Finding the right small business accounting software is tricky.
This comparative review of QuickBooks Online vs Xero will help accountants recommend the best platform based on client needs.
We'll compare core features like invoicing and reporting, applicability for different businesses, ease of use, integrations, mobility, and pricing. By the end, you'll have a clear verdict on which solution accountants prefer and why.
Introduction
QuickBooks Online and Xero are two of the most popular cloud accounting platforms available today. As an accountant advising small business clients, comparing these solutions can help determine the best fit based on the client's unique needs and preferences.
When evaluating QuickBooks Online vs Xero, some key factors to consider include:
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Features and functionality: What core accounting features does each platform offer (invoicing, expense tracking, reporting, etc.)? Are there any special capabilities tailored for your client's industry?
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Ease of use: As the end user, how easy is the accounting software to navigate? How steep is the learning curve?
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Mobility: Can your clients access and manage business finances from anywhere via desktop, phone and tablet apps?
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Scalability: How well can the platform grow as your client's business expands over time? Can it handle increasing transaction volumes?
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Customer support: What onboarding, ongoing support and training options are available? Are knowledgeable representatives available to field questions?
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Third-party integrations: What other business applications and add-ons integrate with the accounting platform? Do they connect to your client's other software and tools?
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Pricing and plans: How affordable is the solution for small businesses? Are plan pricing and features clear and flexible for changing needs?
Evaluating these key factors head-to-head between QuickBooks and Xero can simplify the vendor selection process so you choose what's right for each client's situation. Reach out anytime to discuss the comparison further!
Why do accountants prefer Xero?
Xero has gained significant popularity among accountants due to its user-friendly and intuitive interface. Here are some of the key reasons why accountants choose Xero over competitors like QuickBooks Online:
Simplicity and ease of use
Xero is designed to be simple enough that most small business owners can manage their own bookkeeping and finances. This simplicity also appeals to accountants, allowing them to get clients set up quickly and easily. The dashboard provides an accessible overview of key financial metrics.
Seamless integration with add-on apps
Xero offers over 800 third-party app integrations through its marketplace. These integrations streamline workflows and automate tasks like invoicing, inventory management, payroll, reporting, and more. Accountants can customize Xero to meet each client's unique needs.
Mobile access
With multi-platform apps for iOS and Android, accountants and clients can manage finances on the go. The apps offer the full functionality of the web-based software. This enables greater productivity and real-time financial oversight.
Affordable pricing
Xero's pricing plans are competitive for the features offered. For accounting practices, Xero also provides bulk discounts as the number of clients increases. So accountants can manage multiple client Xero subscriptions cost-effectively.
In summary, Xero appeals to accountants because it facilitates faster, higher-quality work while remaining easy for clients to adopt and use. With seamless integrations, mobile access, and affordable pricing, Xero delivers significant value to today's accounting professionals and small businesses alike.
Do CPA firms use QuickBooks?
QuickBooks Online Accountant (QBOA) is specifically designed for accounting professionals to efficiently manage multiple clients. Over 90% of CPAs surveyed use QuickBooks or recommend it to clients. With a robust ecosystem of over 750 integrated apps, QuickBooks simplifies workflows for CPA firms of all sizes.
Key benefits of QuickBooks Online Accountant include:
- Centralized dashboard to access all client data and workflows from one login
- Accountant-specific features like batch invoicing, batch payments, and custom reports
- Advanced permissions to securely collaborate with clients
- Intuit Tax Online integration for seamless flow of financial data
- Industry-leading security with bank-level encryption
By leveraging QBOA, CPA firms can focus on providing advisory services while streamlining bookkeeping and compliance tasks. From tracking billable hours to analyzing real-time financials, QuickBooks enables firms to work smarter and scale profitably.
Whether a small practice or a large multi-office firm, QuickBooks Online Accountant empowers CPAs to maximize productivity and deliver exceptional client experiences. With flexible plans and pricing tailored for accounting pros, it makes sense why so many CPA firms rely on QuickBooks year after year.
