- Xero is cloud accounting software for invoicing, bank feeds, GST, BAS and payroll
- Most day-to-day work in Xero is bookkeeping; tax returns still need an accountant
- Xero AU plans run from A$107 to A$250 a month on its pricing page (Oct 2026)
- Outsource Xero when the admin costs more than the DIY saving
Xero accounting means keeping your business’s books in Xero, the cloud-based accounting software used by many Australian sole traders and small businesses for invoicing, bank reconciliation, GST, BAS and payroll. Most of the work you do in Xero is bookkeeping, while tax returns and advice still sit with an accountant. This guide covers what is Xero, how Xero accounting software works in Australia, what it costs and when to run it yourself or outsource your Xero bookkeeping.
What is Xero?
Xero is cloud-based accounting software that records a business’s invoices, bills, bank transactions and payroll in one online file. You log in from a browser or the Xero mobile app, and your figures update close to real time. Because the file lives online, your bookkeeper or accountant can work in the same live data without emailing files back and forth.
Is Xero for bookkeeping or accounting?
Xero is sold as accounting software, but most of what it does day to day is bookkeeping: recording sales and expenses, reconciling the bank and tracking GST for your BAS. The accounting work, such as year-end adjustments, tax planning and your income tax return, is done by an accountant or registered tax agent using the data Xero holds. So if you are asking what is Xero in practice, it is the tool, and bookkeeping is most of the job you do in it.
How does Xero work for an Australian small business?
Xero works by pulling transactions from your business bank account through a secure bank feed and letting you match each one to an invoice, a bill or an account code. How does Xero work day to day? Most businesses follow the same five steps:
- Connect your business bank accounts so transactions flow in automatically.
- Send invoices and quotes, and record bills and receipts as they arrive.
- Reconcile the bank feed by matching each transaction, ideally every week.
- Review the GST Xero has tracked and lodge your BAS with the ATO.
- Run payroll if you have staff, with each pay event reported to the ATO through Single Touch Payroll.
The short answer to how does Xero work is that it turns scattered admin into one running record your accountant can check at any time.
What are the key features of Xero?
Xero covers the core jobs most Australian small businesses need, with add-ons you switch on as you grow. The main features are:
- Online invoicing and quotes, with online payment options so customers can pay faster.
- Automatic bank feeds with suggested matches for reconciliation.
- GST tracking and BAS preparation, with lodgement to the ATO from inside Xero.
- Payroll with Single Touch Payroll (STP) Phase 2 reporting and super calculated at the 12% Superannuation Guarantee rate, in place since 1 July 2025.
- Connections to other apps, such as Shopify, through the Xero App Store, so sales data flows into your books without re-keying.
Payroll needs closer attention from 1 July 2026, when Payday Super requires employers to pay super at the same time as wages, with contributions reaching the fund within 7 business days of payday, according to the Fair Work Ombudsman. If you would rather not run pay runs yourself, Sleek’s payroll service can handle them for you.
How do you set up Xero?
You can set up a basic Xero file yourself in an afternoon by working through five steps:
- Start Xero Australia’s 30-day free trial, or choose a plan straight away.
- Connect your business bank accounts and credit cards for bank feeds.
- Enter your business details, including your ABN, GST registration status, BAS reporting period and whether you use cash or accrual accounting.
- Import your chart of accounts, contacts and opening balances.
- Add employees, their super funds and pay details if you run payroll.
Opening balances and the chart of accounts cause most later problems, because errors there distort every report that follows. If you are moving from MYOB or QuickBooks, you also import historical data and reconcile the opening position. Many businesses have a bookkeeper or accountant do this first setup, then take over the day-to-day themselves.
Tip: decide who will reconcile the bank each week before you enter any data. Xero only stays accurate if someone matches transactions regularly.
How much does Xero cost in Australia?
