Using Xero for Self Employed Accounting

Online accounting software Xero is one of a number of packages that have come to prominence in the market over the last couple of years. We use Xero for a number of our clients and have found it particularly helpful when working with the self-employed, sole traders and SMEs.

If you are a sole-trader or self-employed it can bring with you a range of advantages such as:

  • You are by definition your own boss so only have to answer to yourself.
  • You can chose to work when and where you please.
  • Potentially your earnings are unlimited as you are not tied to an agreed salary paid by your employer.

These all seem very attractive but of course there are downsides as well and these include:

  • To ensure you maintain your income you may have to work at unusual hours or at the weekend to keep customers happy and if you are offering services that include breakdown cover.
  • Taking time off usually means you aren’t getting paid.
  • There is no sick pay either.
  • Your success is down to your own skills and hard work rather than those of a team.
  • You need to wear many hats other than your base job role, so you need to have a grasp of how your business works, how to manage finances, how to get paid and so on.

Xero and other online accounting packages help greatly when dealing with the finance, accounting and day-to-day management of your business. By being online they also make access to services like invoicing and linking to your bank accounts so you can check payments, much easier.

Xero can replace spreadsheets, which are prone to errors and greatly simplify your monthly and statutory accounts. Your accountant and other professionals such as book keepers can be linked into your account and can help you process any unusual transactions.

Xero also helps you by giving you a simple overview of your business and allows you to record expenses incurred. This makes it much easier to perform tasks such as your year end tax return and file VAT .

If you are just starting up Xero is an excellent tool and will help you understand your basic accounts even for those who have limited knowledge of finance and accounting functions.

For more information on how MCC Accountants can help you implement Xero and use it to manage the finances of your business please get in touch. We would be happy to arrange a demonstration for you.