Bookkeep a Full BAS Quarter in Xero

Set up Xero, run payroll, reconcile transactions, and produce BAS-ready reports.

Introduction

30 Second Summary

Imagine a wedding photographer who spent October through December shooting weddings, paying their assistant, and buying new lenses. Come February, they need to tell the Australian Tax Office exactly how much GST they collected and how much they paid their team. That is where you come in.

In this project, you will set up a Xero organisation for a fictional photography studio called "Lens & Light Photography" and process an entire quarter of business activity. You will enter invoices, run payroll, reconcile bank transactions, and produce the financial reports that prove the books are ready for BAS lodgement.

What You'll Build

You will open your completed case study PDF and see real financial data, professional formatting, and the full story of how you took a client from zero bookkeeping to a lodgement-ready quarter.

By the end of this project, you'll have:

A fully reconciled quarter in Xero where you can pull up the Profit & Loss, click into any transaction, and trace it back to its source invoice or bill.
Six completed fortnightly pay runs with PAYG withholding and superannuation calculated for two employees, showing how payroll integrates with BAS reporting.
A professional PDF case study (4-6 pages) that you can attach to client emails or LinkedIn messages, documenting your process and quantifying the results with actual figures from your reports.
Secret Mission: A financial insights section with data-driven recommendations that elevate your case study beyond basic bookkeeping.

Are there any prerequisites?

You need a Xero free trial account (already active) and a Google account with access to Google Docs and Google Sheets. The Xero free trial gives you 30 days of access to all features at no cost, which is more than enough time to complete this project.

Before We Start

Before we dive in, let's lock in what you're about to build and why it matters. You're completing an entire BAS quarter for a fictional photography business called Lens & Light Photography, and taking a moment to articulate the scope will help you connect each step to the bigger picture.

Set Up the Xero Organisation and Chart of Accounts

A photography business earns money from weddings, portraits, and corporate gigs. It spends money on camera gear, studio rent, and printing. Without a tailored chart of accounts, all of that lands in one generic bucket called "Sales" or "General Expenses," making your financial reports meaningless.

In this step, you will create a brand-new Xero organisation for Lens & Light Photography, configure its GST settings for quarterly BAS reporting, and add photography-specific accounts so every dollar flows into the right category from day one.

In this step, get ready to:

Create the Xero organisation with Australian GST registration.
Confirm GST settings and set the BAS reporting method to Simpler BAS with Accrual basis.
Add custom revenue and expense accounts for a photography business.

Create the Xero organisation

Every Xero engagement starts with a fresh organisation. This is the container that holds all the books for a single business entity.

Sign in to your Xero free trial account at xero.com.
From the Xero dashboard, click your organisation name in the top left corner.
Select Add an organisation.
Enter Lens & Light Photography as the organisation name.
Select Australia as the country.
Xero will prompt you for additional details. Enter the following values:

ABN: 51 824 753 556
Industry: select Arts and Recreation Services.
Financial year start: select July.
GST registered: select Yes and choose Quarterly as the BAS lodging frequency.

Click Start trial or Save to create the organisation.

The dashboard loads with "Lens & Light Photography" displayed in the top left corner. This confirms your organisation is live.

What is an ABN?

An Australian Business Number (ABN) is an 11-digit identifier for businesses operating in Australia. We are using a sample ABN here because this is a fictional business for practice purposes.

Don't see the option to add an organisation?

If your free trial already has a default organisation, you can rename it instead. Navigate to Settings (the gear icon) then Organisation settings and update the name to Lens & Light Photography.

If you are stuck, help me set up my Xero organisation for this project.

Configure GST settings

Xero applies default Australian tax rates when you select Australia as your country. You need to confirm they are correct and choose the right BAS reporting method for this small business.

Click the gear icon (Settings) in the top menu bar.
Select Financial settings.
Under the BAS section, confirm the following:

Reporting method is set to Simpler BAS (reports GST only at labels 1A and 1B).
Accounting basis is set to Accrual.

If either setting needs changing, select the correct option from the dropdown and click Save.

Now confirm the default tax rates. Navigate to Settings (gear icon) then General settings and look for the Tax rates section.

Confirm that GST on Income is 10%.
Confirm that GST on Expenses is 10%.
Confirm that GST Free and BAS Excluded are both listed as available tax rates.

What is Simpler BAS?

Simpler BAS is a streamlined reporting option for small businesses. It only requires you to report GST collected on sales (label 1A) and GST paid on purchases (label 1B). Full BAS adds extra labels (1C through 1G) that are unnecessary for a small photography studio.

Accrual basis means GST is reported when invoices are raised or received, not when cash changes hands. This gives a more accurate picture of obligations at any point in the quarter.

Can't find Financial settings?

Xero occasionally updates its settings navigation. Look for the gear icon in the top right, then check under Accounting or Advanced settings if Financial settings does not appear directly.

If you are stuck, help me find the BAS and GST settings in Xero.

Customise the chart of accounts

Xero provides a default Australian chart of accounts when you create an organisation. You will now add photography-specific accounts so that revenue and expenses land in meaningful categories.

In the top menu, click Accounting.
Select Chart of Accounts.
Click Add Account.

Create the first revenue account with the following details:

Account type: Revenue.
Code: 4-0001.
Name: Wedding Photography Income.
Tax rate: select GST on Income.
Click Save.

Repeat the process to add these two revenue accounts:

Code 4-0002, name Portrait & Family Photography Income, tax rate GST on Income.
Code 4-0003, name Corporate Photography Income, tax rate GST on Income.

