Xero for new limited companies - How to get started 

You have set up your limited company. You have a name, maybe a logo, and some first sales. Now you keep hearing that you should use Xero, but you are not sure where to start or what actually matters.

This guide is written for you as a new company director. No jargon, just the basics you need to know to get Xero set up in a simple, tidy way.

Here at Agile Accountants we work with owner managed and fast growth limited companies across the UK. We see what works in real life and where new businesses get stuck.

Below are the key steps for Xero for new limited companies how to get started.

1. What Xero actually does for you 

Xero is cloud accounting software. In plain terms, that means:

• Your accounts live online, not in a spreadsheet on one laptop.
• You can see your numbers from anywhere with an internet connection.
• Your bank transactions can flow straight into Xero as a secure bank feed.

For a new limited company, Xero can help you to:

• Track who owes you money and who you need to pay.
• Send professional invoices and see when they are paid.
• Keep proper records, which is a legal duty for directors of UK companies.

You do not need to know every feature. At the start, focus on a few basics and build from there.

2. Get your essentials ready before you touch Xero

Before you create your Xero account, gather a short list of details.

Company details checklist

Have these to hand:

• Company name and registered office address.
• Companies House number.
• Incorporation date.
• Your chosen year end, for example 31 March or 31 December.
• Whether you are VAT registered yet and, if you are, your VAT number and VAT start date.

If you are not sure on year-end or VAT, speak to an accountant first. It is easier to get this right from day one than to fix it later.

Open a business bank account

A limited company is its own legal person. It must have its own money and its own bank account.

Government guidance for directors is clear that you must keep proper accounting records and keep company money separate.

So for Xero:

• Open a business bank account in the company name.
• Plan to run all company money through that account.

This makes your bookkeeping and tax position much clearer.

3. Create your Xero organisation

Now you are ready to set up Xero.

Basic setup 

When you first create your Xero organisation, it will ask for:

• Legal name of the company.
• Business address.
• Main currency (for most UK companies this is pounds sterling).
• Business start date.

Take a moment to check each screen before you click next. These basics flow through to invoices and reports.

Set your financial year and VAT 

In the settings area, check:

1. Financial year end matches the year end registered at Companies House.
2. VAT is set to:

• Not registered, if you are under the threshold or not yet registered for VAT.
• Registered from the correct date, on the correct scheme, if you are over the threshold or chose to register.

If you are close to the VAT threshold, make a note to review this with your accountant regularly.

4. Connect your bank to Xero 

This is where Xero starts to save you time.

What a bank feed does 

A bank feed lets Xero pull transactions from your business bank account into the software securely and automatically. You no longer need to key them in by hand.

This helps you to:

• See up to date bank balances.
• Match payments to invoices quickly.
• Reduce data entry errors.

How to keep it simple 

• Only connect your business bank accounts, not your personal ones.
• If you have more than one business account, connect them all.
• Log in once or twice a week to approve and match the bank feed lines.

Little and often is much easier than a huge job every few months.

5. Set up a basic chart of accounts 

Your chart of accounts is just the list of headings that income and costs go into.

Start with a short and clear list 

Xero gives you a default list. You do not need to keep every item.

For a new limited company, you might want:

• A small number of income accounts, for example consulting, product sales or subscriptions.
• A clear cost of sales section, for example subcontractors or materials if they apply.
• Simple expense headings like rent, software, marketing, travel.

A tidy chart of accounts makes your reports much easier to read. 

Get your accountant to review it 

Before you do too much posting:

• Ask your accountant to look at your chart of accounts.
• Check it will work for both management accounts and year end accounts.

This quick review can save a lot of editing later.

6. Make your invoices look professional 

Your customers will see your invoices often. It is worth five or ten minutes setting them up properly.

Add your branding and details

In Xero, edit your invoice template so it includes:

• Your logo.
• Company name and registered office.
• Company number and VAT number if you have one.
• Payment terms and bank details.

Clear invoices help you get paid on time and meet legal requirements for VAT invoices if you are registered.

Create simple items

You can set up items for common services or products, for example:

• Monthly retainer.
• Website build.
• Standard package.

Each item can have a default description, price and VAT code. This makes invoice creation faster and keeps your VAT treatment consistent.

7. Record bills and receipts so you stay organised 

Good records are not just for HMRC. They also help you understand your costs as a director.

Enter bills, do not just pay from the bank 

In Xero you can:

• Enter supplier bills as they arrive.
• Set due dates.
• See at a glance what you owe.

This gives you a better picture of upcoming cash out, instead of just reacting when payments leave the bank.

Store copies of receipts 

Directors of UK companies must keep accounting records, usually for at least six years.

Xero lets you:

• Attach scanned invoices or photos of receipts to each transaction.
• Use apps to upload receipts from your phone.

This means less paper, less risk of losing documents and easier answers if HMRC ever asks questions.

8. Keep an eye on VAT from the start 

You may not be VAT registered yet, but it is wise to know where you stand.

Know the threshold

The UK VAT registration threshold is currently £90,000 of taxable turnover in a rolling 12 month period. If you go over this, or expect to, you must register.

Xero can help you track income, but it will not register you automatically.

What to do in Xero 

• If not registered, set VAT in Xero to reflect that.
• If registered, enter your VAT number and start date and choose the correct scheme.
• Talk to your accountant about how and when to submit VAT returns from Xero, as most VAT registered businesses must now use software to file.

9. Share Xero with your accountant early 

Do not wait until your first year end to bring in an accountant.

Invite your accountant as a user

In the Xero settings you can:

• Add a new user.
• Choose the adviser role for your accountant.
• Give them access to the parts they need to support you.

This means:

• They can fix small setup issues now, not a year from now.
• They can help you understand basic reports.
• Year-end accounts and tax returns can be based on clean, live data.

At Agile Accountants we usually connect to your Xero account file during onboarding and work with you each month, not just once a year.

10. Follow a simple weekly and monthly routine

Finally, here is a very basic routine you can follow as a new director.

Weekly checklist 

Each week:

• Log into Xero and reconcile your bank feed.
• Send any new invoices and chase overdue ones.
• Enter any new supplier bills.
• Upload or photograph receipts that have not yet been stored.

Depending on the amount of bank transactions, this can often be done in a couple of hours each week, once you’re used to the process.

Monthly checklist 

Each month:

• Check your profit and loss report for the month.
• Look at who still owes you money and who you owe.
• Make sure all bank accounts are fully reconciled.
• If you are close to the VAT threshold or planning to hire, speak to your accountant.

With this simple habit, Xero becomes a live picture of your business, not just something you think about at tax time.

How Agile Accountants can help you get started with Xero

Getting Xero right at the start can save you time, tax and stress later.

For new limited companies across the UK, Agile Accountants can:

• Set up or review your Xero account.
• Tailor your chart of accounts to your business.
• Connect your bank feeds and show you how to reconcile.
• Provide regular management information and advice, not just year-end accounts.

If you are a new limited company, this is how to get started in the most straightforward way, this is exactly what we do every day. Get in touch if we can help in any way.