Review contents
Xero is an awesome accounting tool for businesses of all sizes. It’s super popular worldwide, and particularly in the UK. Simply connect it to your bank account and it will pretty much handle the whole financial side of your business, such as producing end of year accounts, invoices, managing cash flow, VAT, CIS and so much more. We think it’s pretty essential for most businesses.
Xero is probably one of the most recognised accounting tools in the world, particularly in the UK, and for good reason. It’s excellent. We actually use it here at Nuts About Money (as millions of other businesses do).
It’s a tool (software) where you can easily manage all your business finances. You simply connect your bank account(s), or add manual bank transactions, and then Xero will produce pretty much every financial report you’d need, when you need it, such as how much profit you’re making, and your end of year accounts, among other accounting essentials.
You’ll be able to create invoices for customers, and manage all your bills and expenses too.
You can also manage your employee's salaries (payroll), such as setting up connections with HMRC to notify them of payment, create payslips, and manage all the financial side of your team.
And, it will even determine things such as VAT and connect to HMRC to file the returns.
That’s just scratching the surface. Different businesses will use it in different ways, and it’s definitely worth checking out, and make sure to make the most of our exclusive 50% off for 4 months. To claim the deal, click this link to the Xero website¹. Enjoy!
Right, let's dive into it deeper.
You could think of Xero as your personal accountant for your business. It pretty much does everything an accountant would have done for you, all in a great software package you can access on your desktop and mobile app.
We should probably say a bookkeeper rather than accountant (so we don’t offend anyone). A bookkeeper would keep all your transactions in order, so that’s all your payments and sales etc (e.g. all your transactions in your bank statements).
It manages your transactions automatically by connecting to your bank account, and when there’s a transaction, such as a customer paying an invoice, it will automatically come through to Xero.
With your books up-to-date, you can view things like your profit and how much tax to pay. And it will provide everything you need for your end of year accounts too. You’ll also be able to view or download your accounts and file these directly with Companies House and HMRC (using other software).
Alongside that, there’s features to help you manage your business finances in general. For instance, you can create invoices and issue these directly to the customer (e.g. via an email sent by Xero).
Xero can handle your VAT payments too. Working out exactly how much you need to pay based on all your sales and purchases. You can then file your VAT return with HMRC with one click too.
There’s payroll as well, managing employees and their payslips and filing these with HMRC each month too.
That's a short overview of the key features, and depending on the size of your business, you’d use some or all of these (and more). Let’s dive into them a bit more.
Bookkeeping is where you simply manage your transactions, which is money moving in and of the business - so that’s sales coming in, and any expenses coming out.
With Xero, you don’t need to add these manually every time (although you can), as that would take ages. Instead, Xero will connect to your bank account (e.g. your Barclays business current account), and automatically import all of the transactions coming into and out of your bank account. Pretty cool right?
Within Xero itself, you would categorise each transaction, such as classing it as a sale or an expense, and then put them into categories.
Xero then brings all your transactions together to produce useful financial statements such as how much profit you are making (among many others).
It saves a serious amount of time compared to doing everything over confusing spreadsheets!
Within Xero, you can manage basically everything to do with your business finances, and that includes creating invoices for customers too. You can create these and send them via email directly from Xero, and customers can even pay you online too.
Everything is customisable to your business (like adding logos, contact details etc.) and you can even create a range of templates.
You’re also able to manage the invoicing afterwards, such as correcting mistakes with credit notes. It’s all pretty great.
As all your transactions are in Xero, Xero can work out how much VAT you need to pay based on your sales and what you can reclaim on your purchases. Xero will produce your VAT report suited to your VAT schedule (e.g. quarterly), which you can check over, and then submit the report directly to HMRC.
You can then automatically create a bill in Xero for the exact VAT amount to manage your cashflow properly, ready for when you pay the bill later on (e.g. when HMRC collects it via Direct Debit).
If you have employees, you’re responsible for filing their payslip with HMRC each month. You can do this easily within Xero, by setting up your employees and employee structure and benefits in Xero, then each month, simply file the report.
