Xero vs QuickBooks: Choosing the Right Accounting Software Huong Vu September 30, 2023

Xero vs QuickBooks: Choosing the Right Accounting Software

Xero vs QuickBooks: Choosing the Right Accounting Software

When it comes to selecting the ideal accounting software for your business, two popular options stand out: Xero vs QuickBooks. Both platforms offer a range of features and functionalities designed to streamline financial management and provide valuable insights. In this guide, we will compare Xero to QuickBooks, highlighting their key differences and advantages, to help you make an informed decision about the best accounting software for your specific needs.

Xero vs. QuickBooks: Overview

A cloud accounting tool, such as Xero or QuickBooks Online, plays a crucial role in the day-to-day operations of a company, providing valuable insights, maximizing tax deductions, and facilitating efficient project and time tracking. 

The importance of cloud-based expenditure in the global economy is evident from a Garter survey conducted in October 2021. The survey revealed that the estimated global IT expenditure amounted to an astounding $4.47 trillion. Notably, hardware accounted for 18% of the total expenditure, while the majority was allocated to software, communications, and data centers. 

While Xero vs QuickBooks Online excel in providing essential accounting functionalities, they differ in their approaches and come with their own set of advantages and disadvantages. Both platforms are specifically designed to cater to the needs of small to mid-sized businesses, making them ideal choices for small businesses, agencies, retail stores, and startups. However, larger enterprises with more complex requirements may require additional support to fulfill all their needs.

Whether you choose Xero or QuickBooks Online, you can expect a user-friendly interface, efficient accounting processes, and valuable financial insights. These cloud-based solutions empower businesses to gain a clear understanding of their financial status and make informed decisions.

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Feature comparison of Xero and QuickBooks Online

Here is a feature comparison of Xero vs QuickBooks Online:

Ease of setup and use 

Both QuickBooks and Xero provide user-friendly dashboards that offer a convenient overview of your key business metrics upon logging in. Your preference between the two will likely depend on the user interface that you find most enjoyable.

QuickBooks impresses with its simple yet customizable layout, providing a quick snapshot of profit and loss, expenses, bank account balances, invoices, and sales.

Similarly, Xero boasts a user-friendly dashboard that aligns with its minimalist design approach, consistent with the rest of the platform.

Setting up both QuickBooks and Xero is straightforward, and they offer extensive banking integrations for various regions. While there used to be some challenges with Xero’s bank syncing, it has now become as seamless as QuickBooks Online.

Before making a decision between Xero vs QuickBooks, it is essential to ensure that your bank is supported. You can connect your bank account during the trial period to confirm its compatibility.

Upon logging in to either platform, you can quickly view your latest balance and review pending expenses from the dashboard.

Invoicing 

Both QuickBooks and Xero offer reliable features for processing invoices and quotes. Xero simplifies the process by allowing you to create and preview invoices before sending, although it may occasionally experience glitches.

QuickBooks, on the other hand, streamlines invoice management by enabling direct updates to client details within the invoice itself, eliminating the need to navigate to their contact records.

Reporting

Generating reports based on specific date ranges, such as monthly profit and loss statements and balance sheets, is seamless with QuickBooks Online.

Xero offers more customization options in reporting, although it may be slightly less intuitive than QuickBooks Online due to its report generation process. QuickBooks Online benefits from its extensive market experience and has evolved to meet precise customer needs and user flows.

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Notable Xero reports include the Cash Flow Statement and the Business Snapshot (currently in pilot mode), which provides a simplified and insightful view of your business’s financial health.

For companies requiring advanced reporting beyond the standard features of Xero vs QuickBooks Online, additional add-ons and integrations are available for both platforms.

Integrations

When selecting an accounting tool, integration capabilities should not be overlooked. Seamless integration with other systems maximizes the effectiveness of your accounting software.

Look for integrations with:

  • Your CRM (Customer relationship management) system
  • Your time tracking tool if using a separate app
  • Reporting tools
  • E-commerce platforms
  • Email marketing tools
  • Other tools offering advanced accounting add-ons, such as point-of-sale functionality, inventory management, and debtor tracking

Accountant options

If you have an accountant, it’s worth considering their preferred software. Having professionals who are familiar with your accounting platform can be beneficial during tax time and help you maximize the platform’s capabilities.

Both Xero vs QuickBooks are highly regarded by accountants, with preferences often based on location. QuickBooks dominates the US market, while Xero is favored in Europe and New Zealand.

Scalability and suitability for different business sizes 

QuickBooks is an excellent choice for freelancers and small businesses due to its affordability. Xero, on the other hand, appeals to growing startups.

For larger businesses and enterprise-level companies, Xero caters slightly more to mid-market businesses with 51-1000 employees compared to QuickBooks Online. For businesses requiring enhanced transparency, power, and in-depth insights into sales margins, advanced accounting systems, or enterprise resource planning (ERP) like Sage Intacct or NetSuite are more suitable alternatives.

For larger businesses, QuickBooks offers a wider software suite that includes QuickBooks Enterprise Solutions. This edition claims to have 6 times the capacity of other QuickBooks editions, supporting up to 30 users, accommodating up to one million list items, and providing advanced reporting, inventory management, and printing capabilities.

Pricing comparison of QuickBooks Online vs Xero 

If you need to track income, expenses, invoices, and time, QuickBooks Online offers a starting price of $35/month, while Xero starts at $60/month. The top-tier plans from both providers offer similar functionality.

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Xero Pricing:

  • Early Plan: $9/month (limited features)
  • Growing Plan: $30/month (suitable for most small businesses)
  • Established Plan: $60/month (includes multi-currency functionality, expenses, and project tracking)
  • Gusto Payroll Add-on (US customers): Starts at $39/month base + $6/month per person
  • Country-specific payroll add-ons available in some regions, such as the UK

QuickBooks Pricing:

  • Essentials Plan: $25/month (basic functionality, limited to one user)
  • Plus Plan: $70/month (additional features, access for up to five users, time tracking, inventory management, and expanded reporting)
  • Advanced Plan: $150/month (advanced features, batch invoicing and expense management, automated approvals and reminders, custom reporting fields)
  • Payroll Add-ons: Core, Premium, and Elite options available, ranging from $45 + $4/employee/month to $125 + $10/employee/month

Taking these factors into account will assist you in making an informed decision that aligns with your specific business needs, preferences, and budget.

When to choose Xero vs QuickBooks Online

Both Xero and QuickBooks Online are highly regarded accounting systems for small businesses, and their customer reviews demonstrate their understanding of their respective user bases. Here’s a brief overview of situations where QuickBooks Online or Xero might be the better choice:

When to choose QuickBooks Online

  • You’re looking for a cost-effective solution that offers a lot of value.
  • Advanced reporting features are important to you.
  • You operate your business in the US.

When to choose Xero

  • You’re running a growing startup and need a system that can scale with your business.
  • You prefer a minimalist user experience that prioritizes simplicity and aesthetics.
  • Your business is located outside of North America.

Conclusion

Choosing between Xero vs QuickBooks depends on your specific business needs and preferences, as both accounting software options offer powerful features and cater to small and mid-sized businesses. When it comes to integrations, ConnectPOS stands out by providing seamless integration with both Xero and QuickBooks. This exceptional integration capability allows customers to freely choose their preferred accounting software without any limitations. If you want to know more about this solution, feel free to contact us.

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