Now add the expense accounts. Click Add Account again and create each of the following:

Code 6-0001, name Camera Equipment & Maintenance, type Expense, tax rate GST on Expenses.
Code 6-0002, name Studio Rent, type Expense, tax rate GST on Expenses.
Code 6-0003, name Software Subscriptions, type Expense, tax rate GST on Expenses.
Code 6-0004, name Printing & Framing, type Expense, tax rate GST on Expenses.
Code 6-0005, name Travel & Transport, type Expense, tax rate GST on Expenses.
Code 6-0006, name Props & Styling, type Expense, tax rate GST on Expenses.

Why these account codes?

Codes starting with 4- are revenue accounts and codes starting with 6- are expense accounts. This numbering keeps your chart of accounts organised by type and makes it easy to add more accounts later without renumbering.

Photography businesses have unique spending patterns. A generic "Office Expenses" account hides whether you are spending on camera gear, printing, or props. Splitting them out means your reports show exactly where the money goes.

Why add accounts to the defaults instead of replacing them?

Xero provides a standard Australian chart of accounts that covers common needs like bank fees, wages, and superannuation. Adding your photography accounts alongside those defaults gives you the best of both worlds: industry-specific categories for your core revenue and expenses, plus the standard accounts you will need for payroll and bank reconciliation later.

Before you move on, predict what you will see: do you think your custom accounts will appear alongside Xero's default accounts, or will they replace them?

Navigate to Accounting then Chart of Accounts.
Scroll through the list and confirm you can see your custom accounts (Wedding Photography Income, Camera Equipment & Maintenance, Studio Rent) listed alongside the standard Xero accounts.
Confirm the organisation name shows Lens & Light Photography in the top left.

Your custom accounts sit alongside the defaults. Both sets are available for coding transactions in the steps ahead.

Missing an account you just created?

Check that you clicked Save after entering each account. If an account is missing, click Add Account and re-enter it. Also confirm you are looking at the correct account type section (Revenue for 4-xxxx codes, Expenses for 6-xxxx codes).

If you are stuck, help me find or add my custom chart of accounts in Xero.

Your Xero organisation is configured and ready to receive real transactions. Next up, you will populate it with invoices and bills that represent three months of photography business activity.

Create Invoices, Bills, and Contacts

Your Xero organisation is configured with a tailored chart of accounts. Now it is time to fill those accounts with the actual transactions that happened during the quarter.

Real bookkeeping starts with recording what the business earned and spent. Before you can reconcile a bank statement, Xero needs to know about the invoices you expect to get paid and the bills you expect to pay. Entering these first means reconciliation later becomes a matching exercise rather than starting from scratch.

In this step, get ready to:

Create customer and supplier contacts for Lens & Light Photography.
Enter sales invoices for the October-December 2025 quarter.
Enter purchase bills covering recurring expenses and one-off purchases.

Set up contacts for customers and suppliers

Every invoice and bill in Xero is linked to a contact. Setting up your key contacts first makes data entry faster because Xero will auto-suggest them as you create transactions.

In the Xero navigation bar, click Contacts.
Click New contact.
In the Name field, type Sarah & James Mitchell.
Click Save.

Repeat the process to create a new contact named Chen Family.
Create a new contact named Nexus Corp.
Create a new contact named Melbourne Events Co..

Now create the supplier contacts using the same process.

Create a new contact named Studio Spaces Melbourne (studio rent).
Create a new contact named Adobe Systems (software subscriptions).
Create a new contact named ProLab Printing (printing and framing).
Create a new contact named Caltex (fuel).
Create a new contact named Allianz (business insurance).

Why create contacts first?

In Xero, contacts are automatically classified as customers or suppliers based on the transactions you enter against them. Creating an invoice for a contact makes them a customer. Creating a bill makes them a supplier.

You can also create contacts on the fly while entering invoices and bills. Xero will offer to create a new contact if the name does not already exist.

Confirm your contacts are saved by clicking Contacts in the navigation bar.
You should see all 9 contacts listed under the All tab.

Don't see all your contacts?

Make sure you clicked Save after entering each contact name. If a contact is missing, click New contact and re-enter it.

Help me find my missing contacts

Enter sales invoices for October-December 2025

Lens & Light Photography earns revenue from weddings, portrait sessions, and corporate work. You will now enter the invoices that represent this income across the quarter.

Click the + (Create new) icon in the top-right corner of Xero.
Select Invoice.

For the first invoice, enter these details:

In the To field, type Sarah & James Mitchell and select the contact.
Set the Date to 3 Oct 2025.
Set Due date to 14 days after the invoice date.
In the line item Description field, type Wedding photography package - deposit.
Set the Amount to 2500.00 (this is the GST-exclusive amount. Xero will add 10% GST automatically).
In the Account dropdown, select Wedding Photography Income.
Confirm the Tax Rate shows GST on Income (10%).
Click Approve.

What does approving an invoice do?

Approving moves the invoice from Draft to Awaiting Payment status. This means the revenue is now recorded in your accounts under the Accrual accounting basis you configured in Step 1.

The invoice total will show $2,750.00 inc. GST ($2,500.00 + $250.00 GST).

Now mark this invoice as paid to reflect that the client has already deposited the money.

On the approved invoice, click Add payment.
Set the Date paid to 3 Oct 2025.
Leave the amount as the full invoice total.
Click Add.

You have entered your first invoice. Now continue entering the rest of the quarter's invoices using the same process.

