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Accurate accounting and financial management are the foundation of efficiently running a business.
It is crucial for small and medium-sized enterprises (SMEs), and many SMEs are now turning to cloud-based accounting software.
Cloud-based accounting tools simplify bookkeeping and small business accounting, enable regulatory compliance, and enable businesses to make more informed operational decisions. One of the most popular tools in this space is Xero Accounting Software.
Whether you’re a startup or a growing SME, this complete guide will help you understand what Xero accounting software is, why it’s ideal for your business, and how to get started.
If you’re comparing options, consider this list of Xero accounting software pros and cons before giving a final nod of approval.
QuickBooks may be suitable for smaller teams or agencies. However, Xero accounting software Singapore is more suited for businesses that want local tax compliance, modern apps, and greater scalability.
What Is Xero Accounting Software?
Xero Defined: Cloud-Based Accounting for Modern Businesses
Xero Accounting Software is a robust cloud-based accounting software solution designed with the needs of small to large businesses. The parent company, Xero, is based in New Zealand. It helps manage day-to-day accounting tasks such as invoicing, payroll, expense tracking, general ledger, bank reconciliation, cash management, and reporting, all in one easy-to-use online platform. Since it is cloud-based, business owners and accountants can access financial data at any time, from anywhere.Origins and Growth of Xero Globally and in Singapore
Founded in New Zealand in 2006, Xero quickly gained popularity for its user-friendly interface and powerful automation-based functionality. Today, it is widely adopted in regions such as Australia, the UK, and Southeast Asia. In Singapore, Xero has become a trusted choice for SMEs due to its IRAS-compliant features and built-in integrations for local laws, especially for GST filing.Who Is Xero Best Suited For? (Startups, SMEs, Agencies)
- Xero is easily scalable and comes under a SaaS model with budget-friendly pricing.
- SMEs utilise Xero for seamless financial management, including ledger management, cash flow tracking, bank reconciliation, payables management, and reporting.
- Marketing agencies, consultancies, e-commerce sellers, and other SMEs benefit from integrations with Salesforce, Xero add-ons, payables management software, and other software integrations.
Why Use Xero Accounting Software for Your Business?
Key Benefits for SMEs in Singapore
SMEs operating in Singapore may often think about “Why use Xero accounting software?” For your benefit, here are the promising benefits of using Xero:- IRAS compliance for GST-registered businesses
- Easy invoicing and banking integration
- Automation of recurring and mundane tasks to save time
- Multi-currency support for international trade
- Real-time reporting for better financial decisions
Automating Financial Tasks (Invoicing, Payroll, Bank Feeds)
Xero automates many day-to-day tasks:- Invoicing: Create and send professional invoices with automatic reminders.
- Payroll: Integrate with local payroll providers or use Xero’s payroll add-ons.
- Bank feeds: Connect directly with Singaporean banks, such as DBS, OCBC, and UOB, to import transactions automatically.
Cloud Access, Multi-Currency, and Real-Time Reporting
With Xero’s cloud-based accounting software, you and your team can:- Log in from any device to review reports and financials
- Transact in multiple currencies with automatic FX conversions.
- View real-time cash flow dashboards and performance metrics.
How to Use Xero Accounting Software: A Step-by-Step Walkthrough
Setting Up Your Account (Company Info, Users, GST Settings)
- Sign up for a Xero trial or subscription.
- Enter your company profile, including ACRA registration and address.
- Add users, such as your bookkeeper or accountant.
- Set up GST settings, including filing frequency and accounting basis (cash or accrual).
Creating Your Chart of Accounts in Xero
Your chart of accounts defines your financial structure and gives a clear view of assets, liabilities, income, and equity. Xero provides a default template for Singapore businesses, which can be customised through the following:- Adding expense and income categories
- Assigning account codes
- Mapping them to tax rates (eg, GST rates)
Issuing Invoices, Tracking Payments, and Reconciling
- Create branded sales invoices and send them via email or WhatsApp.
- Add payment options, such as credit cards or Stripe.
- Track outstanding payments and set up auto-reminders.
- Reconcile incoming payments with bank feeds using Xero’s one-click match feature.
Integrating Xero with Payroll, CRM, POS, or Shopify
Xero easily integrates with over 1000+ third-party apps, including:- Payroll systems like Talenox and Gusto
- CRM software like HubSpot and Capsule
- POS systems like Square and Epos Now
- eCommerce platforms like Shopify and WooCom
Xero Accounting Software Pros and Cons
Like any other tool, Xero isn’t perfect, and it has its strengths and limitations. Here are the pros and cons of Xero accounting software for Singapore SMEs:| Pros | Cons |
|---|---|
| Easy to use and intuitive | Limited advanced inventory and reporting features |
| IRAS-compliant and GST-ready | Slight learning curve for beginners |
| Excellent app integrations | Add-ons may increase the total cost; limited features in entry-level plans |
| Cloud access and mobile app | May not suit large enterprises |
Xero vs QuickBooks: Which Is Better for Singapore SMEs?
Which Software to Choose Based on Business Size and Goals
When comparing Xero online accounting software vs QuickBooks, both platforms offer strong features, but your choice depends on your needs:| Feature | Xero | QuickBooks |
|---|---|---|
| Cloud-based | Yes | Yes |
| IRAS compliance | Yes | While Quickbooks is also IRAS-compliant, it is not preferred by growing businesses that need more advanced features, plugins, and scalability. |
| User interface | Modern and intuitive | Familiar to and easy for traditional users |
| Integrations | 1000+ apps | 800+ apps |
| Best for | Growing SMEs | Freelancers or very small teams |
Xero in Singapore: Local Features and IRAS Compliance
How Xero Supports GST Filing and IRAS Reporting
One of the biggest reasons for using Xero online accounting software in Singapore is its local compliance features:- GST Tracking: Automatically calculates GST on transactions.
- GST Reports: Prepares IRAS-compliant F5 returns.
- Audit Files (IAF): Exports files compatible with IRAS requirements.
- Multi-currency support: Meets the needs of trading companies in Singapore.
Final Thoughts: Is Xero a Good Accounting Software for You?
Is Xero a suitable accounting software for SMEs in Singapore? Well the answer is absolutely yes. If you’re looking for:- Modern, cloud-based accounting software
- Tools that help with automated invoicing, GST compliance, payroll, and bank reconciliation
- An ecosystem that integrates with 1000+ third-party apps like Shopify, Stripe, payroll, and CRM platforms.
- IRAS-approved features (eg. GST filing) to simplify your compliance journey
FAQs
Xero accounting software helps SMEs manage invoicing, payroll, bank reconciliation, expense tracking, GST reporting, and financial analysis in a cloud-based environment.
Yes, Xero accounting software Singapore is designed for SMEs and is IRAS-compliant, making it an ideal choice for local businesses in Singapore that need cloud-based financial management.
To set up Xero, sign up online, enter your company and GST details, invite users, and customise your chart of accounts. You can also import existing data via CSV or from your previous software. 1000+ payroll, CRM, and other third-party integrations are available to choose from.
Yes, Xero is IRAS-compliant and supports GST reporting, audit file generation, and integrations with local invoicing and payroll providers.
Absolutely. Xero integrates seamlessly with Shopify for sales tracking and with Stripe for online payments.
Xero supports GST filing by producing GST tracking, GST F5 return, and IAF (IRAS Audit Files) files for IRAS submission.
Xero is fully cloud-based and also offers a mobile app for both Android and iOS, allowing you to manage your business finances and accounting needs on the go.
Xero uses industry-standard encryption, multi-factor authentication, regular data backups, and follows global security standards like ISO 27001 to ensure your business data is safe and secure.
