If you’re a freelancer, a small business owner, or just looking to run your eBay selling operation more efficiently, you’re eventually going to come across some accounting needs. If you’re anything like me, though, just the word “Accounting” is enough to send chills up your spine. Balancing books, taxes, and all that can be incredibly difficult.

Thanks to Xero, though, it’s a much easier process than it used to be, and a much more efficient one at that. It’s not perfect, and still requires some serious know-how, but thanks to a few clever features, some of the most intuitive and simple usage you’ll ever see, all it takes is a little bit of discipline on your part to become your very own accounting powerhouse.

Getting Started

Initially, Xero makes the process as simple as possible. You don’t have to pay for the application—you only pay when you’re ready to, or after you’ve got so much data in Xero that there’s no hope in ever getting it out.

Xero is another intersection of form AND function on the web.

Once you’ve created an account, the first step is to set up your company. With Xero’s Wizard, it walks you through all the important steps – the information about your company, the currencies you use, tax rates, current accounts you have open, and much more. If you’re moving to Xero from another system (like an Excel spreadsheet), it’s easy to move all your data as well.

The system is impressively complete, and is so thorough so it can be smarter in giving back information to you – it’s worth investing a few minutes up front to give Xero as much information as possible.

You can also invite other users to share your Xero account, and enter any balances you already have, as well as your bank account information so processes get automated and caught up faster throughout your whole organization.

What Does Xero Do?

Xero, once all the information is into the system, makes a lot of annoying processes significantly easier. Sending invoices or recording transactions is simple – tracking expenses can be done right from the iPhone app—and keeping tabs on everything is much easier thanks to Xero, which acts as a hub and tracker for all your invoices, transactions, and expenses.

If you’ve got clients you work with regularly, you can add them as Contacts with repeating invoices, to make the process go even faster—and in some cases, it can be completely automated, and run without any of your help.

Accounting and invoicing — all your business needs in one tool.

One of the greatest things about Xero is how well it works with your bank account – you can import your statements easily, and reconcile them with your Xero transactions; this means that if there are any funny charges, or something wasn’t billed that should have been, it can be caught quickly with the simple cross-check.

I’ve truly only scratched the surface of what Xero can do for you – it’ll do everything from track your office mortgage to manage your investments for you. The features are just about endless, and seem to be ready to scale with a growing and expanding company.

The Hub of it All – The Dashboard.

Get the bird's eye view on the dashboard.

The Dashboard is where all your information will live, much of it in fantastically helpful graph form. You can see where your bank accounts stand, how much money is going out and coming in (narrowed down as far as you’d like, to a product, customer, or anything else), and much more. Having a one-stop place to see where your company’s finances are, in only a moment, is a hugely useful tool.

Creating useful reports is a simple process.

Xero also makes it incredibly easy to create Reports from your data, which are great for reporting to clients, investors, or shareholders. You can create performance reports showing growth over time, or reports about where the company stands financially and with business strategy. Companies can create budgets in Xero, and have a constant sense of how the company is doing against its goals, and whether you need to tighten the belt a bit, or can afford to spend a bit more.

iPhone access gives you your information anywhere you are.

The advantage of Xero being on the Web is that not only is this information available to you anywhere, it’s available to people like advisors, friends who do your taxes, and anyone else who should be privy to your company’s finances. The information is easy to read and whittle down to what you want to see, and doesn’t require tons of know-how or years of training to understand.

The Moral of the Story

After using Xero for a while, I’ve realized a few things: one, there are a lot of accounting terms that don’t make any sense to me. Two, Xero’s Help Center is one of the best user guides I’ve ever seen, and is the only reason I can actually get Xero up and running. And three, once the system is set, Xero runs smoothly, easily, and without a lot of extra work.

So here’s what I recommend, for anyone looking for a way to handle their company’s finances: sit down with a friend (or the Help Center) who knows about accounting, and input as much data into Xero as you possibly can. Once it’s running, even a money-phobic person like me can handle it.

Other than a bit of an initial learning curve, Xero is a smart, accessible way to handle your company’s money, and to figure out exactly where your company stands—those are two features that can’t be overstated, particularly for a small company (which Xero definitely seems geared toward).

If you decide you love it, Xero is $19/month for the most basic plans, up to a $39/month plan for unlimited invoicing, users, and bank reconciliation. The highest plan also includes multi-currency support, excellent for internationally-focused businesses.

The app might be overkill for people who just need to keep track of a few clients so they can do their taxes, but it’s a much better solution for companies who need to be in total control of expenses, income, and all of a company’s financials.