How do I handle transfers between bank accounts

You can code transfer between bank accounts on Xero. On the reconciliation screen, you should see a Match, Create, Transfer, and Comments Tab. Click on the Transfer tab and select the bank account the transfer is going to, then click Ok. When reconciling Xero should match the transfer transaction with the transfer you have created. Click Ok to reconcile.

You can also use 970 Funds Introduced and 980 Drawings account to code bank transfers. Code under 980 Drawings for money going out and 970 Funds introduced for money coming in.