Why and how exactly might Xero be a threat to QuickBooks?
Xero and QuickBooks Online both provide cloud-based accounting software tailored for small and medium-sized businesses. As leaders in this market space, they also happen to be direct competitors. Here are some of the key reasons why Xero poses a threat to QuickBooks' market share:
Pricing and Plans
One area where Xero has an edge over QuickBooks is pricing. Xero starts with a basic plan at just $9 per month, compared to QuickBooks' Simple Start plan which is $25 per month. For growing businesses, Xero also has more options in its mid-tier plans before jumping up to the Advanced plan.
Integration and Apps Marketplace
Xero has over 1000 apps available to connect it with hundreds of business platforms. This flexibility through integrations allows businesses to customize Xero to their needs. QuickBooks also has an apps marketplace, but it has fewer native integration options compared to Xero.
Global Capabilities
With subscribers in over 180 countries, Xero also caters well to international and multinational businesses compared to QuickBooks. This global presence and capability make it appealing to businesses aiming to scale abroad.
So in summary, Xero's competitive pricing, strong integrations, and global footprint allow it to compete closely with QuickBooks in providing accounting and financial solutions for SMBs. As Xero continues enhancing its product features while still keeping costs low, it remains a formidable threat to QuickBooks' market leadership.
Is Xero a good accounting package?
Xero is widely considered one of the best cloud-based accounting software options for small businesses and startups. As the provided context states, key benefits of Xero include:
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Unlimited user access at no extra cost, making it easy to give employees access to critical financial data
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User-friendly interface for tracking income and expenses, managing invoices, reconciling bank transactions, and generating reports
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Integration with over 700 apps to streamline operations and connect the accounting software with other business systems
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Bank feed and automated reconciliation features that help keep the books up to date with minimal manual entry
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Customizable reporting and dashboards so businesses can quickly monitor the metrics that matter
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Budgeting, cash flow forecasting, and automation tools for better financial control and planning
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Support for multi-currency transactions, ideal for businesses expanding into or trading with international markets
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Accessible from any internet-connected device, enabling remote collaboration
In summary, Xero simplifies everyday accounting tasks for small business owners and their teams, helping them save time and gain greater visibility over their finances. The accounting platform scales as businesses grow while maintaining an accessible and user-friendly interface. For those reasons, Xero is considered a top accounting solution suitable for most small to medium businesses.
Overview and Background
QuickBooks Online and Xero are two of the most popular cloud-based accounting platforms used by small businesses and accountants worldwide. In this comparative review, we provide an overview of each solution and analyze their key features to help accountants determine which software may be better suited to their firm's needs.
QuickBooks Online History and Adoption
QuickBooks Online was launched by Intuit in 2001 as their first software-as-a-service accounting platform. It was designed to bring the core functionality of QuickBooks Desktop to the cloud so that small business owners could access their accounting data anytime, anywhere.
Over the past two decades, QuickBooks Online has become one of the most widely adopted cloud accounting solutions globally, with over 3.4 million subscribers as of 2022. It continues to expand its product offerings by frequently rolling out new features like advanced reporting, improved bank feeds and integrations, inventory management tools, and more.
QuickBooks Online provides users with robust core accounting capabilities such as:
- Invoicing and estimates
- Expense and income tracking
- Financial reporting and dashboards
- Payroll functions
- Bank reconciliation
- Multi-currency support
Its intuitive interface, scalable pricing plans, and rich app ecosystem have fueled steady growth in subscribers over the years.
Xero Company Background and Market Share
Xero is a New Zealand-based accounting software firm founded in 2006. Over the past 15+ years, it has evolved into one of the top cloud accounting platforms internationally with over 3 million subscribers worldwide as of 2022.
Similar to QuickBooks Online, Xero offers users key accounting features such as:
- Invoicing, quotes, bills, and payments
- Bank feeds and reconciliation
- Financial reporting and analysis
- Inventory and project costing
- Payroll integrations
A core part of Xero's value proposition is its open API and vast app marketplace that connects over 1000 third-party business solutions. This makes Xero easily customizable to a wide range of accounting needs and workflows.
