Guide

Xero client onboarding: steps for accountants

Onboarding a new Xero client takes four steps in order: agree the engagement in writing, verify the client’s identity, get linked as their agent at the ATO, then connect to and set up their Xero organisation. If you provide AUSTRAC designated services, customer due diligence comes before the service.

By Matt Collis·Updated 21 October 2026·Reviewed 21 October 2026·Version 5·6 min read

This guide is for accountants and bookkeepers onboarding a new Xero client. Its facts come from the Tax Practitioners Board (TPB), the Australian Taxation Office (ATO), Australian Transaction Reports and Analysis Centre (AUSTRAC) and Xero Central, checked on 21 October 2026.

What does onboarding a new Xero client involve?

Onboarding a new Xero client, in order

For an accounting practice taking on a new client who uses Xero

  1. Step 1

    Agree the engagement

    Scope in writing, plus the client information the TPB requires.

  2. Step 2

    Verify identity

    Proof of identity before you provide services. Customer due diligence too, if the service is an AUSTRAC designated service.

  3. Step 3

    Get linked at the ATO

    A business client nominates you in Online services for business. You add them within 28 days.

  4. Step 4

    Connect to Xero

    The client invites you into their organisation, or you set one up. Link it to the client in Xero HQ.

  5. Set up and hand over

    Financial settings, conversion balances and bank feeds.

Sources: TPB, Client verification process for tax practitioners; TPB, Keeping your clients informed; AUSTRAC, Professional designated services; ATO, How to nominate your registered agent; Xero Central, Get your practice clients into Xero Reviewed

Agree the engagement, verify identity, get linked at the ATO, then connect to the client’s Xero organisation and set it up. Each step depends on the one before.

Onboarding a new client has two halves. The compliance half proves who the client is and gives you authority to act. The Xero half connects you to their books and sets them up.

Do them in that order. A file you build for a client whose identity check then fails is wasted work. For the general pattern beyond Xero, see our client onboarding process steps.

What goes in the engagement letter?

Start with scope. Write down the entities, the services and the software, and keep a checklist of what you agreed.

The TPB adds content you must give in writing. Under section 45 of the 2024 Code Determination, every new client must be told how to search the TPB’s register of tax and BAS agents. You must also tell them how to complain to the TPB.

You also set out your rights and obligations as a registered practitioner, and theirs to you. The TPB says publishing this on your website is one way to meet the rule.

What identity checks do you need?

Two sets of rules can apply. The TPB’s apply to every registered tax and BAS agent. AUSTRAC’s apply only if you provide a designated service.

The TPB’s client verification guidance says you must check proof of identity before you provide tax agent or BAS services to a new client, and on an ongoing basis. Failing to do so may breach Code items 1, 7 and 9.

Key point

Under the TPB’s client verification guidance, a registered tax or BAS agent must check a new client’s proof of identity before providing services.

For an individual, you verify their full name and their date of birth or address. You sight one primary photo ID, such as a driver’s licence or passport. Without one, you sight a primary non-photo ID and a secondary ID.

For a company or trust, you verify the person acting for it and their authority to engage you. You also confirm the entity exists, for example with an Australian Securities and Investments Commission (ASIC) extract or a trust deed.

When do the AML/CTF rules apply?

Since 1 July 2026, accountants who provide designated services are regulated by AUSTRAC. AUSTRAC’s list includes helping a client buy or sell a company, creating or restructuring a company or trust, and providing a registered office address.

If an engagement includes one, you must complete initial customer due diligence before you provide that service. Our customer due diligence checklist sets out what that involves. Skipping it can lead to AML penalties.

AUSTRAC opened enrolment on 31 March 2026. You must enrol no later than 28 days after you first provide a designated service. For a firm already providing one on 1 July 2026, that was 29 July 2026.

How does client-to-agent linking work?