As of October 2026, Xero Australia’s pricing page lists four plans, from A$107 a month for Comprehensive to A$250 a month for Ultimate 50. Every listed plan includes GST and BAS tools, and the main difference between tiers is how many people you can pay through payroll.
| Plan | List price per month | Payroll included |
|---|---|---|
| Comprehensive | A$107 | Up to 5 people |
| Ultimate 10 | A$143 | Up to 10 people |
| Ultimate 20 | A$180 | Up to 20 people |
| Ultimate 50 | A$250 | Up to 50 people |
These are list prices before any promotion. Xero’s offer terms still refer to its older Ignite and Grow plans, but they no longer appear on the plans page, so check before relying on them. For add-on costs and which plan suits which business, see our guide to Xero pricing in Australia.
Xero vs other software: which should you choose?
Xero accounting software, MYOB and QuickBooks Online all handle invoicing, bank feeds, GST, BAS and STP payroll for Australian businesses, so the choice usually comes down to price, add-ons and the software your accountant already uses.
For side-by-side detail, read QuickBooks vs Xero and MYOB vs Xero. To compare a wider set of tools, see our roundup of the best accounting platforms in Australia.
Running Xero yourself vs having it run for you: which do you need?
Running Xero yourself means you do the bookkeeping in the software, while a bookkeeping or accounting service means a person or team does that work in your Xero file for you.
| Run Xero yourself | Have a bookkeeper or accountant run it | |
|---|---|---|
| What it is | A tool you log into and run | A person or team who works in your Xero file |
| Who it suits | Confident sole traders and small businesses with spare time | Owners who would rather not handle BAS or reconciliations |
| What you still do | Reconciling, GST, BAS and chasing receipts | Approving figures and answering questions |
| What you pay | The Xero subscription | The Xero subscription plus a service fee |
If you want someone to run the software, that is where Xero bookkeeping services come in. If you want tax and year-end handled too, look at a small business accountant or, for freelancers and contractors, sole trader accounting.
Should you do your own books in Xero or outsource?
Do your own books in Xero if you have the time and confidence to reconcile weekly and lodge an accurate BAS, and outsource once the admin costs you more than a bookkeeper would. A simple test is to compare one hour of bookkeeping with one hour of billable work. Common signs it is time to hand Xero over:
- Your bank reconciliation is more than a month behind.
- You have lodged a BAS late, or had to correct one.
- Pay runs and super payments take hours each pay cycle.
- A GST or payroll mistake would cost more than a bookkeeper’s fee.
At that point, a done-for-you service usually pays for itself in time saved. If you want the books and the tax handled together, managed accounting covers the full engagement.
How does Sleek help with Xero accounting?
Sleek is a Xero Platinum partner that runs client bookkeeping and accounting in Xero, whether you are setting up a new file or handing over an existing one. Sleek’s bookkeeping service starts from A$275 a month and covers moving your records, setting up Xero, keeping your books accurate and lodging your BAS.
To get your Xero set up and run for you, start with Xero bookkeeping services or, for full-service support, a small business accountant.
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FAQs on xero accounting
Is Xero good for small businesses and sole traders in Australia?
Yes, Xero suits most Australian small businesses and sole traders, especially those who want bank feeds, mobile invoicing and BAS lodgement in one place. It becomes less worthwhile once the admin eats into time you could bill.
Do I need an accountant if I use Xero?
Not for day-to-day bookkeeping, but most businesses still use an accountant for tax planning, year-end adjustments and the income tax return. Xero records and reports your numbers, and it does not replace an accountant’s judgement on structure or deductions.
Can I try Xero before I pay?
Yes. Xero offers a 30-day free trial in Australia, so you can test invoicing, bank feeds and reports before choosing a plan. You can also invite other users, such as your bookkeeper, to work in the trial file with you.
Can I use Xero if I'm not registered for GST?
Yes. You can set Xero to not track GST if your business is not registered. The ATO requires most businesses to register for GST once their GST turnover reaches A$75,000 (A$150,000 for non-profits), and you can switch GST tracking on in Xero when that happens.
