- Xero is cloud accounting built for Australian tax and payroll, connected to the ATO.
- It runs on bank feeds you reconcile regularly, so accuracy depends on a routine.
- The software records and reports; judgment and time still sit with you or a managed accountant.
Xero accounting is cloud-based software that lets an Australian business handle invoicing, bank reconciliation, GST and BAS, payroll and reporting in one place, accessible from any device. It is one of the most widely used platforms in the country and is built around Australian tax and payroll rules, connecting directly to the ATO. Whether it is right for you comes down to how much of the work you want to do yourself, because the software records and reports your numbers but does not make the decisions for you.
What is Xero and how does it work?
Xero is cloud accounting software that stores your financial data online and updates it automatically as transactions flow in from your bank. Instead of a file on one computer, your accounts live in a browser or app, so you, your bookkeeper and your accountant can all see the same up-to-date numbers.
The engine of it is the bank feed. Xero imports your transactions daily, you match them to invoices and bills, and your accounts stay current without manual data entry. From there it handles invoicing, GST tracking, payroll and reporting on top of that reconciled foundation. If you would rather not do that matching yourself, managed accounting does the reconciling and reporting for you instead.
What are Xero’s core features?
Xero covers the full core of small business accounting, which is why it suits so many Australian businesses. The features most owners actually use day to day are bank feeds and reconciliation, online invoicing and quotes, GST tracking with prepared BAS, payroll with Single Touch Payroll, and financial reporting.
Invoicing lets you send branded invoices, set up recurring bills and see when a customer has viewed them. Payroll runs pay runs, calculates superannuation at the current 12% Superannuation Guarantee rate (in effect since 1 July 2025, per the ATO), tracks leave and reports through STP Phase 2. On top of the core, the Xero App Store adds tools for inventory, receipts, point of sale and more, so the platform scales as you grow.
How do you set up Xero?
Setting up Xero follows a fairly standard path, and you can do the basics yourself in an afternoon. The main steps are connecting your bank accounts for feeds, importing your chart of accounts and contacts, setting your GST and BAS settings, and adding employees if you run payroll.
The setup that trips people up is the opening balances and the chart of accounts, because getting these wrong distorts your reports later. If you are migrating from another platform such as MYOB or QuickBooks, you also import your historical data and reconcile the opening position. Many businesses have an accountant or bookkeeper handle this first setup so the foundation is clean, then take over the day-to-day themselves.
TIPBefore you start entering data, decide who owns the bank reconciliation each week. Xero only stays accurate if someone matches transactions regularly, and “I’ll do it later” is how a tidy setup turns into a year-end mess.
What does Xero cost in Australia?
Xero’s Australian plans start at A$37 per month and rise with your payroll and feature needs, as of July 2026 following the 1 July price increase. Payroll is included in every plan up to a set number of employees, and you move up a tier as your headcount or feature needs grow.
Because pricing changes periodically and add-ons affect the real total, it is worth reading the full breakdown in the Xero pricing in Australia guide rather than relying on the headline figure. If you are comparing Xero against other tools first, the MYOB vs Xero comparison and the wider best accounting platforms in Australia roundup are the two worth reading.
Is Xero right for your business, and when is an accountant the better call?
Xero suits businesses that want to run their own books with a modern, ATO-connected tool and are comfortable spending a little time each week keeping it current. Sole traders, service firms and product businesses all use it well, and its large app ecosystem means it grows with you.
It is a weaker fit when the software is not really the problem. If you find accounting stressful, keep missing BAS deadlines, or simply do not want to spend evenings reconciling, the issue is the work, not the tool. Choosing an accounting method and staying on top of lodgements still takes judgment and time. In those cases a managed accountant who runs the numbers for you is usually the better call than another subscription.
How Sleek helps when you would rather not run the software
If reading about setup and reconciliation has confirmed you would rather not do it, Sleek offers managed accounting where a dedicated accountant looks after your bookkeeping, BAS and company tax return. You get compliant, current books without being the one matching transactions or lodging with the ATO.
Sleek’s managed accounting starts from A$180 per month for sole traders and from A$275 per month for companies (list pricing as of July 2026). You can add bookkeeping for regular reconciliations or bring in a small business accountant for the full engagement, so the numbers are handled either way.
Ready to decide between running Xero and handing it over?
Get an instant quote and compare doing your own books with a managed accountant.
Prices may vary with current promotions, so check the latest on the relevant page.
450,000
businesses worldwide.
from 4,100+ reviews.
Frequently Asked Questions
What is Xero?
Xero is cloud-based accounting software used widely in Australia for invoicing, bank reconciliation, GST and BAS, payroll and reporting. Because it runs in a browser and app rather than on one computer, you and your accountant can work from the same live data. It connects directly to the ATO, which keeps compliance reporting inside the one tool.
How does Xero work?
Xero imports your bank transactions through automated feeds, and you match them to invoices and bills so your accounts stay reconciled. On that foundation it handles invoicing, GST tracking, payroll and financial reports. The more consistently you reconcile, the more accurate your reporting and BAS become, which is why a regular routine matters.
Is Xero good for small business?
Yes, Xero is a strong choice for many Australian small businesses, particularly those that want a modern, ATO-connected tool and are willing to spend a little time each week keeping it current. Its app marketplace lets it scale from a sole trader to a growing team. Owners who would rather not do the work at all often prefer a managed accounting service instead.
Do I need an accountant if I use Xero?
Xero records and reports your numbers, but it does not replace an accountant’s judgment on tax planning, structure and year-end review. Many businesses run Xero day to day and see an accountant periodically, while others choose a managed service that runs both the software and the compliance. The right mix depends on how complex your affairs are.
Does Xero do payroll and BAS?
Yes. Xero runs pay runs, calculates superannuation, tracks leave and reports through Single Touch Payroll Phase 2 to the ATO, with payroll included up to a set number of employees per plan. It also tracks GST and prepares your BAS for lodgement. You still review and lodge, so the responsibility for accuracy remains with the business.
How do I set up Xero?
Setup involves connecting your bank accounts, importing your chart of accounts and contacts, configuring GST and BAS settings, and adding employees if you run payroll. The parts worth getting right are the opening balances and chart of accounts, since errors there distort later reports. Many businesses have an accountant handle the initial setup, then manage the day-to-day themselves.
Can I try Xero before I pay?
Yes, Xero offers a free trial so you can set up a demo or your own organisation and test invoicing, bank feeds and reports before subscribing. It is a good way to see whether the day-to-day workflow suits you. If the trial confirms you would rather not run the books yourself, a managed accounting plan is the alternative to a paid subscription.