Xero has achieved steady user growth globally thanks to competitive pricing, innovative updates like AI-powered reconciliations and cash flow forecasting, and strategic partnerships with accounting firms worldwide. As of 2022, Xero captures over 7% market share in the global accounting software industry.
Core Accounting Features Compared
We thoroughly compare the core accounting capabilities of each platform including invoicing, bill payments, expense tracking, financial reporting, and more.
Invoicing and Billing
Both QuickBooks Online (QBO) and Xero provide robust tools for creating professional invoices and managing billing.
QBO enables custom, customizable invoice templates with automatic numbering and due date reminders. Users can configure recurring invoices, accept online payments, and automatically track unpaid invoices. The platform also supports automated sales tax calculations for improved accuracy.
Xero offers similar invoice creation and customization, but also enables users to attach files directly to invoice line items for more transparency. Xero automatically reconciles invoices when online payments are received and handles partial payments more flexibly.
Overall, QBO provides a wider array of invoice automation tools while Xero offers more flexibility for managing complex client billing.
Expense Tracking and Reimbursement
QBO and Xero both provide mobile apps for streamlined expense tracking. Users can quickly snap photos of receipts, record expense details, categorize spending, and submit reports for approval.
However, Xero offers more robust expense management capabilities out-of-the-box. The platform enables creating customized expense policies, configuring approval workflows, and setting spending limits. Xero also automatically reconciles approved expense reports with linked bank feeds.
QBO supports basic expense tracking but would require an add-on like Expensify for advanced reporting and approval features.
Financial Reporting
QBO enables users to access standard financial statements such as profit and loss, balance sheet, and cash flow reports. Reports can be customized by filtering on date ranges, accounts, projects, and more. Users can also export reports to Excel for additional formatting and analysis.
Xero provides 120+ standard reports covering statements, budgets, sales, account reconciliation, and more. The platform also includes interactive data visualizations for insights into cash flow, account balances, debtor days, and additional metrics over custom time periods. Users can fully customize reports and save for later use.
Overall, Xero provides more robust and customizable reporting capabilities out-of-the-box while QBO reporting would require Excel or an added reporting tool.
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Applicability for Different Business Types
We break down how QuickBooks Online and Xero each excel in meeting the accounting needs of certain industries and business types.
QuickBooks for Product-Based Businesses
QuickBooks Online provides robust inventory management and cost tracking features that are suitable for product-based businesses.
With QuickBooks, you can easily:
- Track inventory quantities and costs
- Manage purchase orders
- Generate detailed reports on inventory valuation and cost of goods sold
This makes QuickBooks well-suited for ecommerce companies, retailers, wholesalers and manufacturers. You get deep visibility into your product line so you can analyze profit margins and make better pricing decisions.
Comprehensive inventory capabilities also ensure you have an accurate record of stock levels to avoid overselling products. Overall, QuickBooks empowers product businesses with vital data to scale smarter.
Xero Optimized for Service Companies
Xero stands out with its project management capabilities and time tracking functionality, making it an exceptional fit for service companies.
Key benefits of Xero for service businesses:
- Create projects and track billable hours
- Log expenses to specific projects
- Generate project profitability reports
- Automate billing based on time tracked
These features simplify project accounting for agencies, creative firms, consultants and freelancers. You gain transparency into the profitability of services provided to make adjustments for better efficiency.
With automated time tracking and billing, Xero also saves service teams countless hours compared to manual methods. This frees up more time to focus on clients rather than paperwork.
Xero vs QuickBooks for Contractors
When evaluating Xero vs QuickBooks for contractors specifically, both solutions have merits but Xero pulls ahead in some key aspects like:
- Managing retention money from client invoices
- Tracking project expenses and matching them to invoices
- More configurable invoices tailored to construction billing needs
- Handling progress payments and payment applications
The job costing and project management functionalities in Xero give contractors robust tools to track profitability across different construction jobs. This helps optimize bidding on future projects to improve margins.
