3 Easy Ways to Master Xero Reconciliation and Avoid Tax Headaches



3 Easy Ways to Master Xero Reconciliation 
and Avoid Tax Headaches

From working with our current clients, below we have come up with the 3 most common complaints our clients have faced when it comes to reconciling transactions in Xero that may have affected their bottom line.

1. Create or Transfer?  🤔

When we go in to our Xero and see the blue tab that states 'Reconcile 100 items', we need to recognise are we creating the transaction to be reconciliated or are we transferring to another bank account? This is where our balancing in Xero can come unstuck or worse, coded wrong and can be costly when it comes to tax time.

If you have transferred from one bank account to another and both bank accounts are in Xero, make sure you use the transfer tab in Xero to reconcile the transaction and transfer to the correct bank account in Xero.

2. Bank Feed or Import Statement?  🤔
With your bank accounts in Xero do they all have a Bank Feed or do some of them need to have statements imported?  Some Credit Cards do not allow you to have a bank feed, so you have to import a statement.  Our personal recommendation is if you can have a bank feed, that is the most reliable way for bank transactions to go in to Xero.  

Sometimes when a bank statement is imported, not all transactions come across from the bank and you can spend costly hours trying to find why bank balance is out and worse still, it can affect your bottom line.

3. Account Codes  💁
These Account Codes can be the most important aspect of reconciling your Xero.  If you are using the wrong Account Code it may affect your bottom line as well.  When reconciling and you are about to put in the Account Code to reconcile that transaction to, make sure it is an expense that relates to your business and that the Account Code is set up correctly to reconcile it to.

Hope these 3 tips help you avoid any unnecessary tax implications and if you need help understanding more with your reconciling in Xero, feel free to book a 30min  Complimentary Consultation.



Location: Chermside West QLD 4032, Australia

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