Xero Chart of Accounts

Overview

The chart of accounts (COA) in Xero defines the general ledger structure for your organization. Every invoice line item, payment, and bank transaction references an account code. For MSPs, a well-structured COA enables tracking revenue by service line (managed services, projects, hardware sales), expenses by vendor category, and provides the foundation for meaningful financial reporting.

Anti-triggers

A customer or supplier account — "account" in Xero means a general ledger code; the organization you bill is xero-contacts.
Balances and movement on those codes — the chart of accounts is structure only and carries no figures; use xero-reports.
A login, tenant, or API credential — use xero-api-patterns.

Core Concepts

Account Classes

Xero organizes accounts into five standard accounting classes:

Class	Description	MSP Examples
`ASSET`	Things you own	Bank accounts, accounts receivable, equipment
`EQUITY`	Owner's stake	Retained earnings, owner's equity
`EXPENSE`	Costs of business	Software licenses, salaries, ISP costs
`LIABILITY`	Things you owe	Accounts payable, loans, tax liabilities
`REVENUE`	Income earned	Managed services, project revenue, hardware sales

Each class contains specific account types. The ones that matter most for MSP work: BANK (the only type payments can be applied to), REVENUE/SALES, DIRECTCOSTS (cost of goods sold), and OVERHEADS/EXPENSE.

See references/fields.md for the complete field reference, the full account-type table, and the list of Xero-managed system accounts.

MSP Chart of Accounts Structure

A typical MSP chart of accounts includes:

Revenue (200-299)
  200 - Managed Services Revenue
  210 - Project Revenue
  220 - Hardware Sales
  230 - Software License Revenue
  240 - Cloud Services Revenue
  250 - Consulting Revenue

Cost of Sales (400-499)
  400 - Software License Costs
  410 - Hardware Costs
  420 - Cloud Platform Costs (Azure, AWS)
  430 - ISP/Connectivity Costs
  440 - Subcontractor Costs

Expenses (500-699)
  500 - Salaries & Wages
  510 - Employee Benefits
  520 - Office Rent
  530 - Insurance
  540 - Marketing
  550 - Professional Development
  560 - Tools & Subscriptions

API Patterns

Every request needs both Authorization: Bearer ${ACCESS_TOKEN} and xero-tenant-id: ${XERO_TENANT_ID}. Two Xero-specific quirks apply here:

/Accounts is not paginated — a single GET returns the whole COA.
Updates and archives use POST, not PUT, against /Accounts/{AccountID}, and the body must repeat the AccountID.
Filters go in a URL-encoded where clause with doubled quotes around string literals:

# Revenue accounts only
curl -s -X GET "https://api.xero.com/api.xro/2.0/Accounts?where=Class==%22REVENUE%22" \
  -H "Authorization: Bearer ${ACCESS_TOKEN}" \
  -H "xero-tenant-id: ${XERO_TENANT_ID}" \
  -H "Accept: application/json"

See references/api.md for the full endpoint catalog and create/update/archive/delete examples.

Common Workflows

Set Up MSP Revenue Accounts

async function setupMspRevenueAccounts() {
  const accounts = [
    { Code: '200', Name: 'Managed Services Revenue', Type: 'REVENUE', Description: 'Monthly recurring managed services contracts' },
    { Code: '210', Name: 'Project Revenue', Type: 'REVENUE', Description: 'One-time project and implementation work' },
    { Code: '220', Name: 'Hardware Sales', Type: 'REVENUE', Description: 'Hardware sales and procurement markup' },
    { Code: '230', Name: 'Software License Revenue', Type: 'REVENUE', Description: 'Software license resale (M365, security, etc.)' },
    { Code: '240', Name: 'Cloud Services Revenue', Type: 'REVENUE', Description: 'Cloud hosting and IaaS/PaaS resale' },
    { Code: '250', Name: 'Consulting Revenue', Type: 'REVENUE', Description: 'Ad-hoc consulting and advisory services' }
  ];