QuickBooks Online has added more contractor-friendly features like managing compliance forms. But Xero still leads when it comes to features like change orders and compliance certificates generation which is invaluable for heavier construction accounting needs.
Comparing Desktop and Online Experiences
We evaluate QuickBooks Online against Xero and QuickBooks Desktop, addressing the unique advantages and considerations of each.
Xero vs QuickBooks Desktop
Xero and QuickBooks Desktop take different approaches when it comes to managing small business finances. Xero is a cloud-based accounting solution focused on collaboration, while QuickBooks Desktop is installed locally on computers.
When deciding between Xero vs QuickBooks Desktop, there are a few key differences to consider:
Accessibility
- Xero runs in the cloud, enabling anytime, anywhere access from any device with an internet connection. QuickBooks Desktop must be installed locally.
Updates
- Xero handles updates automatically behind the scenes. QuickBooks Desktop requires manually downloading updates.
Data Backup
- Data backups happen automatically with Xero to ensure protection against data loss. QuickBooks Desktop requires manual backups.
- Xero offers seamless collaboration with accountants and bookkeepers. QuickBooks Desktop collaboration requires accountant access or manual file sharing.
Initial Setup and Learning Curve
- Xero setup takes minutes and the interface is intuitive. QuickBooks Desktop has a steeper learning curve for the initial setup and software navigation.
Integration Options
- Xero provides hundreds of third-party integrations. QuickBooks Desktop has fewer native integrations but can often integrate with the same third-party tools.
Price
- Xero subscription plans start at $12/month. QuickBooks Desktop requires a one-time license fee starting around $200-300.
For simplicity and automatic updates, Xero has advantages. But QuickBooks Desktop remains a solid choice for businesses who prefer one-time payments rather than subscriptions.
Transitioning from Desktop to Cloud
Switching from QuickBooks Desktop to Xero or QuickBooks Online enables businesses to leverage the main benefits of cloud accounting software. However, the transition process takes careful planning.
Here are some best practices to ensure a smooth transition:
Clean up existing QuickBooks Desktop data - Review previous transactions and data inputs to correct errors prior to importing data. This prevents importing unnecessary data issues.
Map account details properly - Carefully match chart of accounts information when importing from QuickBooks Desktop to QuickBooks Online or Xero. Identify any changes needed to account details.
Import historical transaction data - Migrate over transaction history for accurate financial records and reporting continuity. Xero and QuickBooks Online limit how many months of data can sync.
Confirm properly configured sales tax setup - Validate sales tax rates and agencies correctly carry over from the desktop data file to avoid compliance issues.
Review and recreate customizations - Assess QuickBooks Desktop custom fields, reports, invoices and other tailored features. Identify which custom elements to recreate post-transition.
Provide software transition training - Teach staff the new cloud-based workflows and interface to minimize productivity disruptions when switching solutions.
Following these tips, in addition to consulting with accounting professionals, enables businesses to successfully transition accounting systems from QuickBooks Desktop to Xero or QuickBooks Online.
Ease of Use and Learning Curve
We examine the user experience and ease of onboarding new employees onto each platform.
QuickBooks Online Interface
QuickBooks Online features an intuitive, clean interface optimized for completing accounting tasks efficiently. The dashboard utilizes easy-to-understand graphics summarizing key financial metrics and customizable sections to highlight important reports. The navigation menu arranges items logically, facilitating access to tasks like invoicing, expense tracking, financial reporting, and more with just a few clicks.
This simplicity enables new accounting hires to quickly grasp QuickBooks Online's essential workflows. The interface relies on recognizable accounting principles that users already understand conceptually from formal training and education. Employees familiar with common practices like double-entry bookkeeping will feel at home using QuickBooks Online. The similarity to traditional manual techniques bridges the learning gap effectively for seasoned accounting professionals getting acclimated to new software.
