What is the first step when setting up asset types in Xero?

The first step in setting up asset types in Xero is to check the chart of accounts. This is crucial because the chart of accounts provides a complete overview of all the accounts within Xero, including the asset accounts. By reviewing this chart, you can identify which accounts already exist, determine what additional accounts may be necessary, and understand how new asset types will fit into your overall financial reporting structure.

Understanding the existing accounts can help ensure that you do not create redundant accounts, and it sets a foundation for accurate asset tracking and financial reporting. It also aids in defining what types of assets you need to add, based on the current setup.

Initiating changes without this step could lead to inconsistencies or confusion in accounting practices, making it essential to align new asset types with established accounts.