Invoice data for October-December 2025

Enter each invoice with the details below. Set the account to the correct revenue category and approve each one. Mark all invoices as paid except the last 2-3 December invoices (leave those as Awaiting Payment).

3 Oct - Sarah & James Mitchell - Wedding deposit - $2,750 inc. GST (Wedding Photography Income). Paid.
8 Oct - Chen Family - Portrait session - $550 inc. GST (Portrait & Family Photography Income). Paid.
15 Oct - Nexus Corp - Corporate headshots - $1,650 inc. GST (Corporate Photography Income). Paid.
22 Oct - Sarah & James Mitchell - Wedding final payment - $2,750 inc. GST (Wedding Photography Income). Paid.
29 Oct - Melbourne Events Co. - Corporate event - $2,200 inc. GST (Corporate Photography Income). Paid.
5 Nov - Patel Family - Portrait session - $825 inc. GST (Portrait & Family Photography Income). Paid.
12 Nov - Williams Wedding - Wedding package - $4,950 inc. GST (Wedding Photography Income). Paid.
19 Nov - Roberts - Mini session - $330 inc. GST (Portrait & Family Photography Income). Paid.
26 Nov - Nexus Corp - Team photos - $1,100 inc. GST (Corporate Photography Income). Paid.
3 Dec - Thompson Wedding - Wedding package - $5,500 inc. GST (Wedding Photography Income). Paid.
10 Dec - Anderson Family - Holiday portraits - $715 inc. GST (Portrait & Family Photography Income). Unpaid.
17 Dec - Melbourne Events Co. - End-of-year event - $2,200 inc. GST (Corporate Photography Income). Unpaid.

Speed up data entry

After approving and adding payment to an invoice, click the + icon again to quickly start the next invoice. Xero will remember your recently used contacts in the To field autocomplete.

After entering all 12 invoices, click Business in the navigation bar.
Select Invoices.
Check the Paid tab. You should see approximately 10 paid invoices.
Check the Awaiting payment tab. You should see 2-3 unpaid December invoices.

Why leave some invoices unpaid?

In real bookkeeping, not every client pays on time. Leaving 2-3 December invoices unpaid creates realistic Aged Receivables data. This report shows money the business is still owed, which is critical information for cash flow management.

Enter purchase bills for October-December 2025

The other side of the ledger is what the business spent. You will now record the bills from Lens & Light Photography's suppliers for rent, software, printing, fuel, insurance, and a major equipment purchase.

Click the + (Create new) icon in the top-right corner.
Select Bill.

For the first bill, enter these details:

In the From field, type Studio Spaces Melbourne and select the contact.
Set the Date to 1 Oct 2025.
Set Due date to 14 days after the bill date.
In the line item Description, type Studio rent - October 2025.
Set Amount to 2000.00 (GST-exclusive. Xero adds 10% GST to make $2,200 inc. GST).
In the Account dropdown, select Studio Rent.
Confirm the Tax Rate shows GST on Expenses (10%).
Click Approve.

Mark the bill as paid by clicking Add payment on the approved bill.
Set the Date paid to 1 Oct 2025.
Click Add.

Continue entering the remaining bills for the quarter using the reference data below.

Bill data for October-December 2025

Enter each bill, approve it, and mark as paid unless noted otherwise. Pay attention to the GST treatment for each line item.

1 Oct, 1 Nov, 1 Dec - Studio Spaces Melbourne - Studio rent - $2,200/month inc. GST (Studio Rent, GST on Expenses). All paid.
3 Oct, 3 Nov, 3 Dec - Adobe Systems - Creative Cloud - $87.99/month inc. GST (Software Subscriptions, GST on Expenses). All paid.
15 Oct - ProLab Printing - Print order - $440 inc. GST (Printing & Framing, GST on Expenses). Paid.
25 Nov - ProLab Printing - Print order - $660 inc. GST (Printing & Framing, GST on Expenses). Paid.
22 Dec - ProLab Printing - Print order - $385 inc. GST (Printing & Framing, GST on Expenses). Unpaid.
7 Oct - Caltex - Fuel - $95.45 inc. GST (Travel & Transport, GST on Expenses). Paid.
14 Nov - Caltex - Fuel - $110.00 inc. GST (Travel & Transport, GST on Expenses). Paid.
12 Dec - Caltex - Fuel - $88.00 inc. GST (Travel & Transport, GST on Expenses). Paid.
10 Nov - Ted's Cameras - Camera lens purchase - $2,750 inc. GST (Camera Equipment & Maintenance, GST on Expenses). Paid.
8 Dec - Allianz - Business insurance (quarterly) - $825 inc. GST (Insurance, GST-Free). Unpaid.
15 Dec - Styling Store - Props & styling purchase - $275 inc. GST (Props & Styling, GST on Expenses). Paid.

What about GST-Free and BAS Excluded items?

Most business expenses include GST at 10%. However, some items have different GST treatment:

Bank fees are BAS Excluded because they are financial services with no GST component. You will handle these during bank reconciliation in the next step, not as bills.
Insurance can be GST-Free depending on the type of cover. When entering the Allianz bill, select GST-Free as the tax rate.

After entering all your bills, click Business in the navigation bar.
Select Bills to pay.
Check the Paid tab. You should see the majority of your bills listed as paid.
Check the Awaiting payment tab. You should see 2-3 unpaid bills (these will form your Aged Payables report later).

Invoice or bill totals don't look right?

