Burlingham Financial ServicesA month-end close checklist for small businesses
Ten steps to close your books properly every month, in the right order.
Spreadsheets are a great place to start a business and a hard place to grow one. Moving to cloud software such as Xero gives you bank feeds, real-time reports and, increasingly, the digital records HMRC requires. Here's how to make the switch cleanly.
Why now?
- Making Tax Digital. VAT-registered businesses must keep digital records and file through compatible software. Spreadsheets can still be used with bridging software, but the data must flow through digital links, and copying and pasting between programs doesn't count as one.
- Income Tax is following. From 6 April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates, with the threshold falling to £30,000 in April 2027 and £20,000 in April 2028.
- Time. Bank feeds and bank rules remove most manual typing, and receipt apps capture bills straight from your inbox.
Step 1: Choose your conversion date
The conversion date is the day Xero takes over. The cleanest choice is the first day of a financial year, or failing that the start of a VAT quarter. That way, no VAT return or set of accounts is split across two systems.
Step 2: Tidy before you move
Reconcile your spreadsheet to the bank up to the conversion date. Moving messy data simply moves the mess. Agree outstanding customer and supplier balances while you're at it.
Step 3: Build the chart of accounts
Xero's default chart of accounts is a sensible start, but it's worth tailoring it to the way you want to see your numbers, for example separate income lines per service, or tracking categories for locations or projects.
Step 4: Enter conversion balances
Conversion balances are Xero's term for opening balances. You enter the trial balance at your conversion date, and then the individual unpaid sales invoices and supplier bills that make up your debtor and creditor totals, so you can track them to payment.
Step 5: Connect bank feeds and set bank rules
Connect each bank and card account so transactions flow in daily. Then create bank rules for regular payments such as rent, software subscriptions and utilities, so they code themselves.
Step 6: Connect your apps
Typical additions include receipt capture (Dext or Hubdoc), payment platforms (Stripe, GoCardless or PayPal), e-commerce (Shopify or Amazon) and bill approvals and payments (ApprovalMax or Apron). Each one reduces manual entry.
Step 7: Run in parallel for one month
For the first month, keep your spreadsheet alongside Xero and compare the results. Once they agree, you can retire the spreadsheet with confidence.
Step 8: Train the team
A short training session covering invoicing, bill approval and reconciliation, plus a one-page process note, makes the new system stick.
Keep your old records. Moving software doesn't change how long you must keep records: six years from the end of the financial year for limited companies, and five years after the 31 January filing deadline for sole traders. Export and archive your spreadsheets before you stop using them.
How I can help
As a Xero Certified Specialist I set up and migrate Xero files, connect the right apps and train your team. Most setups take one to two weeks from start to training.
Sources
This article is general information, correct at the date it was last reviewed. It isn't tax or legal advice, so please speak to your accountant about your own circumstances.