Set up your organisation's financial details
Your financial settings include information used to produce your reports, invoices and bills. If you're unsure about the information asked for, you might like to consult your accountant or bookkeeper.
Choose your financial year-end
Xero sets a default financial year-end for your organisation: March for a financial year that runs from 1 April to 31 March.
Most organisations set their financial year-end to align with their tax year-end.
Changing your financial year-end date impacts your balances, reports and fixed assets. Avoid changing it if you’ve already set Xero up for your organisation and entered your conversion and comparative balances.
- From the Settings menu, select General Settings.
- Under Organisation, click Financial Settings.
Under Financial Year End, click Change.
- Choose your financial year-end date.
- Click Done.
Choose your VAT period and scheme
VAT Period – choose the frequency you submit your VAT Return. When entered, the Xero VAT Return will automatically generate the VAT amount to pay based on this period. You need to complete this so Xero can generate the VAT Return (or Flat Rate VAT Return).
VAT Scheme – You need to complete this to be able to generate Xero VAT (or Flat Rate VAT) Returns. Choose Cash or Accrual in line with your organisation’s VAT registration. If your company is not registered for VAT choose 'None'. If you are registered for flat rate VAT, choose the relevant Flat Rate Cash or Flat Rate Accrual Scheme. Your choice will determine which kind of return will be generated for you in Reports (whether a VAT Return or a Flat Rate VAT Return), and which transaction dates are used for populating your return.
- If you choose a Cash scheme: The return will be run based on the date you made or received payments for invoices, bills and expense claims. It will also be based on the date you entered spend or receive money transactions in your bank account.
- If you choose an Accrual scheme: The return will be run based on the invoice date, or, in the case of expense claims, the 'Reporting date'. All other reports in Xero are based on the actual transaction date. For example, spend or receive money date, invoice date, expense claims reporting date.
- If you choose None: Xero won't calculate VAT on transactions. Xero will use the accrual basis for your reporting, except those reports which are run on the cash basis only.
Only change your VAT registration status if you fully understand the necessary VAT requirement for all accounts within the chart of accounts.
About flat rate VAT schemes: Only choose a flat rate VAT scheme if you are registered for flat rate VAT. Choosing a flat rate VAT scheme significantly alters your chart of accounts and the type of VAT Return generated in Xero. If you switch to either of the two flat rate VAT schemes in Xero:
- Any draft VAT Returns for standard rate VAT are deleted.
- In your chart of accounts, all asset and expense accounts are changed to 'No VAT' by default.
- New tax codes are added to your chart of accounts, for VAT on Capital Purchases and Sales.
- The standard VAT Return are replaced by the Flat Rate VAT Return, which allows you to enter the flat rate percentage applicable to your business.
Organisation’s VAT Number – required to display on outgoing invoices and financial reports (although you can change your invoice branding so that it doesn't show on customer invoices if you prefer).
VAT-related information won't display if your organisation isn't registered for VAT.
Flat Rate Adjustment Account – select or add an account for Xero to use if a flat rate adjustment to balance the VAT account is needed when you publish or file your VAT Return.
Enter Service User Number (SUN) or Owner ID number for BACS payments
If you'll be adding batch payments to pay bills, enter your Service User Number (SUN) or Owner ID number. (If you bank with HSBC, you don't have to do this.)
Use lock dates to close off your accounts for a period or year end
Lock dates stop any changes to data entered before that date. Only users with the Adviser user role can view, set and change lock dates.
Time zone setting in Xero
The time zone setting in Xero determines the date and time shown for those items that are time-tracked. For example, when a user logs in. Xero also uses the time zone setting for time-stamping all actions recorded in History & Notes.
Xero uses your computer's clock to determine what the current date is when entering any transactions or running reports that default to today's date. For example, entering the date on an invoice, or running the Balance Sheet report as at today's date.
The time zone is set to UTC by default but you can change it.