What is the point of Xero?

mlionel20 on 29/08/2019 - 22:32

Hi all,

I am just curious as to what the purpose of Xero software is.

Traditionally before Xero existed or similar accounting software, I would assume

  • the usage of bank statements will provide the summary of transactions and the total. Why do we need Xero for this?
  • you'd need to keep record of your receipts and your expenses. This one I can see it being useful with Xero where you can easily take a photo of the receipt and it is uploaded directly to the app
  • you can generate invoice manually ; what is the benefit of Xero generating invoices?
  • you'd do a few clicks to generate payslip for your employees ; does it really waste that much time that we need Xero for that?

I hope to learn more about this as almost all businesses use it but I don't understand why.

Financial

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Comments

  • kipps on 29/08/2019 - 22:37
    +8

    Bank statements alone cannot generate balance sheets and profit and loss statements. There are many benefits to a proper accounting system. It can do BAS, profit and loss, balance sheets, debtors, creditors and full reporting. The underlying source records like bank statements cannot present the information in any useful form. Once you run a business and see how it works you’ll see you really need something like it if you want to be efficient.

    • mlionel20 on 29/08/2019 - 23:12
      -3

      thanks for the reply kipps. But for small businesses, the business will only need to have those statements at the end of the financial year when doing tax return. And at that time, the accountant can reconcile statements and receipts to generate those things, isn't it? I guess Xero will make it more convenient for the accountant. So is Xero then more beneficial to the accountant than the business owner?

      • kipps on 29/08/2019 - 23:29
        +9

        You will not be operating a small business for long if your interest in your financials is once a year. It is not the accountant’s job to do the entry of a book keeper.

      • scotty on 30/08/2019 - 06:24
        +3

        So is Xero then more beneficial to the accountant than the business owner?

        I guess you can argue that it's less beneficial to the accountants, as business owners can do all the bookkeeping tasks on the platform with minimum effort, reducing the accountants to only the tax returns. I've been using Xero since 2010 (recommended by the accountant), spending a few minutes each week reconciling the bank statements, and only paying the accountants to do the tax once a year.

        As kipps has said, it also gives you your business' financial position at any moment in time — your balance sheet, cashflow, profit & loss, etc. Every business would want that to make financial sensitive decisions.

        • horsome on 30/08/2019 - 20:41

          It actually makes it better for both business owner and accountant. It takes care of all the tedious work on both sides of the relationship (provided both sides are performing their roles correctly), and talk more about business development, tax strategies, etc.

  • lakes_8 on 29/08/2019 - 22:41
    +1

    speed

  • xinyi on 29/08/2019 - 22:51
    +4

    Think about this:

    Before MyGov e-tax system, lodging your own tax return was burdensome and time consuming so people were willing to pay $49 for accountants to fill in paper/electronic forms for them.

    After the e-tax platform was implemented, all the data from your salary, bank account, super is uploaded and pre-filled by the ATO according to your Tax File Number. It's become much easier to lodge your own tax return.

    Xero simplifies many business operations into one platform that is user friendly like e-tax

  • EphemeralEnigma on 29/08/2019 - 22:51
    +1

    Regarding your point on payrolls, businesses are now not allowed to generate payslips manually.

    Per the new regulation, all businesses are required to generate payrolls using softwares that offer Single Touch Payroll (STP) and Xero is one of the softwares that offers that functionality.

    More info on STP below:
    https://www.ato.gov.au/Business/Single-Touch-Payroll/About-S…

  • Clear on 29/08/2019 - 22:59
    +4

    It's also better than MYOB.

  • AustriaBargain on 29/08/2019 - 23:36
    +1

    Automatic generation of invoices, especially for monthly services, is good isn't it? Just set it once and let it do it's thing, issue tax invoices to your clients. Why would you want to do that by hand?

    • anthonyw on 30/08/2019 - 21:09

      Automatic reminders and links to online payment with statements and history is also great.

      • AustriaBargain on 30/08/2019 - 21:10

        Also, paying your own employees.

  • mskeggs on 30/08/2019 - 06:14
    +4

    Business accounting packages were literally among the first applications released for personal computers decades ago.
    Xero is just the latest. I’m surprised you have made it this far in life without knowing about them.

    • burningrage on 30/08/2019 - 06:55

      Spreadsheet I am guessing.

  • Soluble on 30/08/2019 - 07:15
    +2

    I've been using Xero since I started my business, I scan in every bill, reconciles with accounts instantly. Quarterly BAS takes around 10 seconds. Payroll is done in under 5 minutes. Every day of every week I can see exactly where my business sits.

  • Destin on 30/08/2019 - 08:26
    +1

    +1 for Xero. As for the benefits it depends on your business - for me it makes tax time a breeze. If you're after a free alternative check out Wave.

  • Noblejoker on 30/08/2019 - 10:32
    +2

    Agree with all the benefits of a system like Xero for biz of any size
    But it is not OzB friendly = expensive
    Comment here for very small business should try waveapp.com
    Free, integrates online invoicing with credit card option, payroll etc.
    not as user friendly for payroll and bas as Aussie apps but workable
    Fast, Cloud based and again Free!

    • realfancyman on 30/08/2019 - 10:48
      +1

      Yep I use Wave and works well, only flaw is that it doesn't show the GST per item which means their invoices don't meet the ATO requirements for over $1000.

      Also, doesn't have integration with my bank account so expenses are manual. Still not enough of an inconvenience to justify paying for Xero

      • Noblejoker on 30/08/2019 - 11:17

        Bugger about the bank
        Integrates with many banks - def does the big 4

        Can be set for GST
        try this https://avers.com.au/Bookkeeping/Blog/Free-Invoicing-ABN-GST…

        No single touch payroll integration with ATO though (AFAIK)
        If youare doing much payroll suggest you move up to Quickbooks or Xero (not MYOB)

        • realfancyman on 30/08/2019 - 11:49

          It does have GST but for it to be compliant with ATO, I invoices over $1000 need to have the GST listed per item not just a total at the end.

          Might need to have another look then, thanks!

          • Noblejoker on 31/08/2019 - 10:17

            @realfancyman: Yep link shows adding GST as a tax which then shows per item :)

            • realfancyman on 31/08/2019 - 11:50

              @Noblejoker: Yeah, that's what I've done and when your drafting the invoice it shows per item, but on the actual copy that goes to the customer, it's just a total :(

      • d39833 on 18/09/2019 - 09:42

        Yea, wave is great. Have been using it for over a year.

        Do you know if it has Single touch payroll that the government needs now?

  • horsome on 30/08/2019 - 20:32

    Mate, learn what accounting is then revisit the questions you pose.

  • Team Ozgiftcards on 20/09/2019 - 12:37

    Check out waveapps. Its free. Good for individuals and non gst registered and no payroll businesses.

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