How to Set Up Xero Conversion Balances

When should you move to Xero?

If you are a new company and this is your first year doing your finances, you can start any time. Usually the sooner the better – to make sure you are on top of your finances.

If you are an established small business with trading history, you have two options:

-Set it up at the end of your financial year-end

This option is highly recommended. The reason why, is because at the end of your financial year-end your accounts have been fully closed and all your year-end figures are (hopefully) spot on. It will give you a lot of headaches if you set it up and the figures are actually wrong. So make sure you tidy up your accounts and finalize them before moving.

What if you want to start at the end of your financial year-end, but your accountant hasn’t closed the accounts as yet?

You can set up Xero conversion balances just with the bank balances (so at least you can rely on that). Start your accounts on the 1st January for example and once your accountant has closed the year-end, you can then go back and enter the opening balances.

Please note, that bank feeds sometimes take a few days – weeks to work, so if you want to make sure you can do your accounts in Xero on the 1st Jan, start setting it up a bit sooner. Bank feeds don’t import historical data, so if it starts working later than you planned, you will have to import transactions manually. If the bank feed starts working sooner, you can easily delete the unwanted transactions.

-Set it up half way through your financial year

If you have the choice, I highly advise against this one. The reason is that most companies, bookkeepers don’t close the accounts properly half way through the year. So the opening balances you have in your old accounting software might not be correct and hence Xero won’t be correct either. This is usually because things weren’t accrued for or depreciation wasn’t done, and so on. So unless you have no other choice, go for it, but this shouldn’t be your #1 choice.