If your totals seem off, check that you entered the GST-exclusive amount in the Amount field. Xero adds 10% GST on top. For example, entering 2000.00 with GST on Expenses produces a total of $2,200.00 inc. GST.

Also confirm you selected the correct tax rate for each line item. The wrong tax rate changes the total.

Help me troubleshoot my totals

Now run a quick Profit & Loss report to see the quarter taking shape.

Click Accounting in the navigation bar.
Select Reports.
Click Profit and Loss.
Set the date range to 1 October 2025 through 31 December 2025.
Click Update.

Before you look at the report, what do you expect to see? Do you think the business is profitable this quarter based on the invoices and bills you entered?

The report should show revenue populating your custom accounts (Wedding Photography Income, Portrait & Family Photography Income, Corporate Photography Income) and expenses under your custom expense accounts. Total revenue should be approximately $49,500 (GST-exclusive) and total expenses approximately $20,400 (GST-exclusive).

Why is the P&L showing GST-exclusive amounts?

The Profit & Loss report shows revenue and expenses without GST because GST is not your income or your expense. It is collected on behalf of the Australian Tax Office (ATO) and reported separately on the BAS. The amounts you see in the P&L are the true business revenue and costs.

The P&L is incomplete

Notice that your Profit & Loss currently overstates the business profit. The biggest expense category is missing: wages. You will add payroll in the next step, which will significantly change the bottom line.

You have populated Xero with a full quarter of sales and expenses. Next up, you will configure payroll and run 6 fortnightly pay runs to add the missing wages expense.

Configure Payroll and Process Pay Runs

Your invoices and bills capture what the business earned and spent, but there is a major cost missing from the Profit & Loss: wages.

Without payroll, the P&L dramatically overstates profit. The BAS will also be missing PAYG withholding figures. Running payroll adds the biggest expense category and generates the W1 and W2 labels you need for a complete BAS.

In this step, get ready to:

Set up a fortnightly pay calendar and add two employees with STP Phase 2 compliance.
Process 6 fortnightly pay runs covering October to December 2025.
Review payroll reports to confirm PAYG withholding and gross wages totals for the BAS quarter.

Set up the pay calendar and employees

Xero needs a pay calendar before you can run payroll. The pay calendar defines how often employees get paid and what date each pay period starts.

Navigate to Payroll in the top menu, then select Pay Calendars.
Click Add Calendar.
Enter a name for the calendar (e.g. Fortnightly).
Select Fortnightly as the pay period.
Set the first pay date to 10 October 2025.
Click Save.

You should see your new fortnightly pay calendar listed on the Pay Calendars page.

Why fortnightly?

Most Australian small businesses use fortnightly pay runs. It balances cash flow with employee expectations and aligns with common award payment requirements.

Now you need to add the two employees. Each employee profile requires personal details, salary information, tax settings, and a nominated super fund.

Navigate to Payroll > Employees.
Click Add Employee.
Enter the first name Alex and last name Torres.
Set the start date to 1 October 2025.
Enter a sample date of birth and address (these are required fields in the trial).
Under Employment, set the job title to Lead Photographer.
Assign Alex to the Fortnightly pay calendar you just created.

Next, configure Alex's pay and tax details.

Under Pay Template, set the annual salary to $65,000.
Under Tax, set TFN as declared, Australian resident, and the tax scale to Regular.
Under Super, set the fund to AustralianSuper with the contribution rate at 12% of ordinary time earnings.
Under STP Phase 2 fields, set Employment type to Employee, Income type to Salary and wages, and Tax scale to Regular.
Click Save.

What is STP Phase 2?

Single Touch Payroll Phase 2 is mandatory for all Australian employers. It requires a six-character tax treatment code for every employee, built from their employment type, income type, and tax scale.

Xero automatically generates this code from the fields you set. It reports the code to the ATO every time you process a pay run.

Confirm Alex Torres appears in the Payroll > Employees list before continuing.

Now add the second employee following the same process.

Click Add Employee again.
Enter the first name Priya and last name Sharma.
Set the start date to 1 October 2025.
Set the job title to Studio Assistant.
Assign Priya to the Fortnightly pay calendar.
Set the annual salary to $50,000.
Set tax details: TFN declared, Australian resident, Regular tax scale.
Set super fund to AustralianSuper at 12%.
Set STP Phase 2 fields: Employment type Employee, Income type Salary and wages, Tax scale Regular.
Click Save.

Navigate back to Payroll > Employees. You should see both Alex Torres and Priya Sharma listed.

What is superannuation?

Superannuation is Australia's mandatory retirement savings system. Employers must contribute 12% of each employee's ordinary time earnings into their nominated super fund.

For the Oct-Dec 2025 quarter, super contributions are due within 28 days of the end of the quarter (by 28 January 2026). Payday Super (requiring payment within 7 business days of each pay run) does not start until 1 July 2026.

STP filing is simulated in the free trial

In the Xero free trial environment, STP filing is simulated and does not transmit data to the ATO. You can safely process pay runs without worrying about real tax reporting.

Process all 6 fortnightly pay runs

With both employees set up on the fortnightly calendar, you need to process 6 pay runs covering the full October to December 2025 quarter.

Navigate to Payroll > Pay Runs.
You should see a draft pay run ready for the first pay date of 10 October 2025.
Click on the pay run to open it.
Review the auto-calculated values for each employee: gross pay, PAYG withholding, and superannuation (12% of ordinary time earnings).
Click Post to finalise the pay run.

After posting, Xero automatically creates payroll journal entries in your accounts. Click into a payslip to confirm it shows gross pay, PAYG withholding, super, and net pay.

