Xero Setup Basics: How to Choose the Correct Start Date for Your File

Deciding the start date for your new Xero file is an important decision. Xero lets you begin at any time of year, but you need to be clear about whether you are starting from today or going back to the beginning of a financial year and recreating all activity from that point.

If you are starting a new business part way through the year, the start date for your Xero file is simple. Use the date you began trading. That is the point when real income and expenses started and it keeps your bookkeeping clean and true to the business timeline.

If you have already been trading for some time, it is generally best to start a new Xero file from 1 July wherever possible. It gives you a full financial year in one system, it avoids partial year confusion and it gives your accountant a clean set of data to work from tax time.

What to consider before locking in your start date

Even if 1 July is usually the cleanest option for most ongoing businesses, there are a few things worth confirming before you commit:

Lodged Tax Returns

If last year’s tax return has been finalised, starting from 1 July of the new year keeps your Xero file aligned with your accountant’s published figures. The financial statements your accountant prepared for that year provide a complete and reliable set of numbers, which makes them ideal conversion balances for a 1 July start.

Completed BAS periods

If you choose a 1 July start date but have already lodged BAS for part of the current year, you can still rebuild those periods in Xero. You just need to make sure that the GST reported in Xero for those months matches the amounts that have already been lodged with the ATO. Once your BAS and Xero figures line up, you can continue the rest of the year in one clean system.

Payroll

Payroll behaves differently to the rest of your bookkeeping. If you are switching to Xero part way through the year, you generally do not recreate past pay runs. Instead you bring across each employee’s year to date figures, switch your Single Touch Payroll registration to Xero and update your super clearing house. This needs to be handled carefully so employee totals remain accurate for both STP and end of year. If you start fresh on 1 July, payroll is far simpler because Xero becomes the system of record for the entire year.

Alternate approach for complex situations

If your business has already been operating for many months and BAS for the year have been lodged and the transaction volume is too high to rebuild the entire year in Xero, you can choose a mid year start date. In this situation you would bring your current accounts to a fully reconciled position as at the day before your chosen Xero start date and use those figures as your opening balances.

This approach avoids recreating several months of detailed transactions but it does require careful preparation and accurate reports from your accountant. For most new users it is still simpler and cleaner to begin from 1 July wherever possible.

Choosing the right start date sets the foundation for how well your Xero file will operate over time. Once you lock it in, the next step is making sure your bank feeds and opening balances line up so you do not end up with gaps or duplicated data. If you would like a practical walkthrough of how to handle that stage, see our companion guide on setting up your Xero bank feeds without gaps or overlaps.

If you would prefer support getting your file set up correctly from the beginning, our Xero Setup service can guide you through the decisions, gather the required information and configure your new file so you can move forward with confidence.

You may also find these helpful

Disclaimer

The information in this article is general in nature and provided for educational purposes only. It does not constitute personal financial, legal, or tax advice and should not be relied upon as such. Every business has unique circumstances, and we strongly recommend consulting with a registered tax agent, BAS agent, or legal advisor before making decisions about your company setup, payroll, or financial systems. While care is taken to ensure accuracy, laws and software functionality may change over time.