Key facts Onboarding rules and limits for Australian practices
Proof of identity
Before you provide services to a new clientThen on an ongoing basis. TPB client verification guidance
ATO nomination
28 days to add the clientThe client can extend it by another 28 days before it expires
Who nominates
Entities with an ABN, except sole tradersSince 13 November 2023
AML/CTF obligations
From 1 July 2026For accountants who provide designated services
AUSTRAC enrolment
Within 28 days of the first designated service29 July 2026 for a firm already providing one on 1 July
Xero conversion date
Always the first of a monthConversion balances are the closing balances on the day before

Sources: TPB, Client verification process for tax practitioners; ATO, Does client-to-agent linking apply to you?; ATO, How to nominate your registered agent; AUSTRAC, Anti-money laundering and counter terrorism laws cover thousands more businesses (1 July 2026); AUSTRAC, Enrol with us overview; Xero Central, Convert to Xero from another accounting system Reviewed

The time limits and start dates that shape onboarding a new client in Australia, from the TPB, the ATO, AUSTRAC and Xero Central.

A new business client must nominate you with the ATO before you can add them as a client. Client-to-agent linking has applied to all entities with an ABN, except sole traders, since 13 November 2023.

The client nominates you in Online services for business, under Profile, then Agent details. They need your registered agent number, and a Digital ID such as myID linked to their ABN in Relationship Authorisation Manager.

The ATO does not tell you when a client nominates you, so ask them to. You then have 28 days to add them, or the nomination expires. Send business clients the ATO’s nomination steps.

Key point

Under the ATO’s client-to-agent linking, an entity with an ABN, other than a sole trader, must nominate you before you add it as a client.

Linking is not an identity check. The TPB says it only confirms that someone can act for the entity in Online services for business. It does not verify the person who engaged you.

How do you connect to the client’s Xero organisation?

It depends on whether the client already uses Xero. Xero Central’s guide to getting practice clients into Xero covers both cases.

A client with their own Xero organisation invites you into it. Once you accept, link that organisation to the client record in Xero HQ. Xero says this step is essential for managing staff access later.

A client without Xero can buy a business plan, or you can set one up for them. Partner plans, Xero Ledger and Xero Cashbook, suit clients who do not send invoices.

Check which role you are given. Xero Central says only the administrator and standard roles can reach the organisation’s settings, and only an administrator can set lock dates.

What should you set up in Xero first?

Begin with the financial settings. In the Accounting menu, select Accounting settings, then Financial settings. Set the financial year end, the goods and services tax (GST) accounting method and how GST is calculated and reported.

If no year end is chosen when the organisation is added, Xero sets 30 June.

Next, choose the conversion date, the day the client starts recording transactions in Xero. Xero says it is always the first of a month.

Conversion balances are the closing balances in the old system on the day before that date. Run a trial balance in the old system to that day and enter its figures in Xero.

Then connect the bank accounts. In the Accounting menu, select Bank accounts, then Add bank account, and search for the bank. A bank feed imports transactions automatically; if none is offered, you import statements by hand.

Before you hand over, check the opening bank balances. Our client onboarding best practices cover the handover.

Frequently asked questions

Can I complete the ATO nomination for my client?

No. The ATO says your agent cannot complete the nomination process for the client. You can explain the steps, but the client must submit it.

What if the 28 days run out?

The nomination expires and cannot be extended, so the client submits a new one. While it is live, the client can select Extend, from the day after nominating, to add another 28 days.

Do individuals and sole traders need to nominate me?

Not at this stage. The ATO says you add them through your existing process.

Can I bring historical transactions into Xero?

Yes. Xero Central lists three routes: a manual conversion, an external conversion partner or the Xero Conversion Toolbox. Opening balances alone are faster, but leave no history to analyse.

Is every accounting client covered by the AML/CTF rules?

No. The obligations follow designated services, not the firm as a whole. Preparing a tax return is not on AUSTRAC’s list, but setting up a trust or company for the same client is.

Next steps

Turn the steps above into one checklist your team runs on every new client. Our guide to KYC requirements for accountants covers the identity rules in more depth.

StackGo’s IdentityCheck runs ID checks from Xero Practice Manager and writes the results back to the client record. See how IdentityCheck works with Xero Practice Manager, or how it supports AUSTRAC Tranche 2 compliance.

Sources

The facts on this page come from these sources, checked on 21 October 2026. Tax practitioner rules:

AML/CTF:

Xero:

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