Chart of Accounts in Xero

When you start your Xero subscription, you may have opted for the general list of codes with the Chart of Accounts – but what if you want to categorise an expense that isn’t in the list?

We’ll take website hosting fees as an example. You could add this expense under ‘IT and Software’, but if you want to see this expense separately then you’ll need to track it separately. You do this by adding a new account code for ‘Website Hosting’. Note: this is not another account like a bank account. An account is what Xero calls the code or number used to specify a category in your accounts.

Now we’ll explain here, with a step by step guide on how to do it:

1. Log in to your Xero account.
2. Go to ‘Accounting’ (blue tab along the top).
3. Go to ‘Chart of Accounts’.
4. Scroll down the list and have a look for a similar code. In this example, you could look for ‘IT and Software’. Xero has a default where the Chart of Accounts is alphabetical, so if you want to follow this, make sure to choose a code that fits alphabetically! Note – you cannot use a code twice, and Xero will highlight that in step 7.
5. Click ‘Add Account’. For example, ‘200’ would usually refer to Sales, which sits under the Revenue section in your accounts. Important: When you are adding an account, it’s important you know which section of your accounts this new code should sit because it will form part of your profit and loss or balance sheet in your year-end accounts. If you follow a similar code like ‘IT and Software’ being an overhead then this will help you, but if you don’t know what this should be please, drop us a message. It can make a big difference in your accounts if the codes are wrong!
6. Use the dropdown list under ‘Account Type’ to select the correct category.
7. Type in the code you want to use as per step 4.
8. Type in the Code name in the ‘Name’ box. For example: ‘Website Hosting’.
9. Type in a Description. For example: ‘Expenses incurred from website hosting fees’.
10. Select the tax type that would normally be used for this new code. This will depend on if you are VAT registered or not.
11. Press Save!

That is a basic guide to adding a new code, but if you get stuck you can drop us a message or contact Xero Support.