The coding process in Xero allows you to group each item of income in your business – like putting money into different pots. By doing this, you’re able to see a more detailed picture of your company finances and analyse where your money is coming from.
So, as you can imagine – when you can code income correctly in Xero, your numbers are more accurate. Alongside having a better overview of your accounts, coding correctly also means you won’t have to worry about fixing anything when it comes to your year end and it won’t affect your VAT return, making the whole bookkeeping process easier, stress-free and more cost effective.
The problem is what to code where? With sales income it’s quite self explanatory. But sales income isn’t the only kind of income you receive. Many of our clients come to us with the same question: where do I code all the income that doesn’t belong under sales? Like Directors loan funds, insurance money, grant payments?
You’re not alone in finding it confusing! And we appreciate that:
- Xero might be new software for you – you may be doing a little more than you’re used to
- You’re not a bookkeeper (and never wanted to be!)
It’s best just to ask for particulars, because there’s no one-size-fits-all answer for coding
It’s a very valid question to ask, because unfortunately (like many things when it comes to Accounting) there’s no one answer. Each business is different, and so the nature of coding is different. Where you code your item depends entirely on what you’ve received and the type of business you have. For example:
- Private funds would go to ‘capital introduced’ in a sole trader/partnership, but would go to the Directors loan account in a limited company.
- Insurance monies will go to different places depending on what the claim is for – i.e. a vehicle write off would be motor vehicle disposals but a claim for repairing a motor vehicle would go to motor vehicle repairs.
We don’t expect it to be easy to figure it out. That’s why we do the job we do! So rather than panic and code everything to ‘sales’, we encourage you to give us a quick call and ask where to code your specifics.
If you’re already a client of ours, pick up the phone and give us a call.
If you’re not a Saint & Co client, and you’re struggling to navigate Xero or worried about making errors, have a chat with one of our Xero consultants. That’s what we’re here for.