One of the biggest features in Xero (Sign up for a free trial here) is to be able to view all of your bank activity on your Xero dashboard. Before you are able to do that, you need to be able to add your bank account to your Xero accounting.
Whether you are adding a new bank account or credit card, the steps are really the same. The difference comes into effect during step 2.
Step 1: Click “Accounts” and “Bank Accounts”
Once you click “Add Bank Account” Xero will ask you for your bank name. It is here that you will use to choose either a credit card or bank account. Let’s assume you bank with Bank of America. You will enter “Bank of America” to add your bank account. If you want to add your credit card, then you will choose “Bank of America Credit Cards”
For Account Name: We typically recommend that you enter what the account is used for:
For Bank Accounts:
- Operating Account
- Savings Account
- Payroll Account
Pro Tip: Put the last 4 digits of the account number in your account name as well as in the number line.
I.e. Operating Account- 1111
The reason is we as business owners tend to have multiple accounts and when you transfer money later, being able to quickly see which account you are transferring to can save you lots of time.
When it comes to adding your bank account and activity, Xero will import automatically up to 90 days in the past. If the account has activity that you want to bring into Xero beyond 90 days then you will need to make sure your conversion balance is correct as well as import the other days of the year.
In this illustration, this account had only 5 transactions since it was just opened.
Step 4: Check Balance
To make sure that we added the credit card on correctly we went ahead and reconciled ALL the transactions. The statement balance shows at $639.09. In order to check that this came in correctly I was able to pull up my credit card account online and match the credit card balance to $639.09 to see no mistakes were made.
Step 5: Import and Add Beginning Balances (If Needed)
Now that the bank account is added and the last 90 days of transactions have been imported. The next two steps is to make sure you have the beginning balance correct and all of the activity in imported.
Let’s say that you are adding a bank account to your Xero account today on June 26, 2017. You opened your business last year but did all of your accounting in excel. You want to import all of your bank activity for 2017 and make sure all of the balances are imported correctly.
Conversion Balance: Enter your Beginning Balance
If you are bringing in a bank account this year and have a balance as of the beginning of the year, then you will need to use the conversion balance area to enter your beginning balance of the bank account or credit card account. This is likely already done because you need the balances on your balance sheet entered in through the conversion area, so all of your beginning balances are correct. If it’s not, then click on Settings—_General Settings—Conversion Balances. Choose the bank account or credit card and enter the number in the appropriate box.
Bank Account Positive Balance Negative Balance
Credit Card They Owe you Money You Owe them Money (Likely)
The next step is to import the activity from the beginning of the year to the date Xero didn’t import.
January 1 $1,000 Balance (This gets Entered into Conversion Balance)
January 1 – March 31 (This gets imported via a CSV file)
April 1 – June 26th (This will be imported when you set up the bank feed
If you aren’t adding a bank account the day you open it, you may find this process a little confusing. If you follow the steps above you should have all of your activity imported for this year to date. The next step is where the fun starts—-reconciling your bank transactions.
Follow the steps above to add your bank account in Xero, so you can take advantage of the being able to automatically import your bank transactions daily.
If you need help with your Xero accounting, contact us today.