It’s very handy, and your employees can get their payslips from Xero too, it’s an all-in-one feature to manage employees.
If you manage subcontractors within the CIS scheme, you can handle all the CIS calculations and payments within Xero too.
If employees are spending money for business reasons they can be reimbursed through expense claims and this can all be handled within Xero too.
If your business operates with multiple currencies (e.g. paid in a different currency than your primary currency), you can manage this all within Xero too.
There’s also things like purchase orders and tracking orders and deliveries, inventory management, producing quotes, and fixed asset management. That’s alongside all the financial statements you can produce, such as end of year accounts, and lots of analytical features to assess the financial health of your business.
Xero has a range of different plans, and they all come with different limits for features, and access to different features, as there’s quite a few we won’t run through each one here. But don’t panic, you don’t need to sign up to a super expensive plan as a small business (and even the most expensive plan is still pretty low cost), it’s all tailored to your business size.
The basic plan, called ‘simple’, comes with a wide range of features for most businesses and is only £7 per month. We think that’s very low cost. You get access to the key features and can then assess which other features you’d like to use and then upgrade to the relevant plan - you may never need to upgrade either as you get a lot of features with the basic plan.
The larger plans are still great value in our opinion, with a £16 per month plan including things like VAT reporting.
Nuts About Money tip: as you’re running a business, Xero itself is a business expense, so you can deduct the cost from your profits, reducing tax and ultimately the actual cost of Xero.
If you're not happy with the service, you can cancel with just a month’s notice too, there’s no long term contracts. And don’t forget to make use of our special offer, get 50% off for 4 months. Use this link to sign up on Xero website¹ to claim.
The customer support is great, firstly because there's a global community of avid Xero users who answer your questions if you ask them on the Xero customer support forum. How great is that? You can hear from real Xero customers who have experienced the same issue as you, or have a similar type of business, and they can explain it all online.
Direct customer support is great too, and you can message in from your Xero account describing the issue you are having and they’ll respond with solutions.
There’s no phone support unfortunately. However, there is a large help centre on their website, which answers lots of common questions and provides guides to run through features.
Yes, it’s perfectly safe to use Xero for your business. It connects to your bank account to read your transactions, but it doesn’t make any transactions itself (and is not permitted by your bank). Any actual payments you’ll need to make yourself from your bank account (e.g. to suppliers).
If it wasn’t obvious by now, we think Xero is pretty awesome. It’s super handy for most businesses to get a handle on their finances. No more spreadsheets that get out of date or wondering where your money’s gone. You simply connect your bank account to Xero and it will automatically manage your accounts and create the reports you need (such as how much profit you’re making).
It’s got all the features you need to run your business finances, such as filing payroll and VAT returns. It’s easy to get set up and start using (as long as you know the basics), and the more you use it, the more features you’ll really appreciate, there’s a range of features for all types of businesses.
We highly recommend checking out Xero for your business. And don’t forget your 50% discount for the first 4 months! To get started, learn more, and claim the deal, head over to the Xero website¹.
Yes! And it’s a great one, 50% off!
To claim your 50% off for 4 months, you must click this link to the Xero website¹. From there you can sign up, and the deal will be automatically applied to your Xero account.
To claim the deal you don’t need to set up your whole Xero account until you’re ready, you just need to register.
Enjoy!
We’d love to hear from you, and it will help others too.
Edward Savage is a leading expert on money, with a background of 8 years working in financial services in London, has a business, accounting and finance degree, runs an investing community, and teaches people about money. He writes about all aspects of personal finance, including pensions, investing, mortgages and insurance.
This article was written, reviewed and fact checked by the expert team at Nuts About Money. You’re in safe hands. Learn more.
We're experts in all things money, with years of combined experience working in the finance industry and writing about money. We understand the ins and outs, how to get the best deals, save money, and how to communicate money in an easy to understand way (we hope you agree).
More than 20 years of combined experience researching and writing about money
Researched and reviewed a wide range of financial services companies, and have a transparent review process
We follow a strict editorial code to ensure you get the best information possible
