Xero and MYOB, set up and kept up to date

Who it is for

• New businesses choosing accounting software for the first time
• Sole traders moving from spreadsheets or a shoebox of receipts to cloud bookkeeping
• Small and medium businesses already on Xero or MYOB whose file needs tidying or reconciling
• Employers who need payroll, Single Touch Payroll and super set up correctly for Payday Super
• Businesses that would like their accountant working in the same file they use every day

Bookkeeping in Xero and MYOB

Ross Accounting does its bookkeeping in Xero and MYOB. Software packages are one of the services the firm offers, alongside bookkeeping, financial statements, tax advice and tax returns.

Our bookkeeper Angela Ross has vast experience in bookkeeping for many small businesses using MYOB, QuickBooks and Xero, three packages widely used by small businesses.

When your bookkeeping, BAS and year-end accounts are all prepared from the same file, the figures flow straight through to your tax return without being re-keyed, and you can see how your business is performing during the year rather than only at tax time.

What accounting software does for a small business

The ATO says a commercial record-keeping package can help a business in several practical ways. In general terms, good accounting software can:

• track income, expenses and assets, and work out depreciation
• calculate wages, tax withheld and super
• produce the summaries and reports needed for GST, income tax and other reporting
• prepare figures for your tax return and business activity statement (BAS)
• send some information, such as an activity statement, to the ATO online when the package meets the ATO's requirements
• meet your Single Touch Payroll (STP) reporting obligations if you employ staff
• back up your records to cloud storage, away from the risk of fire, flood or theft

Both vendors describe these functions on their own sites. Xero says most banks can be connected to its software through a direct feed, that it works out GST on transactions and that a BAS can be lodged with the ATO from inside Xero. MYOB says its software can link your bank accounts, has STP reporting built in, can send BAS reports to the ATO, and lets your accountant or bookkeeper access the file at no extra cost. Features and plans change, so check the current details on the Xero and MYOB websites.

Choosing the right software

There is no single right package. The ATO suggests choosing record-keeping software that you can understand and use easily, that lets you meet your record-keeping requirements, and that lets you report to the ATO digitally. If you use a registered tax or BAS agent, the ATO also suggests considering software that is compatible with theirs.

Before you commit, it helps to list what the software actually needs to handle in your business, for example:

• invoices, receipts, refunds and payments from customers
• stock, jobs or customer orders
• payroll, including leave entitlements and STP reporting
• money the owners take out of the business (drawings)
• more than one bank account, more than one business, or foreign currency
• budgets, cash flow forecasts and regular management reports

The ATO recommends reviewing your software from time to time as the business grows, so it keeps up with new reporting requirements and digital options such as eInvoicing. On costs, the ATO notes that businesses can generally claim a deduction for commercial off-the-shelf record-keeping software used in the business, including subscription fees.

Cash or accrual: setting up the file

One of the first decisions when setting up a file is how income and expenses are recorded. business.gov.au explains that cash accounting records a sale when the money arrives and a bill when it is paid, while accrual accounting records them when the sale or purchase happens, so the books also show what customers owe you and what you owe suppliers.

Cash accounting is simpler and often suits businesses that are paid straight away. Accrual accounting is more involved but gives a truer picture for businesses that invoice and wait to be paid. The choice depends on the size and complexity of the business, and is worth talking through before the file is set up. See starting a business if you are at that stage.

Record-keeping rules still apply in the cloud

Moving your books online does not change your legal obligations. The ATO's record-keeping rules for business (page updated 18 June 2026) say, in summary, that:

• most records must be kept for 5 years, generally from when the record was prepared or obtained or the transaction was completed, whichever is later
• records must be protected from being changed or damaged
• you must be able to reconstruct your original data if your record-keeping system changes
• if digital records are encrypted or password protected, the ATO must be given the keys or access details when it asks, and be able to extract the data into a standard format such as Excel or CSV
• records must be in English or easy to convert to English

The ATO accepts digital images of paper records if they are true and clear copies, after which the paper original generally does not have to be kept. However, typing the details of a receipt into your accounting software is not enough on its own: you still need a copy of the actual record, which is why attaching a photo of each receipt to the transaction is a good habit.

If you store records in the cloud and plan to change software, the ATO says to download a complete copy of those records first, before you lose access. The ATO also notes that ASIC requires companies to keep records for 7 years. Our business record keeping guide has more detail.

The ATO says to download a complete copy of cloud records before changing software provider, because a business must still be able to reconstruct that data after the old subscription ends.

Payroll, Single Touch Payroll and Payday Super in 2026–27

If you employ staff, your payroll software does much of the reporting for you. Single Touch Payroll is mandatory unless an ATO deferral or exemption applies: each time you pay employees, STP-enabled software sends salaries and wages, PAYG withholding and super information to the ATO. The ATO says new employers need to report through STP Phase 2 enabled software from their first pay run.

Payday Super started on 1 July 2026, and the ATO describes these changes for super guarantee from that date:

• super guarantee is paid for each payday instead of quarterly, and must reach the employee's fund within 7 business days after payday (with some exceptions, such as for new employees)
• the rate stays at 12% for 2026–27, now worked out on qualifying earnings, which include ordinary time earnings, commissions and salary sacrifice contributions
• both qualifying earnings and super liability are reported through STP
• the Small Business Superannuation Clearing House has closed

This makes it important that pay items, super settings and STP reporting are set up correctly in Xero or MYOB. Our payroll service and the Single Touch Payroll and Payday Super guides explain the detail.

eInvoicing

eInvoicing is a way of sending invoices directly from one business's software to another's through the Peppol network, rather than emailing PDFs. business.gov.au explains that it applies to invoices between businesses and government, not to consumers, and that it does not matter which software each side uses as long as both are connected to Peppol.

If you already invoice from accounting software such as Xero or MYOB, business.gov.au suggests checking with your software provider whether eInvoicing is available and following their steps. We can talk through whether it suits the way you invoice.

How it works

1. 1
   Talk it through

   We look at how your business runs, the software you use now (if any) and what you need it to do.

2. 2
   Set up or tidy up

   We set up a new Xero or MYOB file, or bring an existing file up to date, including bank feeds, reconciliations, GST settings and payroll.

3. 3
   Keep it current

   We can do the bookkeeping for you, with receipts attached to each transaction and the bank accounts reconciled.

4. 4
   Report and lodge

   Your BAS, financial statements and tax return are prepared from the same file, so the figures flow through to year-end.

What to bring

• Login access to your existing Xero, MYOB or QuickBooks file, if you have one
• Details of your business bank, credit card and loan accounts
• Your ABN and GST registration details
• Employee details, pay rates and super fund details if you run payroll
• Recent invoices, receipts and any spreadsheets you have been using