ability, but the fear of making a permanent mistake. That fear fades once you understand that Xero is designed to be revisited, adjusted, and refined as your business grows.

If you have gathered the items above, you are ready to start because you have removed the guesswork from the process.

I believe in You: you’re a champion 🏆