Crypto Accounting With Xero
What is Xero?
Xero is a cloud-based accounting software designed for small and medium-sized businesses to manage their finances efficiently. Founded in 2006 in New Zealand, Xero now serves over 4.2 million subscribers globally. Features include:
Invoicing & payments: Create professional invoices and accept payments
Expense tracking: Monitor and manage business expenses
Bank reconciliation: Automate transaction categorization and reconciliation
Financial reporting: Generate real-time insights into business performance
Payroll management: Handle payroll and tax compliance with ease
With access from any internet-enabled device, Xero integrates with over 1,000 third-party apps - including crypto accounting software like Koinly!
Can Xero handle cryptocurrency?
No. Xero does not have in-built crypto accounting features, but it does integrate with third-party crypto tax software such as Koinly. While some simple transactions may be supported in Xero, there are limitations. For instance:
Xero only supports up to four decimal places. For crypto accounting, this is an issue as coins, like Ethereum, may be up to 18 decimal places.
Xero does not connect with your crypto wallets. For traders and businesses with a high transaction volume using multiple platforms, this means a time-consuming process of manually uploading each transaction to Xero.
If you're an accountant, trader, or business using Xero, it's important to integrate with crypto accounting software to manage your accounting and tax obligations accurately.
Why you should use Xero with Koinly
Seamless integration: Koinly directly connects with Xero in a couple of clicks to easily connect to your Chart of Accounts.
Comprehensive crypto support: Koinly supports more than 800+ chains, exchanges, and platforms, making it easy to manage a diverse range of crypto activities.
Automated profit calculations: Koinly automates calculating profits and categorizing them according to your specific transactions and the relevant crypto tax regulations in your country.
Real-time data tracking: Track your crypto portfolio in real-time and stay updated on your holdings and transactions.
Customer support: Koinly provides outstanding customer support, with a 4.7 average star rating on TrustPilot.
How to integrate with Xero and Koinly
To begin, you'll need to sign in to Koinly and connect all of your crypto exchanges and chains so Koinly can import your crypto transactions. Next, you'll connect Koinly to Xero, so you can sync your crypto transactions to Xero.
Let's look at each step in the sections below:
Connecting to Xero
To set up the connection, go to your Settings and click on Accounting. Here you will see the option to connect to either Xero or QuickBooks but keep in mind that a single Koinly account can only connect to one of these accounting platforms.
Click on Connect and follow the login process to set up the connection.
After connecting to your Xero account, you will need to set up the accounts so that Koinly knows how you want your transactions to be synced. After doing this, your connection is set and you are ready to start syncing transactions!
How to sync transactions to Xero
There are 2 ways to sync your transactions from Koinly. The simplest way is to select Sync all txns to Xero from the Accounting page. This will sync all transactions in your Koinly account.
If you only want to sync some of your Koinly transactions then you can also go to the Transactions page, select the transactions that you want to sync, and then click on Send to Xero. This option allows you to select the specific transactions to sync to Xero, so you can easily exclude transactions that should not be synced for whatever reason.
You can see which transactions have been synced by using the special Xero filter on the Transactions page.
Viewing your synced transactions on Xero
On Xero, you can view the synced journals on the Journal page. These entries will be in the draft tab until you post them.
Does Xero work with Koinly?
Yes, Xero connects to crypto accounting software like Koinly. Once you've connected, you can easily move data from Koinly to Xero for easy crypto accounting.
Can Xero handle Bitcoin taxes?
Yes, Xero can handle Bitcoin taxes when you use it in combination with a crypto accounting tool like Koinly. Koinly is custom-built to manage your Bitcoin taxes and integrates with fiat accounting software like Xero to make your accounting needs simpler, even when complicated crypto transactions are involved.
Can Xero handle DeFi taxes?
You can use crypto accounting software like Koinly alongside Xero to handle your DeFi taxes. Koinly provides specific features to support DeFi tax calculations. It allows you to import your DeFi transactions, including activities such as liquidity mining, yield farming, lending, borrowing, and swapping tokens on decentralized exchanges. Once your data is imported to Koinly, simply connect and sync your transactions to Xero.
