Xero Bookkeeping: Set Up and Review Client Books

Xero bookkeeping records and reconciles a client’s transactions in their Xero organisation, then puts the accounts through staff review. Start with agreed opening records, connect authorised bank feeds and prove the first reporting period before repeating the work.

Prepare the Client’s Starting Records

Confirm what you are taking over before anyone enters transactions. An existing Xero organisation carries history and settings that must survive the handover. A new organisation needs a documented starting point.

Collect the signed engagement scope, first reporting period and GST registration details, including the reporting basis. Obtain bank and card statements, the opening trial balance, unpaid customer invoices and supplier bills. Include loan statements and payroll balances where those accounts exist.

Record who provides missing documents and who reviews corrections. Use the bookkeeping client onboarding checklist for the wider acceptance and first-client work. The steps here begin with the client’s Xero books.

For an existing organisation, save the starting reports and inspect outstanding reconciliations before changing anything. Agree which earlier periods you will correct. Carry forward unresolved items visibly so a new bookkeeper’s work can be separated from inherited errors.

Set Up the Xero Organisation

Set up one organisation for the client’s business and give each person their own user access. Your personal Xero account is your sign-in. The organisation contains the business’s accounts and has its own subscription.

1. Agree who will hold the subscription and pay the bill. Record whether the client pays Xero directly or the practice pays under the engagement.
2. For a new file, create the user account, confirm the email address and add the organisation. Xero’s organisation guidance says the creator purchases its subscription. A later transfer changes the subscriber.
3. Enter the business’s correct name and tax country. Check these against the client’s records before creating the organisation: Xero says the tax country cannot subsequently be changed.
4. Review the financial year end, GST basis and reporting frequency. Match the chart of accounts to the business’s activities and opening trial balance. Check each account’s GST default instead of copying another client’s settings.
5. Invite the client and each staff member using separate email addresses. Give the bookkeeper transaction access and give the reviewer the adviser permissions needed for their work. Confirm reporting access before the first review.

Keep subscription responsibility separate from transaction permissions. Xero’s role guidance distinguishes the subscriber’s billing powers from an adviser’s accounting access. Record the client’s continuing access and agreed subscription ownership so the engagement can end without losing the organisation.

Xero HQ and practice client-list management cover the practice’s view across clients. Here, check the permissions inside this particular organisation. Never share the client’s password or ask for their banking sign-in.

Check Opening Balances Before Entries

Prove the opening balances against the previous records before you rely on new-period reports. For a new file, the conversion date defines where the opening position ends and transaction recording begins.

1. Obtain the trial balance immediately before conversion. Compare every opening debit and credit with the approved source, including bank balances and loans.
2. Enter or import the conversion balances. Xero Central explains that these balances establish the opening accounts. Reports remain inaccurate until the required balances are recorded.
3. Add the outstanding pre-conversion invoices and bills. Their totals must agree with opening receivables and payables. Include relevant prepayments, overpayments and payroll balances without recording them twice.
4. Run the opening trial balance and compare it account by account with the source. Trace a difference to its supporting schedule or transaction before changing a balance.

A balanced trial balance can still contain errors. Check that unpaid invoices belong to real customers and that an opening loan matches its statement. Do not put an unexplained difference into an expense account to make the bank agree.

For an existing Xero file, reconcile the inherited closing reports to supporting records instead of creating fresh conversion balances. Keep a correction record with the original amount, reason, evidence and reviewer’s approval. Give each unresolved item an owner and due point.

Connect Bank Feeds Without Duplicates

Connect each bank feed to the matching account in the correct Xero organisation, then prove the imported period against bank statements. The client or an authorised banking user approves the connection.

1. Identify the bank account and confirm its number against the statement. In Xero, add or select the corresponding bank account and follow its bank-specific connection instructions.
2. Have the authorised client complete the bank approval. If the bank uses a Xero bank feed form, obtain the correct form for that account and the required signatures.
3. Record the requested feed start and the first line received. Compare them with the opening balance and any statements already imported.
4. Import only uncovered statement periods. Check transaction counts and totals against the bank records, including days with no activity, before reconciling.

For NAB Xero bank feeds, NAB’s instructions describe authorisation through NAB Internet Banking. The client accepts the terms, selects the accounts and shares them with Xero. They then select the matching organisation and account in Xero and connect them. NAB also supplies an authority form for customers without Internet Banking.

A NAB Connect login does not establish that the Internet Banking authorisation route applies to that account. NAB Connect’s accounting integration guide directs Xero users to its feed authority resource. Use that route for the account concerned and obtain the authorised signatories’ approval.

For CBA Xero bank feeds, CommBank’s setup instructions describe NetBank’s Profile, Access & Feeds and Connect to Bank Feeds options. Select Xero and complete the prompts. Where a customer form applies, download it through Xero and follow CommBank’s submission instructions.

