Xero vs QuickBooks: Which is the best accounting system in 2023?

However, if you work with several vendors and clients and require more advanced features, you should consider QuickBooks Online Plus. Xero provides much more third-party integrations and extensions than QuickBooks. The Xero App Marketplace includes over 800 apps and is constantly introducing new ones in categories such as CRM, invoicing, inventory, time tracking, e-commerce, and others. Xero also has ten in-house apps that allow you to access its functionality on your mobile device. Reconciliation is the process of comparing two sets of records to check that the figures are correct and in agreement.

Once payment is received, Xero will automatically apply the payment if paid online, or you can process the payment during your regular bank reconciliation process. If you’re unwilling to go for the QuickBooks Online Plus plan to get Free Small Business Bookkeeping Templates that feature, then you’ll be glad to know that all of Xero’s plans come with inventory management. With QuickBooks Online, update details about the client directly in the invoice instead of navigating to their contact record.

Xero’s intuitive design and emphasis on automation make it an excellent choice for small businesses and entrepreneurs seeking a streamlined accounting experience. QuickBooks and Xero are two of the best accounting software options with a range of plans and packages that can work for freelancers, small businesses and large enterprises alike. We researched both tools extensively to help you determine the best one for your company.

It is tailored to small businesses and includes invoicing, time tracking, and expense management. All plans include time tracking and phone assistance is available Monday through Friday from 8 a.m. The first two plan tiers limit billable clients, but not on invoices. More specific categories like Business, Accounting, Payroll, Projects, and others have their own dedicated dashboards accessible through a horizontal sidebar. By clicking on any data, you can access a comprehensive breakdown with historical context, and you have the option to set up data tracking for the automatic generation of specific reports.

Popular Integrations

You get it with the established plan, which is cheaper at $65 per month than QBO’s plus plan. Project management features let you track the financial side of your projects. This can include tracking time, creating quotes, logging job expenses, and more. Xero users can only track time if they have the highest-tier Established plan for $65 per month, whereas QuickBooks Online offers time tracking starting with the $55 per month Essentials plan. Xero’s invoice entry screen, seen above, is clean and uncluttered with easy look-up options available for most fields. Once the invoice is completed, you can send it via email with online bill payment options included in the email.

If you’re in the market for accounting software, you might be feeling overwhelmed by all the options out there. While Xero and QuickBooks are wildly popular, they’re not the only options available. There are a number of alternative accounting software programs that can offer powerful features and a user-friendly interface. The desktop version is installed on a computer, while the online version is accessed through a web browser.

You can also get linked debit cards for you and your team to handle day to day business expenses easily, at home and abroad. Xero has automatic bank feeds, which means that all you have to do is make the initial connection between the software and your bank. After that, the data will be updated automatically every business day. There are no manual uploads needed, and you can set up secure, encrypted feeds from any number of different bank accounts. QuickBooks Online is an offshoot of Intuit’s general desktop-based accounting software QuickBooks. Both offer excellent accounts payable (A/P) features, although QuickBooks Online is slightly better due to the ability to generate recurring payments.

Xero provides real-time financial data, allowing users to track their finances from anywhere, at any time. Its biggest drawback is the inability to contact customer support directly by phone, and other users experienced issues with using the QuickBooks Payroll integration. The ability to accept payments on your smartphone through the QuickBooks Online mobile app is a convenient feature for many on-the-go business owners. You can even track your company’s spending habits by simply viewing the reports on your phone. Meanwhile, Xero’s mobile app might be preferable if you often need to record bills and bill payments on the go. Both Xero and QuickBooks Online do a great job of accounting for inventory and calculating the cost of your inventory sold automatically.

Xero vs QuickBooks comparison chart

As you can see below, all three online accounting platforms are compatible with Google Apps, Excel, Zapier, HubSpot, various time-tracking, expense-tracking, and project management software. If you run an e-commerce or physical products business, you shouldn’t use Wave. The platform is designed for service businesses and has minimal inventory management features. The QuickBooks Online dashboard, as you can see below, includes all the information you need to get a quick overview of your financial transactions. The dashboard is programmed to display your invoices, expenses, bank accounts, profit and loss statement, sales, and time tracking. Both Xero and QuickBooks have positive feedback from customers – the ratings for Xero and QuickBooks Online are pretty much neck and neck – and both offer similar accounting tools.