What does each pay run calculate?

For a $65,000 salary paid fortnightly, each pay run calculates gross pay of approximately $2,500 before tax. Xero applies the ATO's PAYG withholding tables to determine the tax amount based on the regular tax scale.

Superannuation at 12% is calculated on ordinary time earnings. This means Alex accrues approximately $300 per pay period, and Priya approximately $231. These amounts accumulate as a liability until the quarterly super payment is made.

Now repeat the process for the remaining 5 pay runs.

Return to Payroll > Pay Runs and open the next draft pay run for 24 October 2025.
Review the figures and click Post.
Continue processing pay runs for: 7 November 2025, 21 November 2025, 5 December 2025, and 19 December 2025.
For each one: open the draft pay run, review the auto-calculated amounts, and click Post.

Not seeing a draft pay run?

If no draft pay run appears, check that both employees are assigned to the fortnightly pay calendar you created. Navigate to each employee's profile and confirm the pay calendar field shows your fortnightly calendar.

Also confirm the first pay date on your calendar is set to 10 October 2025. If you entered a different date, Xero will generate pay runs for different periods.

Help me troubleshoot why my pay run is not appearing in Xero.

After posting all 6 pay runs, navigate to Payroll > Pay Runs and confirm all 6 are listed with a Posted status.

Review payroll reports

With all pay runs posted, you need to confirm the quarterly totals that will feed into the BAS. The Payroll Activity report shows gross wages (the W1 amount) and PAYG withholding (the W2 amount).

Navigate to Payroll > Payroll Activity.
Set the date range to cover 1 October 2025 to 31 December 2025.
Confirm all 6 pay runs appear as completed.
Note the total gross wages for the quarter. This is the W1 amount for your BAS.
Note the total PAYG withholding for the quarter. This is the W2 amount for your BAS.

What are W1 and W2 on the BAS?

W1 is the total gross wages paid to all employees during the quarter. W2 is the total PAYG tax withheld from those wages. Both figures are required when lodging the BAS so the ATO knows what wages were paid and how much tax was withheld.

Before you verify, take a moment to predict: based on 6 fortnightly pay runs for two employees earning $65,000 and $50,000 annually, roughly what total gross wages do you expect for the quarter?

Click into any individual payslip from the pay runs list.
Confirm it shows gross pay, PAYG withholding, superannuation (12%), and net pay for the employee.

You should see 6 completed pay runs listed with gross wages totalling approximately $26,538 for the quarter (6 fortnightly instalments for $65,000 + $50,000 combined annualised salaries). Each payslip breaks down into gross pay, tax withheld, super accrued, and net pay deposited.

Pay run totals look wrong?

Double-check that both employees have the correct annual salary entered. If Alex shows anything other than $65,000 or Priya shows anything other than $50,000, edit their profiles under Pay Template and re-run the affected pay runs.

Help me check why my payroll totals don't match what I expected.

Your books now include the biggest expense category for most businesses: wages. The Profit & Loss will finally reflect realistic profitability, and you have the W1 and W2 figures ready for BAS time. Next up, you will import and reconcile the bank statement to prove these numbers match reality.

Import Bank Statements and Reconcile

You have invoices, bills, and payroll recorded in Xero. But the books are not trustworthy until they match what actually happened at the bank.

The bank statement is the single source of truth. Reconciliation is where you prove the numbers are real by matching every bank movement to a corresponding record in Xero.

In this step, get ready to:

Create a CSV bank statement file in Google Sheets covering Oct-Dec 2025.
Import the CSV into a manual bank account in Xero.
Reconcile all transactions, including handling unmatched items that have no invoice or bill.

Create the CSV bank statement file

A real bookkeeper would download this file from the client's online banking. For this project, you will build the statement yourself in Google Sheets so you control every transaction.

Open Google Sheets and create a new blank spreadsheet.
Name it Lens & Light Bank Statement Oct-Dec 2025.
In Row 1, enter these three column headers:

Date,Description,Amount

Starting in Row 2, enter the following revenue deposits (money received from clients):

03/10/2025,Sarah & James Mitchell wedding deposit,2750.00
08/10/2025,Chen Family portrait session,550.00
15/10/2025,Nexus Corp headshots,1650.00
22/10/2025,Sarah & James Mitchell final payment,2750.00
29/10/2025,Melbourne Events Co corporate event,2200.00
05/11/2025,Patel Family portraits,825.00
12/11/2025,Williams Wedding package,4950.00
19/11/2025,Roberts mini session,330.00
26/11/2025,Nexus Corp team photos,1100.00
03/12/2025,Thompson Wedding package,5500.00
10/12/2025,Anderson Family holiday portraits,715.00
17/12/2025,Melbourne Events Co end-of-year event,2200.00

What do these rows represent?

Each row is a client payment that hit the bank account. These match the invoices you created in Step 2. Positive amounts represent money flowing in.

