Editor | 16 November 2021
XERO: Understand how to reconcile expenses paid via Cash or a Personal Card

XERO: Understand how to reconcile expenses paid via Cash or a Personal Card

This article will address one of the most frequently asked questions we hear from our clients: How do I reconcile business expenses paid for with cash or a personal card?

We’ll show you a step-by-step of how to get your Xero portal up to date.

Your Limited Company has a separate legal identity to you as an individual, even if you’re the only Director. 

This means that the company’s assets and liabilities are completely separate from your own personal finances.

The law states you must have a separate bank account in the business name, that all business transactions go through. 

We’re all human, and you might occasionally use the wrong card or forget your pin number. 

This useful guide will help you understand how to reconcile expenses paid from your personal account and will also work for transactions paid for with cash.

STEP 1

Firstly, you need to create a bill in the software to be able to pay it off and have a record of the transaction. Start by logging into your Xero portal and click on ‘Business’ then ‘Bills to pay’.

  

STEP 2

Once here, you will need to click on ‘New Bill’.

   

After you have entered all the information onto the bill, it should look something like the below.

 

You will also be able to attach a receipt by clicking on the paper button next to the reference.

Once you are happy with the bill click the green ‘Approve’ button.

 

Step 3

Now the bill has been created, you will be able to pay it off.

Staying on the same page, you can make the payment via the box on the bottom left of the screen

Make sure the date paid is the same as the due date.

Make sure the ‘Paid From’ box is set to ‘835 - Directors Loan Account’

 

Once you have done this, then click ‘Add Payment’ and this will reconcile the bill in your Xero portal.

If you need any further support, or have any questions about the Xero software, please reach out to the team.