  const results = [];
  for (const account of accounts) {
    try {
      const result = await createAccount(account);
      results.push({ code: account.Code, status: 'created' });
    } catch (error) {
      results.push({ code: account.Code, status: 'error', message: error.message });
    }
  }

  return results;
}

Validate Account Codes for Invoice

async function validateAccountCodes(lineItems) {
  const accounts = await fetchAllAccounts();
  const accountCodes = new Set(accounts.map(a => a.Code));
  const revenueAccounts = new Set(
    accounts.filter(a => a.Class === 'REVENUE').map(a => a.Code)
  );

  const issues = [];

  for (const item of lineItems) {
    if (!accountCodes.has(item.AccountCode)) {
      issues.push(`Account code '${item.AccountCode}' does not exist`);
    } else if (!revenueAccounts.has(item.AccountCode)) {
      issues.push(`Account code '${item.AccountCode}' is not a revenue account`);
    }
  }

  return { valid: issues.length === 0, issues };
}

Revenue Breakdown by Account

async function getRevenueBreakdown(startDate, endDate) {
  const accounts = await fetchAllAccounts();
  const revenueAccounts = accounts.filter(a => a.Class === 'REVENUE');

  const invoices = await fetchAllInvoices({
    where: `Type=="ACCREC"&&Status!="VOIDED"&&Status!="DELETED"&&Date>=DateTime(${startDate})&&Date<=DateTime(${endDate})`
  });

  const breakdown = {};

  for (const account of revenueAccounts) {
    breakdown[account.Code] = {
      name: account.Name,
      total: 0,
      invoiceCount: 0
    };
  }

  for (const invoice of invoices) {
    for (const line of invoice.LineItems || []) {
      if (breakdown[line.AccountCode]) {
        breakdown[line.AccountCode].total += line.LineAmount || 0;
        breakdown[line.AccountCode].invoiceCount++;
      }
    }
  }

  return breakdown;
}

Find Bank Accounts for Payments

async function getBankAccounts() {
  const accounts = await fetchAllAccounts();
  return accounts
    .filter(a => a.Type === 'BANK' && a.Status === 'ACTIVE')
    .map(a => ({
      accountId: a.AccountID,
      code: a.Code,
      name: a.Name,
      bankAccountNumber: a.BankAccountNumber,
      currencyCode: a.CurrencyCode
    }));
}

Gotchas

Accounts with transactions cannot be deleted. The DELETE call fails; archive the account instead (Status: "ARCHIVED").
System accounts are read-only. DEBTORS, CREDITORS, GST, ROUNDING and friends are Xero-managed and reject modification.
Account codes must be unique across the whole COA, including archived accounts, so a "code already exists" error may point at an archived record.
Class is derived from Type and cannot be set directly.

See references/errors.md for the complete error-code table.

Error Recovery Pattern

async function safeCreateAccount(data) {
  try {
    return await createAccount(data);
  } catch (error) {
    if (error.message?.includes('already exists')) {
      // Account exists - find and return it
      const accounts = await fetchAllAccounts();
      return accounts.find(a => a.Code === data.Code);
    }

    throw error;
  }
}

Best Practices

Use consistent code ranges - Revenue 200-299, COGS 400-499, Expenses 500-699
Name accounts descriptively - "Managed Services Revenue" not just "Revenue"
Add descriptions - Include what transactions belong in each account
Set default tax types - Reduces errors when creating invoices
Archive, don't delete - Preserve historical data for accounts with transactions
Separate revenue streams - Track managed services, projects, and hardware separately
Map to PSA categories - Align account codes with PSA service categories
Use DIRECTCOSTS for COGS - Separate direct vendor costs from overhead expenses

Related Skills

Xero Invoices - Account codes for invoice line items
Xero Payments - Bank accounts for payments
Xero Reports - P&L and Balance Sheet use accounts
Xero API Patterns - API reference

Xero Accounts

SKILL.mdmsp-claude-plugins/xero/xero/skills/accounts/SKILL.md