Confirm you have 12 revenue rows (Rows 2 through 13) in your spreadsheet.
Below the revenue rows, enter the October and November expenses (money paid out). Use negative amounts for withdrawals:

01/10/2025,Studio Spaces Melbourne rent,-2200.00
03/10/2025,Adobe Creative Cloud,-87.99
07/10/2025,Caltex fuel,-95.45
10/10/2025,Payroll net wages,-3618.00
15/10/2025,ProLab Printing order,-440.00
24/10/2025,Payroll net wages,-3618.00
28/10/2025,Square merchant fee,-48.50
31/10/2025,Bank account fee,-10.00
01/11/2025,Studio Spaces Melbourne rent,-2200.00
03/11/2025,Adobe Creative Cloud,-87.99
07/11/2025,Payroll net wages,-3618.00
10/11/2025,Teds Cameras lens purchase,-2750.00
14/11/2025,Caltex fuel,-110.00
18/11/2025,Camera Clinic equipment repair,-385.00
21/11/2025,Payroll net wages,-3618.00
25/11/2025,ProLab Printing,-660.00
28/11/2025,Square merchant fee,-62.15
30/11/2025,Bank account fee,-10.00

Confirm you now have rows up to Row 31 in your spreadsheet.
Continue entering the December expenses and the final interest credit:

01/12/2025,Studio Spaces Melbourne rent,-2200.00
03/12/2025,Adobe Creative Cloud,-87.99
05/12/2025,Payroll net wages,-3618.00
08/12/2025,Allianz business insurance,-825.00
12/12/2025,Caltex fuel,-88.00
15/12/2025,Props and styling purchase,-275.00
19/12/2025,Payroll net wages,-3618.00
22/12/2025,ProLab Printing,-385.00
28/12/2025,Square merchant fee,-55.80
31/12/2025,Bank account fee,-10.00
31/12/2025,Interest earned,2.15

Why are some items here that were not entered as bills?

Bank fees, Square merchant fees, and the Camera Clinic equipment repair were never entered as bills in Step 2. This is intentional.

In real bookkeeping, the bank statement always contains transactions the client forgot to tell you about. You will handle these unmatched items during reconciliation.

Confirm your spreadsheet has 42 rows total (1 header + 41 data rows).
Download the file as a CSV. Click **File**, then **Download**, then **Comma Separated Values (.csv)**.
Check your Downloads folder to confirm a .csv file is there.

CSV not downloading?

Make sure you selected **Comma Separated Values (.csv)** and not **Microsoft Excel (.xlsx)**. Xero only accepts CSV, OFX, QIF, QBO, or QFX formats for manual import.

help me fix my CSV download from Google Sheets

Import the CSV into Xero

Before you can import the statement, Xero needs a bank account to receive the data. You will create a manual bank account since this is a practice environment with no live bank feed.

In Xero, navigate to **Accounting** in the top menu.
Click **Bank Accounts**.
Click **Add Bank Account**.
Search for your bank. Since this is a manual account, click the **Don't link a bank** option (or skip the bank search).
Enter the account name: Business Cheque Account.
Set the account type to **Everyday**.
Confirm the currency is **AUD**.
Click **Save**.

Why a manual bank account?

Xero supports automated bank feeds from participating banks, which pull transactions in automatically. Since Lens & Light Photography is a practice business, you create a manual account and upload the CSV yourself. The reconciliation workflow is identical either way.

You should now see the **Business Cheque Account** listed on the Bank Accounts page.
Click the **Business Cheque Account** name to open it.
Click **Manage Account**, then select **Import a Statement**.
Click **Select file** and choose the CSV file you downloaded from Google Sheets.
Xero will ask you to map the columns. Map **Date** to Column 1, **Description** to Column 2, and **Amount** to Column 3.
Select the date format that matches your CSV (DD/MM/YYYY for Australian format).
Click **Import**.

After the import completes, Xero shows you how many transactions were imported. You should see 41 statement lines ready for reconciliation.

Import failing or showing 0 transactions?

Check that your CSV has no empty rows at the top or bottom. Xero skips the header row automatically, but extra blank rows can confuse the mapping.

Also confirm you selected the correct date format. If Xero cannot parse the dates, it rejects the entire file.

help me fix my Xero CSV bank statement import

Reconcile all transactions

The reconciliation screen shows each bank statement line alongside Xero's suggested match. Your job is to confirm matches for items that correspond to invoices, bills, or payroll entries, and create new transactions for items Xero cannot match.

Click the **Reconcile** tab (or click the number of items to reconcile on the bank account tile).
Start with the client payments (positive amounts). For each one, Xero suggests a matching invoice payment. Review the suggestion and click **OK** to confirm the match.
Work through all 12 revenue deposits, confirming each invoice match.

What is Xero matching against?

When you marked invoices as paid in Step 2, Xero created payment records. The reconciliation engine now matches the bank deposit to that existing payment record by amount and date.

Next, work through the expense transactions (negative amounts). For items matching your bills (rent, Adobe, fuel, printing, insurance, props, lens purchase), Xero suggests the corresponding bill payment. Click **OK** to confirm each match.
For payroll transactions (Payroll net wages lines), Xero matches these to the payroll wage payment entries created when you posted each pay run. Confirm each one.

After confirming the matched items, you will encounter several transactions that Xero cannot match to any existing record. These are your unmatched items.

Before you continue, think about which transactions in the statement had no corresponding bill entered in Step 2. What do you expect to see?

For each unmatched bank statement line, you will create a new transaction directly on the reconciliation screen. Select **Create** on the statement line, then fill in the account category and GST treatment.
Reconcile the three monthly **bank account fees** ($10.00 each) as follows: set the account to an appropriate bank fees account, set GST to **BAS Excluded** (bank fees have no GST), and click **OK**.
Reconcile the three **Square merchant fees** ($48.50, $62.15, $55.80) as follows: set the account to an appropriate fees account, set GST to **GST on Expenses** (merchant fees include GST), and click **OK**.
Reconcile the **Camera Clinic equipment repair** ($385.00) as follows: set the account to Camera Equipment & Maintenance (6-0001), set GST to **GST on Expenses**, and click **OK**.
Reconcile the **Interest earned** ($2.15) as follows: set the account to an interest income account, set GST to **GST Free** (bank interest has no GST), and click **OK**.

