We all make mistakes, and when you first start working with Xero, you are bound to make a few of them. We often see common mistakes that, if not rectified, can become quite costly. You should be aware of them if you want to get the most out of Xero’s powerful cloud accounting system. Here are five of the common mistakes we come across.
Not connecting all the credit card and bank accounts dedicated to your business
You want to ensure that all your business bank and credit card accounts are synced to Xero to ensure that you don’t miss any sales expenses in your reports.
Ensure that you keep your business accounts separate from your personal ones if you want to avoid hassles at tax time. Trust us; we will thank you! Doing this also helps you make business decisions quicker and more accurately.
Not reconciling the bank account in Xero to bank statements
Run reconciliation reports in Xero regularly and then compare them to your bank statement to make sure there aren’t any duplications or errors.
This is a critical step that is easy for business owners to miss, which means they could be looking at inaccurate or incomplete data when they check their reports.
Giving team members Xero User access and permission levels and not checking them regularly
It’s easy to give key team members full access to the Business’ Xero systems and then forget to review the permissions regularly.
The best practice would be to provide access on an “as needed” basis and make sure you review who has access to the system and what permission level they have quarterly.
It is also important to make sure that you revoke a staff member’s Xero access as soon as they leave.
Not having financial SOPs (standard operating procedures)
It is a good idea to have a proper financial SOP. It will describe who is responsible for what, by when, and a step-by-step guide on how to do it.
Mishandling transactions when you’ve paid with your personal money
Many business owners are unsure of how to handle transactions that are a business expense that you have paid with from a personal account. There are ways to capture the expenses paid on the wrong card in Xero, so you can still claim it as a tax deduction.
It is a good idea to get in touch with your advisor to help make the adjustments accordingly.
Work With a Specialist Advisor to Avoid Mistakes
If you want to make sure you are taking full advantage of Xero and all the features it can offer, it is a good idea to contact an experienced advisor like Precision. We can help you avoid making costly mistakes as we know all the ins and outs of this cloud-based accounting system.
Get in touch with us today If you would like to find out more and chat with a Xero certified advisor. Join the Conversation…