- Your purchases are your A/P, where you can enter a bill to be paid later.
- Checks are what you record when you’re paying for it now.
- Inventory is where your items live – both inventory, and non-inventory. Anything you sell, every product and service goes here.
- Expense Claims are where you can submit a receipt for reimbursement. If you want to show a receipt as a contribution by the owner (ie) (s)he paid for it with personal funds, then you have to set up the appropriate equity or loan account, as an account that can be used in a payment. I’ll show you that in the video.
- Fixed Assets can be set up for tracking. If you’re familiar with the QuickBooks Desktop Fixed asset manager, this is the same idea. For the same reasons, as with QuickBooks I am going to suggest shying away from using this. It’s a cool feature, don’t get me wrong, but it wants to calculate depreciation, for you, and in my opinion, that is better left to the tax professional who is using their tax software to calculate the tax basis depreciation. If you have the Fixed Assets module in Xero calculating depreciation on some other basis, then you are going to have to make adjustments to get your books into agreement with what is reflected on your tax return. Also, once you create the fixed asset, it can be challenging to get your payment(s) for the item linked to it. I’ve seen fixed assets get duplicated here. Once for creating it directly in the Fixed Assets area, and again when the purchase was recorded. Keep it simple. Record the purchase to the Fixed Asset account, and book the depreciation manually based on what your tax professional gives you.
These are the ways we can record expenses, or in the case of inventory.. inventory purchases, as well as fixed assets. The video will walk you through what all of this looks like.