Wave’s reporting features are also easy to use but lack depth when it comes to sales tax, inventory, and employee data. This could work well for freelancers, solopreneurs, and businesses with only a couple of employees. Larger businesses — even startups — will not find Wave’s offering here to meet their needs. Summary
There’s a lot to think about when comparing and choosing accounting software for your business, and not only the monthly cost. It’s tempting to go for the cheapest plan, but this could mean having to pay extra for the add-on features your business needs.

If you’re on a budget, Xero offers many of the advanced features that QuickBooks Online does, at a lower price. Xero is ideal for contractors with fixed assets that are looking for a lot of users at a low cost. QuickBooks Online offers a cloud-based system which allows you to streamline many repetitive accounting tasks and processes.

When we inputted new invoices or added information, the dashboard updated immediately to reflect changes. QuickBooks Online was given the highest rating in the accounting category because it has the widest range of features and the most power. Xero is similar to QuickBooks Online, but has a thinner reporting section which does not always load reliably. Small business owners, freelancers, and businesses that outsource their accounting tasks to a bookkeeper or accountant.

Product limitations

Meanwhile, Xero’s user-friendly interface and cloud-based accessibility may resonate better with entrepreneurs looking for a modern, streamlined solution. While Xero provides solid email tracking functionality, QuickBooks emerges as the winner in this category. Its seamless integration with popular email platforms and comprehensive tracking capabilities make it the preferred choice for businesses seeking robust email tracking solutions. QuickBooks provides step-by-step instructions, making managing invoicing, tracking expenses, and generating financial reports easy. Even users with limited accounting knowledge can quickly become comfortable using QuickBooks.

The integration starts at $39 per month plus $6 per month per person. There’s also a self-service feature that lets employees view their paystubs and W-2s online. Your business probably has a long list of contacts like customers and suppliers.

• With either solution, you can access your accounts anytime and anywhere.
• The monthly subscription price is a bit higher than Xero’s Gusto integration, but the price per user is lower, and it also has a few extra features like local tax filing.
• Just like with inventory, Xero and QuickBooks are your best options for sales tax configuration and reporting.

In this Xero accounting software vs QuickBooks Online comparison, both platforms have their strengths. Xero stands out for its simplicity and ease of use, making it an excellent choice for small businesses or those new to accounting software. Xero or QuickBooks Online (QBO) are popular cloud-based accounting platforms used by businesses of different sizes because they are designed to provide flexibility and accessibility. If ease of use is a top priority for you, QuickBooks emerges as the winner. Its intuitive design and user-friendly features make it an ideal choice for businesses of all sizes.

Xero vs. QuickBooks Online: Setup

It’s an all-in-one solution for managing invoicing, expense tracking, and payroll, and it syncs with your bank accounts to keep data updated in real-time. Xero’s mobile app offers a seamless and user-friendly experience, allowing you to stay connected to your business wherever you are. Xero’s desktop version provides features such as invoicing, bank reconciliation, and financial reporting, empowering businesses to manage their finances efficiently. Xero’s desktop software is known for its ease of use and accessibility, making it a popular choice among small and medium-sized businesses. Service or project-based businesses should choose accounting software that can track project costs, revenues, and profits. The software must have tools to track time, record billable hours or expenses, send invoices for progress billings, or monitor project progress and performance.

Xero has been praised for its intuitive user interface and ease of use, while QuickBooks Online offers more robust features suited for larger businesses. Ultimately, when deciding between Xero vs. QuickBooks, it depends on the complexity and size of your business. When comparing Xero vs. QuickBooks Online, Xero allows for unlimited users where QuickBooks Online has a cap of 25.

One of the most important features any accounting tool can offer is integration with your business bank accounts. Ideally, you’ll want all your transactions flowing seamlessly into the software, with regular updates helping you keep on top of your cashflow. Both can integrate seamlessly with Wise Multi-currency account which is specifically handy for sending and receiving international payments. The Xero mobile app is for Android and iOS devices is free when you sign up for a subscription. It offers easy access to Xero’s accounting tools on the move, including looking up contacts, sending invoices and reconciling bank transactions. With its intuitive interface and startup-friendly pricing, Xero is known as a platform for small businesses.

Essentials allows three users, Plus allows five, and even QBO’s highest-tier plan, Advanced, only lets you have 25 users. The Growing and Established plans don’t limit your invoices and bills. You probably noticed from the above summaries that Xero and QuickBooks sound pretty similar. They’re both strong solutions that meet all of the standard accounting needs and offer lots of extras. The ability to integrate a software product with other applications can increase its functionality tremendously. Both Xero and QuickBooks Online offer excellent integration with hundreds of apps.