Why do unmatched items have different GST treatments?

Not every expense attracts GST in Australia. Bank fees are financial supplies and therefore BAS Excluded. Bank interest earned is GST-Free input-taxed income.

Square merchant fees, however, include GST because Square is a registered Australian business charging for a taxable service. The equipment repair from Camera Clinic also includes GST. Getting these codes right is the difference between an accurate and inaccurate BAS.

Use the same accounts consistently

For bank fees and merchant fees, pick one expense account (such as "Bank Fees" under your chart of accounts) and use it for all similar transactions. Consistency makes your reports cleaner and your BAS more accurate.

Once you have reconciled every statement line, the reconciliation screen should be empty.

Before you check the final result, predict what the bank account tile will show. Do you expect the Statement Balance and Balance in Xero to match, or differ?

Navigate back to **Accounting**, then **Bank Accounts**.
Look at the **Business Cheque Account** tile.

You should see a green "0" for items to reconcile. The Statement Balance and Balance in Xero match. Every transaction in the bank statement has been accounted for.

Still seeing items to reconcile?

Go back into the reconciliation screen and check for any remaining lines. Common causes: you may have skipped a transaction, or a payroll payment amount may not exactly match the pay run net figure. For small discrepancies, use an adjustment line to account for rounding differences.

help me finish reconciling my bank account in Xero

Your books now match the bank. Every dollar in and out is accounted for, coded to the right account, and tagged with the correct GST treatment. Next up, you will generate the financial reports that prove this quarter is BAS-ready and build your professional case study.

Generate Financial Reports and Build the Case Study

Your books are fully reconciled and every transaction has been accounted for. That is the operational work done.

However, a reconciled set of books is only valuable if the client can see the result. Financial reports are the deliverable that proves the quarter is done. A case study turns your work into a marketing asset that potential clients and employers can evaluate at a glance.

In this step, get ready to:

Generate five key financial reports covering the Oct-Dec 2025 quarter.
Build a professional case study in Google Docs with actual figures from your reports.
Export the finished document as a PDF ready to share with clients or on LinkedIn.

Generate the five key reports

Each report answers a different question about Lens & Light Photography's financial health. Together, they prove the quarter is BAS-ready.

In Xero, click Accounting in the top navigation bar.
Select Reports from the dropdown menu.
In the search bar at the top of the reports list, type Profit and Loss and click the report when it appears.
Set the date range to 1 October 2025 through 31 December 2025 using the date fields at the top of the report.
Click Update to generate the report.

You should see your custom revenue accounts (Wedding Photography Income, Portrait & Family Photography Income, Corporate Photography Income) with amounts populated, total expenses including wages, and a net profit figure at the bottom.

Take a screenshot of your Profit & Loss report showing the revenue, expenses, and net profit figures.
Click Accounting in the top navigation bar again.
Select Reports from the dropdown.
Search for Balance Sheet and open it.
Set the date to 31 December 2025 and click Update.

The Balance Sheet shows your assets, liabilities (including GST owing and PAYG payable), and equity as at 31 December 2025.

Take a screenshot of the Balance Sheet.
Navigate back to Accounting then Reports.
Search for Aged Receivables and open the report.
Set the date to 31 December 2025 and click Update.

You should see the 2-3 unpaid December invoices listed with the customer names and amounts owing.

Take a screenshot of the Aged Receivables report.
Navigate back to Accounting then Reports.
Search for Aged Payables and open the report.
Set the date to 31 December 2025 and click Update.

The Aged Payables report shows the 2-3 unpaid supplier bills, proving Lens & Light Photography still has outstanding obligations.

Take a screenshot of the Aged Payables report.
Navigate back to Accounting then Reports.
Search for GST Summary and open the report (it may appear under a Tax heading).
Set the period to 1 October 2025 through 31 December 2025 and click Update.

The GST Summary shows GST collected on sales, GST paid on purchases, and the net GST position for the quarter. This is the data that feeds directly into a BAS lodgement.

Take a screenshot of the GST Summary report.

What do these five reports prove?

The Profit & Loss shows the business earned revenue and incurred expenses (including wages) during the quarter, landing on a net profit figure.

The Balance Sheet shows what the business owns and owes as at a point in time. The GST liability and PAYG payable accounts confirm tax obligations are tracked.

The Aged Receivables and Aged Payables show cash still owed to or by the business. Together with the GST Summary, they prove the books are BAS-ready and no transactions have slipped through the cracks.

Create the case study in Google Docs

Financial reports prove the work is done. A case study tells the story of that work in a way potential clients and employers can understand.

Open Google Docs in a new browser tab by navigating to docs.google.com.
Click Blank document to create a new document.
Click on Untitled document at the top left and rename it to Lens & Light Photography - Bookkeeping Case Study.

Now structure your case study with five sections. Each section has a specific job.

Create a cover page with the business name (Lens & Light Photography), the quarter covered (October - December 2025), and your name.
Add a heading for Section 1: Client Overview and write 2-3 sentences describing the business: an Australian photography studio with 2 employees, GST-registered, operating during peak wedding season.
Add a heading for Section 2: The Challenge and describe the starting point: a new business with no bookkeeping system and 3 months of unrecorded transactions needing processing before BAS lodgement.

