![]() That in effect is accounting in a nutshell. So you label your buckets and sort the balls by type, so that you end up with balls of the same type within each bucket. Some balls are red, some yellow, some furry, large, and small. Imagine you have a set of buckets, and balls that you want to sort into those buckets. Before running with the defaults, stop and consider what are appropriate accounts for your business to have and customise it Having a messy chart of accountsįirst of all, if you're not sure what a chart of accounts is, think of it like this. Thing is, there is nothing vanilla about your business.įor example - your business structure will influence the correct setup of some liability and equity accounts ( such as Drawings) and some accounts might or might not be required ( like Dividends). Often we see people roll with the default vanilla Xero chart of accounts. All done! However getting those first few steps right is critical to your business, and the first place to start when setting up Xero is your chart of accounts. It's easy to breeze through the Xero setup wizard. Xero has designed their customer onboarding to make it simple and easy to get started. Whether it's been done by the business owner or their accountant - here are some of the common mistakes we see with Xero setups ![]() Create all of his projects to sit under this placeholder department.As a seasoned Xero Partner and certified advisor at Digit, I've seen it all when it comes to the wonderful ways in which people can set up Xero. In the example below, we have called this 'No Departments'.ģ. As the second tier he will need to create a placeholder department. Create the Account tier (in this example, 'Wages') and assign the Accounting Code as normal.Ģ. ![]() To set up a 3-tier structure with a placeholder department in Smartly, Keith will need to:ġ. He will not need to set up Tracking Categories in Xero. This means that the project name will still be displayed in the Description column and the Account will be assigned correctly - but the Tracking Category will be ignored. To use the feature, he will need to set up a placeholder Tracking Category at the Tier-2 level so that the information can flow through to the right place in Xero. However, he still wants to use this costing structure so that he can assign labour costs to different projects. Keith has an engineering business that does not have any departments. Scenario 4: Tracking hours by Project/Job only You can set up as many first tiers as necessary if you use multiple accounting codes. If nothing has been entered, add it here. Click on the edit icon and check the number in the Accounting Code field. To check these are entered correctly in Smartly, go to Company Details > Department/Jobs and hover over the tier you are interested in. You can find these in Xero under Accounting > Chart of Accounts. ![]() The account codes that you enter into Smartly must reflect those in your Xero Chart of Accounts. Make sure your Account and Tracking Category names in Smartly are mapped to your Xero account To set up your cost structure in Smartly, refer to our Labour Costing guide to find out more about setting up your costing structure.ġ. Account: These are your highest-level cost allocations such as Wages or Bonuses.Ģ. Tracking Category: This lets you break your labour costs down further by team or department for example.ģ. Project/Job: Details related to specific projects or jobs.
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