QuickBooks Online also offers thorough onboarding resources like multi-media tutorials, webinars, and guides that explain its features systematically. These assets accelerate knowledge transfer for new hires to build proficiency. While mastering advanced configurations requires hands-on practice over time, QuickBooks Online reduces the initial training investment compared to more complex platforms.
Xero's User Experience
Xero also uses a clean, intuitive interface to ensure critical financial data remains easily accessible for decision-making. The dashboard features customizable panels providing one-click access to tasks like reconciling transactions, tracking sales, or reviewing reports. Concise metric overviews help managers quickly gauge financial performance too.
For accountants, Xero arranges key info into a logical workflow supporting core accounting activities. Users can efficiently manage tasks like coding expenses to accounts, preparing invoices, or recording bank transactions. This cohesive integration enables working through monthly reconciliations seamlessly.
However, Xero's flexibility comes at the cost of added complexity. Users can extensively customize everything from markup rates to tracking against budget line items. While helpful for sophisticated businesses, these options may overwhelm entry-level accounting hires still learning. The multitude of buttons and tabs makes it harder for novices to navigate compared to QuickBooks' simpler presentation.
That said, Xero's guided product tours and task-based help articles provide critical training content to smooth out the early stages of onboarding new accountants. Investing time upfront to complete these resources helps new hires acclimate faster. But the initial orientation process generally takes longer compared to QuickBooks' simpler interface.
Add-ons and Third-Party Integrations
We overview the add-ons marketplace and app ecosystem around QuickBooks Online and Xero to extend functionality.
QuickBooks vs Xero vs Zoho: Extending Capabilities with Add-ons
QuickBooks Online, Xero, and Zoho Books all offer app marketplaces and third-party integrations to extend the capabilities of their accounting platforms.
QuickBooks Online has the largest ecosystem, with over 800 apps available on their Apps tab. Popular add-ons include inventory management, CRM, reporting, and ecommerce integrations. Intuit itself offers several add-on services like QuickBooks Payments for integrated payments. The open API also allows custom integrations.
Xero has over 800 apps in their marketplace. Top solutions include inventory management, expenses, reporting, payroll, CRM, and ecommerce. The ecosystem may not be as vast as QuickBooks, but covers the most common extension use cases for a growing small business.
Zoho takes a different approach with its Zoho One platform. Rather than third-party apps, Zoho provides over 45 integrated business apps for CRM, HR, inventory, email marketing, and more. This can simplify operations under one vendor. However, capabilities may not be as deep as focused third-party solutions.
When evaluating accounting software, understanding what addons are available can be just as important as the core features. QuickBooks Online offers the most flexibility for future growth with the largest app ecosystem. Xero strikes a balance in its marketplace, while Zoho opts for its own stack of business apps. The right choice depends on current and future integration needs. For example, if advanced inventory management is critical, QuickBooks likely has the richest selection. But Zoho's unified suite could work well for an end-to-end operations view.
Mobility
Accounting mobility involves being able to access, manage, and utilize accounting software while on the go. With the rise of smartphones and tablets, mobile access to accounting systems has become increasingly vital for small businesses and accounting professionals. Both QuickBooks Online and Xero offer dedicated mobile apps for iOS and Android to provide robust accounting functionality from anywhere.
QuickBooks Mobile App Features
The QuickBooks mobile app provides a suite of useful tools to manage key accounting tasks while away from the office. Key features include:
- Intuitive dashboard to quickly view income, expenses, account balances and run common business reports.
- Ability to create, view and edit invoices, estimates and sales receipts.
- Scan receipts using mobile camera to log expenses on the go. Receipts are automatically matched to corresponding transactions.
- Sync data with QuickBooks Online in real-time. Any changes made on mobile are instantly updated in the web version.
- Secure access using the same QuickBooks Online login credentials.
- Categorize bank transactions and reconcile accounts through mobile.
- Use mobile check deposit for faster processing.
- Track mileages and bill customers for reimbursements directly from the app.