Do not assume every bank feed supplies all historical transactions. Use the actual first imported line to establish coverage. If an import overlaps an existing feed, identify the duplicate statement lines before removing anything. Preserve the evidence of which copy belongs in the file.

Record and Reconcile Client Transactions

Match each bank statement line to the transaction it pays, then review the accounting and GST treatment. A bank match proves the payment link. It does not prove the account coding is correct.

1. Read the statement line and locate its invoice, bill or other source record.
2. Match an existing transaction when one already records the sale or purchase. Compare the amount and reference, including any partial payment.
3. Create the appropriate receipt or payment only when the transaction has not already been recorded. Attach the source document and select the account and GST treatment it supports.
4. For money moved between the client’s accounts, record a transfer and match the other side. Keep it out of sales and expenses.
5. Investigate an unmatched line or doubtful suggestion. Search existing transactions, inspect settlement records and ask the client for missing evidence before accepting it.

Consider these fictional amounts. A consulting client receives $1,100 against an existing invoice for $1,000 plus $100 GST. Match the receipt to that invoice. Creating a second sales receipt would duplicate income and GST.

The same client pays a supplier bill of $220, comprising $200 plus $20 GST. Match the existing bill after checking its evidence and coding. A separate $500 movement to the client’s savings account is a transfer, with no new income or expense. The examples assume taxable supplies and valid evidence for the GST credit.

For a fitness or Pilates studio, reconcile membership sales and refunds to the booking or payment records. If a payment provider collects $1,000, refunds $100 and deducts $30 in fees, a $870 deposit is the net settlement. Record the underlying sales, refund and fee using their supporting records and applicable tax treatment. Do not treat the entire deposit as a new $870 sale.

For consultants, separate invoice payments from retainers and reimbursed costs. Read the agreement before treating a retainer as earned income or a reimbursement as ordinary sales. Identify personal transactions and code them according to the entity and transaction, instead of claiming a business expense automatically.

For a wellness studio with employees, reconcile payroll-generated wage expenses and liabilities to the payroll reports, then match the bank payments. Payroll setup, employee calculations and reporting obligations belong to the separate payroll work. Refer to the BAS preparation checklist when the reviewed records feed BAS work.

Automated suggestions still need this transaction review. The AI bookkeeping guide explains assistance and the decisions staff retain.

Review the First Reporting Period

Accept the first period when its bank statements agree and the reviewer can explain the remaining balances. Assign a reviewer who understands the client’s work and Xero’s accounting treatment.

Compare each bank and card statement with the reconciliation for the same period. Explain outstanding payments and receipts separately from missing or duplicated statement lines. A zero count of unreconciled lines does not establish that the statement import is complete.

Review aged receivables and payables against unpaid invoices and bills. Investigate stale balances, duplicate credits and unexpected negative amounts. Clear suspense items when evidence supports the correction, or retain them as identified exceptions with an owner.

Run the trial balance, profit and loss and balance sheet for consistent periods. The trial balance shows where balances sit. The profit and loss reveals unusual income or expenses, while the balance sheet exposes unresolved loans, tax and payroll liabilities. Compare them with the opening position and the business’s activity.

Inspect GST exceptions and source documents before the records move to BAS preparation. Finish with retained statements and reports, documented corrections and reviewer sign-off. Resolve material exceptions before relying on the affected figures. Assign any remaining items with their reporting effect stated.

Keep Recurring Work and Handover Clear

Agree who collects receipts, records transactions, reconciles accounts and reviews reports, with a frequency for each task. Give the client a document cutoff and a response time for missing evidence. Give the practice a reporting date and a named reviewer.

For virtual bookkeeping of a consultancy client, use named staff access and an agreed secure document route. Assign one person to chase missing invoices and expense evidence. The reviewer’s handover must cover retainer treatment, reimbursed costs and personal transactions as well as the bank reconciliation.

Symptom	First check	Correction and escalation evidence
Bank feed stops	Compare the last imported line with the bank statement and connection status	Restore the authorised connection or use a controlled statement import. Escalate with the affected account, missing period and error message, without banking credentials.
Reconciliation differs	Compare opening balance and statement coverage before investigating coding	Trace missing or duplicate lines and outstanding payments. Escalate with the reconciliation report, statement and identified difference.
Organisation is inaccessible	Confirm the user accepted the correct invitation and still has access	Ask an authorised organisation user to restore the appropriate permission. Escalate with the organisation identity and invitation error, without sharing passwords.

When the engagement ends, confirm the client’s access and subscription responsibility, remove outgoing staff access at the agreed point and hand over final reports. List outstanding exceptions and the last reconciled period. The next bookkeeper must be able to continue from a proved balance with the supporting records intact.