Xero Setup Checklist for a New Business (Get It Right First Time)

Setting up Xero properly takes about two hours, and the settings you choose in the first ten minutes — GST basis, financial year end and conversion date — are the ones that cause the most pain later. Work through this checklist in order — each step depends on the one before. If something still looks wrong at the end, fix it before you raise your first invoice, not after your first BAS.

Before you touch a setting

Have these ready or you'll stall halfway through:

Your ABN and, if you're a company, your ACN and registered office details.
Whether you're registered for GST and from what date. You must register once your turnover hits $75,000, and many new businesses register voluntarily to claim GST back on startup costs — our guide to registering for GST covers the call.
A separate business bank account. Mixing personal and business money is the biggest cause of messy books.
Your conversion date — the day your Xero records start. For a new business that's the day you started trading; otherwise use 1 July or the start of a BAS quarter.
Logins for myID and Relationship Authorisation Manager (RAM) if you'll be running payroll or lodging your own BAS.

Step 1: Pick the plan that matches your payroll

Xero doesn't sell payroll separately. The number of people you pay is what pushes you up the plans, so choose on headcount first and features second.

Plan	Price per month (as at Sept 2026)	People on payroll	Watch out for
Ignite	$37	1	~20 invoices/quotes and 5 bills a month
Grow	$78	2	No multi-currency or projects
Comprehensive	$107	5	Adds multi-currency, projects, expenses
Ultimate 10	$143	10	Higher Ultimate tiers above this

Xero has raised prices most years, so confirm current rates before committing. Still weighing up platforms? Compare the field in our accounting software guide — switching six months in is far more painful.

Step 2: Organisation settings you can't easily undo

Go to Settings > Organisation details and enter the legal name exactly as it appears on your ABN registration, plus trading name, ABN, address and contact details. These flow onto your invoices, so a typo here is a typo on every document you send.

Then open Settings > Advanced > Financial settings:

Financial year end: 30 June for almost every Australian business. Xero defaults correctly, but check it — a substituted accounting period is rare and needs ATO approval.
Time zone: set it to your own state. Leaving it on a default means transactions dated in the wrong day, which shows up as reconciliation noise at quarter end.
Lock dates: leave blank for now. Once your first BAS is lodged, set a hard lock date so nobody (including you) can change a period you've already reported.

Step 3: GST and BAS settings

Still in Financial settings, this is where new files most often go wrong.

GST registration: set your ABN and tick that you're registered, with the correct registration date.
GST accounting method: cash or accruals. Cash means you report GST when money moves, so you're never paying GST on an invoice before the customer has paid you. Any business with aggregated turnover under $10 million can use cash. Accruals reports GST when the invoice is raised.
GST period: monthly, quarterly or annually, matching what you agreed with the ATO. Quarterly is standard for new small businesses.
PAYG withholding and instalments: only tick these if you're actually registered for them. Turning on PAYG instalments before the ATO has entered you into the system produces a BAS with fields you can't complete.

Getting the method wrong means every BAS is wrong. Late lodgement isn't cheap either — the ATO's failure to lodge penalty for a small entity is one penalty unit ($364) for each 28 days overdue, capped at five units, so $1,820 (as at September 2026).

Step 4: Trim the chart of accounts — and check the tax rate on each one

Xero loads a default Australian chart of accounts with well over a hundred accounts. Most of them don't apply to you, and every one you leave in place is another chance to code a transaction to the wrong bucket.

Go to Accounting > Chart of accounts and:

Delete what you'll never use. You can delete an account with no transactions against it. Once it has history, you can only archive it.
Add the two or three accounts your business really needs. A tradie wants Materials and Subcontractors; a cafe wants Food and Beverage separated. Detail you'll actually look at is worth having; detail you won't isn't.
Aim for 30 to 60 accounts. Fewer, well-named accounts beat hundreds of unused ones every time.
Check the default tax rate on every account you keep. Bank fees, most insurance, ASIC fees, wages, super and owner drawings are not standard GST purchases, and Xero's default won't always suit your situation.

The difference between GST Free and BAS Excluded trips up nearly everyone, and it changes what lands on your BAS. Our explainer on GST-free versus BAS excluded is worth reading before you start coding transactions.

Step 5: Connect your bank feeds

Go to Accounting > Bank accounts > Add bank account. The major banks (CBA, NAB, Westpac, ANZ) offer direct feeds — you authorise through your own internet banking, so Xero never sees your password. Smaller banks and some cards come through open banking instead.

Two things to know:

Feeds take a day or two to start, and most only deliver yesterday's transactions overnight.
Open banking feeds run on a time-limited consent — 12 months is the maximum allowed under the Consumer Data Right rules, and some banks default to shorter periods — which you must renew when prompted. Ignore the email and the feed simply stops — you won't notice until reconciliation goes quiet. Diarise it.

