What Xero Should You Use?

15 May 2019

 

WHAT XERO SHOULD YOU USE?

 

 

 

 

These are the main Xero options used:

  • Non GST Cashbook     $12 + GST per month
  • GST Cashbook   $21 + GST per month
  • Starter   $27.50 + GST per month
    • Limited number of transactions per month (5 invoices, 5 bills, and 20 bank transactions)
  • Standard   $60 + GST per month



For Residential Rental Properties

Generally would use a Non GST cashbook.  Once set up Xero would receive all the bank transactions, which could then be memorised or coded.

  • Key concept of cashbook is that it only accounts for income when received and expenses when paid for.  So would not show who owes you money, or who you owe money to.


You can only access a non GST cashbook through an accountant or bookkeeper.  A lot of our clients prefer a monthly fee to complete their annual financial statements and tax returns, which includes the Xero fees. For full details about the monthly accounting fees options, click here. 
 
If you do not want to go on the Monthly accounting fee option, we would invoice your monthly Xero subscription to you separately each month.  There would also be a one-off fee of  $25 + GST charged to set up your Xero (if you do not choose the monthly accounting fee option).




Short Term accommodation properties such as Airbnb

Generally this entity would be GST registered, so would use a GST cashbook.

  • Xero would calculate your GST due, and show calculations you can check before filing with IRD.
  • Key concept of cashbook is that it only accounts for income when received and expenses when paid for.  So would not show who owes you money, or who you owe money to.


You can only access a non GST cashbook through an accountant or bookkeeper.  A lot of our clients prefer a monthly fee to complete their annual financial statements and tax returns, which includes the Xero fees. For full details about the monthly accounting fees options, click here. 
 
If you do not want to go on the Monthly accounting fee option, we would invoice your monthly Xero subscription to you separately each month.  There would also be a one-off fee of  $25 + GST charged to set up your Xero (if you do not choose the monthly accounting fee option).

 

Commercial Property

Generally would be GST registered, and would often invoice tenants for outgoings.  Starter or Standard would be best.

  • Would show how much each tenant owed you at any time.
  • Xero would calculate your GST due, and show calculations you can check before filing with IRD.


We recommend owning the Starter or Standard Xero subscription yourself.  This means you have full ownership and control.  You can invite us as your accountant to access your Xero, as well as any other relevant parties if you wish.  If you change accountant, your Xero continues without any issue, as you own the subscription.  It is $5 per month more expensive, but we feel this is worth it.



 
Property Trading

Generally would be GST registered, and would often have a large amount of invoices due to suppliers for renovation costs.  Starter or Standard would be best.

  • Would show how much you owe each supplier at any time.
  • Xero would calculate your GST due, and show calculations you can check before filing with IRD.

 
We recommend owning the Starter or Standard Xero subscription yourself.  This means you have full ownership and control.  You can invite us as your accountant to access your Xero, as well as any other relevant parties if you wish.  If you change accountant, your Xero continues without any issue, as you own the subscription.  It is $5 per month more expensive, but we feel this is worth it.



 
Xero Tips
 

  1. Always use one xero for one entity.  So if you have a Trust owning 1 rental, and an LTC owning another rental, you will have two Xero’s.  One for the Trust and one for the LTC.
  2. Use Tracking.  Tracking can help you see the Profit or Loss for each Property.  So one LTC might own 5 properties all managed through one bank account, then you would use Xero Tracking to monitor the Profit or Loss for each rental.
  3. Try to put all income and all expenses through the business bank account that is on Xero.  That way Xero will have the transaction that just needs coding.  If you pay for expenses on a private credit card, then get the business account to repay you.
  4. Use Budgets and run the Budget Variance report to compare Actual vs Budget.


I hope this quick summary helps you.


Kind regards
Ross Barnett

 
 
 
 

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