Use before/after framing

The most compelling case studies show a clear transformation. Describe the messy starting state (no records, no system) and contrast it with the polished end state (fully reconciled, BAS-ready). This narrative is what makes clients trust your work.

Add a heading for Section 3: Process & Solution and describe what you set up and how: chart of accounts customisation, invoice and bill entry, payroll configuration with STP Phase 2 compliance, bank statement import, and reconciliation.
Add a heading for Section 4: Results and include actual numbers from your Xero reports: total revenue, total expenses, net profit, GST collected and paid, net GST position, total wages paid, and superannuation accrued.
Paste in at least one screenshot from your reports (e.g., the Profit & Loss) to support the numbers.
Add a heading for Section 5: Summary of Deliverables and list what you delivered: customised chart of accounts, 3 months of reconciled transactions, 6 pay runs with STP compliance, and 5 financial reports.

What makes a strong Results section?

Use the actual figures from your Xero reports. Avoid vague language like "revenue increased." Instead, write something like "Total revenue for the quarter was $49,500 across 12 invoices, with wedding packages contributing 62% of income."

If you can reference specific insights (e.g., the net GST position, the PAYG liability, or outstanding receivables), your case study will read like professional advisory work.

Review your document. It should have clear headings, at least one embedded screenshot or table, and actual numbers from your reports in Section 4.

Document feeling too short?

Aim for 4-6 pages. If your case study is under 4 pages, expand Section 3 (Process & Solution) with more detail about your reconciliation workflow. You can also add a brief table in Section 4 showing revenue by service type, or paste additional report screenshots to fill out the visual story.

Help me expand my case study

Export to PDF and verify

A PDF locks in your formatting and makes the case study easy to attach to emails or LinkedIn posts.

In your Google Doc, click File in the top menu bar.
Hover over Download and select PDF Document (.pdf).
Open the downloaded PDF from your Downloads folder.

Before you open it, what do you expect to see? Think about how many pages the document should be and whether your screenshots will appear correctly in PDF format.

Your PDF should be 4-6 pages with clear headings, embedded screenshots or tables, and quantified results using real figures from your Xero reports.

PDF looks different from your Google Doc?

Check that your images are inserted inline (not floating) in Google Docs. Floating images sometimes shift position during PDF export. Also confirm your page margins are set to Normal (File then Page setup) so content does not get clipped at the edges.

Help me fix my PDF formatting

You now have a complete set of financial reports proving the books are BAS-ready and a professional case study that documents the entire engagement. This is the kind of deliverable that wins client trust and demonstrates your capability beyond data entry.

Secret mission

Add Financial Insights with Data-Driven Recommendations

Any bookkeeper can produce reports. What separates you from the crowd is the ability to interpret the numbers and tell the client what they mean. In this secret mission, you will add a financial insights section that transforms your case study from proof of data entry into proof of business advisory skills.

Clean Up Your Resources

Decide whether to keep your resources running, pause them to come back later, or delete them entirely. This project runs on Xero's 30-day free trial, so there are no ongoing costs unless you choose a paid plan after the trial ends.

Resources you used:

One Xero organisation ("Lens & Light Photography") on your free trial.
Google Docs case study document.
Google Sheets CSV bank statement file.

Keep everything running

No action needed. Choose this if you want to keep practising in Xero or share the organisation with potential clients or employers.

Your Xero free trial expires after 30 days. After that, the Grow plan ($75 AUD/month, which includes payroll for 2 people) would be required to maintain access.
If you let the trial lapse without choosing a plan, your data is retained by Xero for re-activation later.
Your Google Docs and Sheets files remain in your Google Drive at no cost.

Pause - I'll come back to this later

Do nothing. Xero will prompt you to choose a plan when the trial ends. Your data is not deleted.

You can return to the organisation at any time during the trial period and pick up where you left off.
Your Google Docs and Sheets files stay in your Drive and are accessible whenever you need them.

Delete - I don't want to use this again

Remove all project resources and start fresh.

Delete the Xero organisation: In Xero, go to Settings, then Organisation Settings, and select the option to delete the organisation. Follow the confirmation prompts. This permanently removes all data in the "Lens & Light Photography" organisation.
Delete Google Docs and Sheets files: Open Google Drive, locate your case study document and CSV bank statement file, right-click each one, and select Move to trash.
Empty the trash in Google Drive to permanently remove the files.

Keep your case study PDF

Even if you delete everything else, consider keeping a copy of your exported PDF case study. This is a portfolio piece you can attach to client emails or share on LinkedIn without needing access to the original Xero organisation.

That's a Wrap!

Nice work. You just completed an entire BAS quarter for Lens & Light Photography, from a blank Xero organisation all the way through to a polished case study with real financial data.

You've learned how to:

Set up a complete Xero organisation with a photography-specific chart of accounts, correct GST settings, and a full quarter of invoices, bills, and bank reconciliation including handling unmatched items like bank fees and merchant charges.
Configure fortnightly payroll for 2 employees with STP Phase 2 compliance, PAYG withholding, and 12% superannuation across 6 pay runs covering the entire Oct-Dec 2025 quarter.
Generate BAS-ready financial reports (Profit & Loss, Balance Sheet, Aged Receivables, Aged Payables, GST Summary) and build a professional PDF case study documenting your process with actual numbers from your reports.
Secret Mission: Added a Financial Insights & Recommendations section with data-driven, advisory-level analysis that elevates your case study beyond basic bookkeeping.

Ready to quiz yourself?