Connect your business credit card and any payment platform (PayPal, Square, Stripe) now too — feeds added later leave gaps you'll import by CSV.

Step 6: Invoice branding, terms and payment services

Under Settings > Invoice settings, edit the standard branding theme: add your logo, set payment terms explicitly (14 days from the invoice date is common) and put your bank details in the footer so customers can actually pay you.

Check the template produces a valid tax invoice: the words "Tax invoice", your business name and ABN, the date, what you sold, and the GST amount. Our checklist on tax invoice requirements has the full list, including the extras needed on sales of $1,000 or more.

Then decide about payment services. Connecting Stripe or GoCardless puts a "Pay now" button on your invoices, which usually gets you paid faster. It isn't free:

Stripe charges 1.7% + 30c per domestic card payment on standard Australian pricing (as at September 2026; Stripe has flagged lower pricing from 1 October 2026, when the card surcharging ban starts). On a $2,200 invoice that's $37.40 plus 30c, so $37.70 — about $1,810 a year if you send four invoices that size a month.
GoCardless takes direct debit from a bank account at a low percentage with a dollar cap, usually far cheaper than cards on large recurring invoices. Confirm the current rate first.

One important change: from 1 October 2026, surcharging customers on eftpos, Mastercard and Visa payments is banned in Australia. If your plan was to pass card fees on through a Xero surcharge line, build the cost into your prices instead.

Step 7: Payroll, only if you're paying someone

Skip this entirely if you're a sole trader with no staff. If you're hiring:

Set up payroll organisation settings, including your payroll bank account and the award your staff are covered by.
Create a pay calendar — weekly, fortnightly or monthly — before adding employees, since each employee is assigned to one.
Connect Xero to the ATO for Single Touch Payroll. Find your Software ID under Payroll > Single Touch Payroll > STP settings, then nominate Xero as your software provider in ATO Access Manager. This step catches people out because it happens outside Xero. Our Single Touch Payroll guide walks through the reporting obligations.
Check the pay rate. The national minimum wage is $26.44 an hour or $1,004.90 a week, and $33.05 an hour for a casual with the 25% loading (as at September 2026). If a modern award covers your industry, the award rate applies instead and is usually higher.
Set up super. The super guarantee is 12%, and since 1 July 2026 contributions must reach the employee's fund within seven business days of payday rather than quarterly. Turn on Xero's automated super and run your first pay run early enough to see the money actually land.

An employee on the national minimum wage working a 38-hour week earns $1,004.90, and the super on top is $120.59. Budget for both from day one.

Step 8: Contacts, opening balances and who gets access

Import your customers and suppliers under Contacts > Import using Xero's CSV template. Clean the file first — duplicates created by slightly different spellings are tedious to merge later.

For conversion balances (Settings > Advanced > Conversion balances), a genuinely new business usually has nothing to enter beyond the owner's initial deposit. If you're moving from another system, your balances must match that system's trial balance at the day before your conversion date, exactly. Ask your accountant for it rather than reconstructing it.

Finally, Settings > Users. Xero's roles are Adviser, Standard, Invoice Only and Read Only, with optional payroll and reporting permissions on top. Invite your accountant or bookkeeper as an Adviser — they can see and fix everything financial but can't take over your subscription. Keep the subscriber role yourself so you own the file and the billing.

The five settings people get wrong

Cash versus accruals GST, chosen without thinking, then discovered at the first BAS.
Default tax rates on accounts — bank fees, insurance, wages and super coded as standard GST purchases, quietly inflating every BAS refund.
The conversion date, set to today instead of the start of the period, which orphans earlier transactions.
No lock date, so a stray edit changes a quarter you've already lodged.
Buying the subscription in the bookkeeper's name, so you don't own your own file. Subscribe yourself and invite them in.

Key takeaways

Settle GST basis, financial year end and conversion date before entering a single transaction — they're what breaks BAS later.
Choose your plan on how many people you pay and invoices you send, not the headline price.
Trim the chart of accounts to 30-60 and check the default tax rate on each one you keep.
Connect bank feeds early, and renew open banking consents when prompted or the feed silently stops.
If you're hiring, nominate Xero's Software ID with the ATO for STP and set up automated super — payday super gives you seven business days from each payday.
Own the subscription yourself and invite your bookkeeper as an Adviser.

Where to get help

Xero Central has step-by-step articles for every setting here, plus setup guides for each Australian bank feed.
The ATO's GST accounting methods guidance covers cash versus accruals eligibility.
ATO Access Manager is where you nominate Xero as your STP software provider, and the ATO's payday super information explains the seven-business-day rule.
Fair Work Ombudsman for award rates and pay conditions before you set up employees.
A registered BAS agent or your accountant should review your file before your first BAS. An hour of their time now beats unwinding a year of miscoded transactions.