With robust mobile optimization, QuickBooks empowers accounting teams to maintain productivity regardless of location. Its intuitive interface makes completing accounting tasks efficiently on the go simple and straightforward.
Xero's Mobile Accounting Capabilities
Xero also offers full-featured iOS and Android apps that enable managing key accounting functions remotely. Notable mobile features include:
- Dashboard displays an overview of cashflow, account balances, reconciliations statuses and common reports.
- Create quotes, invoices and credit notes and email them directly to customers.
- Enter and code expenses on the go by uploading photos of receipts.
- Reconcile accounts by taking photos of bank statements.
- Review and reply to comments or queries from accountants and bookkeepers.
- Receive instant notifications for outstanding bills, overdue invoices, negative bank balances, etc.
- Share financial data with an accountant or bookkeeper directly from the app.
With robust tools optimized for mobile usage, Xero enables accounting teams to maintain productivity outside the office. Its user-friendly interface simplifies performing accounting duties from a smartphone or tablet.
In summary, both QuickBooks Online and Xero offer full-featured mobile apps on iOS and Android to enable managing key accounting functions while on the go. With mobile access to accounting software now considered crucial, evaluating each platform's mobile capabilities can influence which best fits a business's or accounting firm's needs. When choosing between Xero vs QuickBooks Online, assessing each solution's mobile apps in tandem with the broader feature set is key for making an informed decision.
Pricing and Plans
QuickBooks Online and Xero offer competitive pricing tailored to accounting professionals. When comparing costs, it's important to consider functionality needs based on business size and complexity.
QuickBooks Online Price Points
QuickBooks Online uses a tiered pricing model with plans for small, medium, and large businesses. Monthly fees range from $25-150 per user. Key features include:
- Invoicing and expense tracking
- Inventory and order management
- Payroll, payments, and billing
- Standard and custom reports
The Plus plan starts at $35/month and adds capabilities like project costing, 1099 contractors, and advanced reporting. The Advanced plan at $70/month further builds on these features with the addition of advanced inventory, field services, and foreign currencies.
Most small businesses can manage their accounting effectively with the Simple Start or Plus plans. As complexity increases, the Advanced plan unlocks robust functionality needed by mid-sized companies.
Xero Pricing and Subscription Plans
Xero categorizes plans based on number of invoices sent annually. Options range from $9-60 per month. Key highlights:
- Mobile accounting app
- Invoicing, expenses, inventory
- Bank feeds and reconciliation
- Financial reporting and metrics
The Early plan at $9/month fits solopreneurs sending under 20 invoices monthly. The Growing plan at $30/month suits small businesses sending up to 150 invoices. For larger volumes, the Established $60/month plan enables sending 500+ invoices.
Xero's pricing model scales intelligently as businesses grow. The plans compare closely to QuickBooks tiers based on features and target customer size. When evaluating costs, be sure to validate features against current and future needs.
The Accountant's Verdict: QuickBooks Online or Xero?
QuickBooks Online and Xero are two of the most prominent and widely-used accounting software platforms available to accounting professionals today. Based on their features, functionality, pricing, and support, we aim to provide an impartial verdict on which solution may be better suited for an accountant's needs when managing client books and finances.
Overall, QuickBooks Online takes a slight edge when it comes to the depth of its accounting capabilities, integration options, and scalability for larger businesses. Its customizable roles, batch invoicing, and advanced reporting also give accountants robust tools to streamline work.
However, Xero should not be overlooked, especially for smaller businesses. Its intuitive interface, flexible pricing, and innovative features like Hubdoc integration and auto-coding can maximize an accountant's productivity. Xero also enables collaboration through shared access to real-time data.
Ultimately, the ideal choice comes down to the specific needs and priorities of an accounting practice. QuickBooks Online excels in accounting power and scalability, while Xero offers smarter workflows and flexibility for early-stage clients. Evaluating the must-have features and cost considerations of a firm's client base can determine which solution emerges as the top pick.
