First: Choose Your Hobby Business
Here's a little trick that makes learning Xero so much more fun: instead of using boring made-up data, use something you actually care about.
Throughout this course, you'll be creating contacts, writing invoices, and entering bills. All of that practice data needs to come from somewhere — so why not make it yours?
Think about a hobby or interest you have. Could you imagine turning it into a small side business? For example:
- 🎸 Play guitar? You offer guitar lessons — $60/hour to students in your suburb.
- 🧶 Love craft or sewing? You sell handmade items at markets or online.
- 🐕 Adore dogs? You run a dog-walking service on weekends.
- 📸 Into photography? You do family portrait sessions on Saturday mornings.
- 🌱 Enjoy gardening? You offer garden maintenance or sell seedlings.
- 🎂 Bake cakes? You make custom celebration cakes to order.
- 💪 Fitness fanatic? You run a small personal training business.
You don't need to actually run this business — you're just using it as the theme for your practice data in Xero. It makes everything more relatable, and you'll remember it better!
Write down your hobby business idea before you start. You'll use it for your organisation name, your practice contacts, your invoice items, and your products. The more specific you make it, the more realistic your practice will feel. Not sure what to pick? Have a chat with your trainer — they're happy to help you choose something that clicks for you.
Sign up for a Xero Free Trial
Xero offers a 30-day free trial with full access to all features — no credit card required to start.
- Go to xero.com and click "Try Xero for free" at the top of the page.
- Enter your email address and create a password.
- Xero will send you a confirmation email — click the link inside to verify your account.
- You'll be asked to fill in some basic details about your organisation. Use a simple name like "My Training Business" — this is just practice data.
Xero also has a built-in Demo Company you can explore at any time without affecting your own practice data. Look for "Xero Demo Company" in the top-right menu after logging in.
Set Up Your Organisation Details
Once inside, Xero will walk you through a short setup. Here's what to fill in for a training environment:
- Organisation name: Use your hobby business name — e.g. "Sarah's Guitar Lessons", "Paws & Go Dog Walking", or "Sunshine Cakes"
- Industry: Pick whatever fits your hobby business best — "Education", "Personal Services", or "Retail" all work fine
- Country / region: Select Australia
- Financial year end: June 30 (standard for Australia)
- GST registered: You can tick No for a training setup — this keeps things simpler
Note: These are practice settings. None of this is lodged anywhere or used for real tax purposes. You're just creating a safe space to learn the interface.
Skip the Bank Feed (for now)
Xero will encourage you to connect a bank account. Skip this step for your training setup — you don't need a real bank account to learn the interface.
Look for a small "skip" or "do this later" link on the bank connection screen. You'll still be able to practise creating invoices, contacts, and navigating all the menus.
Set Up a Sample Contact (Customer)
Contacts in Xero are the people or businesses you deal with. Let's create a practice customer so you have someone to send invoices to during the lessons.
- From the top menu, click Contacts, then All Contacts.
- Click the New Contact button (top right).
- Enter a made-up name that fits your hobby business — e.g. if you're doing guitar lessons, try "Alex Johnson" (a student). If you're selling craft, try "The Local Market Stall".
- Add a fake email like alex@example.com
- Click Save.
In Xero, a contact only becomes a "customer" or "supplier" once you've attached a transaction to them. Until then, they're just a contact. You'll see this in action during the invoicing unit.
Set Up a Simple Invoice Item
Xero lets you save reusable items so creating invoices is faster. Let's create one practice item now.
- Go to Business → Products and Services from the top menu.
- Click New Item.
- Give it a code and name that matches your hobby — e.g. GUITAR01 / "1hr Guitar Lesson", or CAKE01 / "Custom Celebration Cake".
- Set a realistic unit price for your hobby — e.g. $60.00 for a lesson, $85.00 for a cake. This is just practice data, so have fun with it!
- Leave the account field as the default suggestion and click Save.
Understand the Chart of Accounts
When you signed up, Xero automatically created a Chart of Accounts for you — a list of categories used to organise financial transactions. You don't need to change anything here for training purposes.
To take a look: go to Accounting → Chart of Accounts from the top menu. You'll see categories like "Sales", "Bank", and "Expenses" already listed.
You're ready to start!
Your Xero training environment is set up. Head back to the course and work through each unit in order. Take your time — there's no rush, and you can always come back and practise in your trial account.