QuickBooks Online vs. Xero: Which One Is Best for Your Small Business?

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    Both Xero and QuickBooks Online are powerful accounting solutions for most small businesses. Even so, there are a few differentiating factors that are worth considering so that you can be confident about your decision now and in the future.

    QuickBooks Online is the better candidate for business owners looking to prioritize scalability and the ability to easily mill in accountants. And if they want deeper insights into the logistics of their growing business, the reporting capabilities of QuickBooks Online can be scaled with any plan level.

    However, the unlimited users feature makes Xero a winner among larger businesses and established small businesses that require 25+ users or 250+ accounts. At the other end of the spectrum, the $ 11 per month early plan is a fantastic deal for the self-employed who don’t have to send out more than 20 invoices per year.

    • Established: $ 62 per month.

    • Easy start: $ 25 per month.

    • Essentials: $ 40 per month.

    • Advanced: $ 150 per month.

    • Easy start: 1 user; 2 auditing firms.

    • Essentials: 3 users; 2 auditing firms.

    • Plus: 5 users; 2 auditing firms.

    • Advanced: 25 users; 3 auditing firms.

    Maximum number of financial accounts

    • 250 max for Simple Start, Essentials and Plus plans.

    • Unlimited for the Advanced plan.

    Well. Invite your accountant via email and assign them advisor permissions. With over 2.7 million subscribers worldwide, Xero is well known but not as popular as QuickBooks Online.

    Excellent. Email your accountant a link to sign in to your QuickBooks account. QuickBooks Online has 5.1 million users worldwide, which means your accountant is likely familiar with it.

    Well. Xero’s Growing Plan gives small businesses room to expand with the option to upgrade to the Established plan later.

    Excellent. Advanced, custom reporting capabilities in higher-level plans can be of great benefit to experienced business owners interested in creating more sophisticated reports.

    Excellent with a usability rating of 8.8 from TrustRadius.

    Excellent with a usability rating of 8.4 from TrustRadius.

    Extra note on ease of use: If you want to get the most out of your accounting software, whether you choose Xero, QuickBooks Online, or something else, you will need to invest some time learning the fundamentals of accounting. Both Xero and QuickBooks Online have neat dashboards that are easy to navigate, but the information on them can be overwhelming if you don’t brush up on it terminology and why it matters.

    Maximum number of users: Xero wins

    If you need to give more than five people access to accounting, Xero might be the better option for you. QuickBooks Online’s most popular Plus plan is five users, and the highest Advanced plan, which is expensive at $ 150 per month, allows up to 25 users. In contrast, Xero’s top tier established plan costs $ 60 per month and doesn’t limit the number of users. All in all, however, user limits shouldn’t be a big deal unless you have a larger company.

    Number of invoices: QuickBooks Online wins

    Although QuickBooks Online limits the number of users, all of its plans support unlimited bills. Xero’s Early Plan, recommended for self-employed or brand new businesses, allows for 20 invoices. If you only send out one or two invoices per month, the $ 11 per month early plan is an extremely affordable option. Otherwise, you’ll need to top up your subscription or consider QuickBooks Online plans.

    Number of accounts: Xero wins

    With a recommended account limit of 699, Xero is better equipped to serve large organizations with a wide variety of existing account categories. If you can hold your accounts at QuickBooks Online’s lower limit of 250 or less, that factor doesn’t matter.

    Reporting Complexity: QuickBooks Online Wins

    This category had the greatest weight in the scalability comparison. While the number of users, bills, and accounts are important, some small businesses will never need more than a few users or 100 accounts. However, as business owners learn more about accounting, they may want to produce more detailed reports, and that ability increases with each of QuickBooks Online’s four tier tiers. While Xero’s top tier plan allows users to track projects and claim expenses, the other reporting functions remain relatively consistent.

    Popularity: QuickBooks Online is winning

    QuickBooks Online is an industry standard with 5.1 million users worldwide. If you count QuickBooks desktop users, that number increases to 8 million. With more than 2.7 million users worldwide, Xero is popular, but not as ubiquitous as QuickBooks Online. The numbers alone suggest that your accountant worked with the latter.

    Bookkeeper invites: Tie

    Dashboard: tie

    Finally, when you do decide to go with an accounting software, the hope is that you will be comfortable with it. Before making a decision, it is a good idea to test each software product to review its dashboard and shortcuts. While both Xero and QuickBooks Online have been rated as easy to use and clean in appearance, you may find that you prefer one layout over the other.

    Screenshot of the QBO dashboard

    QuickBooks online dashboard.

    Screenshot of the Xero dashboard

    Xero dashboard.

    Bank reconciliation: tie

    When business owners select an account in Xero and navigate to the Reconciliation tab, the page is divided into two columns: “Review your bank statement” and “Then reconcile your transactions in Xero”. An “OK” button in each line gives subscribers the opportunity to confirm each match. QuickBooks Online’s long list of transactions on the Reconcile tab takes a slightly different approach. After you’ve linked QuickBooks Online to your bank accounts, mark each transaction that matches an expense on that month’s statement. QuickBooks Online recommends printing bank statements for easy cross-referencing.

    Claim costs: QuickBooks Online wins

    QuickBooks Online allows users to claim expenses in all plans, while Xero requires Xero Expenses, an additional feature only included in the highest Established plan.

    Asset management: Xero wins

    While Xero includes asset management on all plans, QuickBooks Online users must either download a third-party add-on or manually set up an asset account. Although both companies suggest that users work with an accountant to manage asset depreciation, Xero does the job better for you.

    Inventory Management: Xero Wins

    If you can’t justify the $ 70 a month QuickBooks Online Plus plan, the company’s lower plans aren’t included Inventory management. This could be a real disadvantage for small online retail businesses, for example, who need to keep an eye on their products and the materials used to make them. All of Xero’s plans include inventory management so business owners can keep track of what is in stock and what products are being sold.

    Transaction Tracking Tags: QuickBooks Online Wins

    Both Xero and QuickBooks Online have their own versions of transaction tracking tags, but QuickBooks Online is the winner in this area. Xero allows users to create two active tracking categories, while QuickBooks Online allows users to create 40 tracking categories. For example, users could create a location category with subcategories for each city they ship to – that would count as one category. Similarly, users can create an order status category with options such as completed, pending, and incomplete. The more categories you create, the more reports you can create to get a better idea of ​​how your business is doing and where there is room for growth. Other category tag ideas are customer type, vehicle, needs receipt or ask my accountant.

    Customer service: tie

    Business owners who prefer to hiccup on the phone will prefer QuickBooks Online. While Xero only offers online support, it’s available 24/7 in case you’re a night owl.

    Mileage and time recording: QuickBooks Online wins

    Xero users track mileage and time through Xero Expenses, a tool only included in the top tier Established. QuickBooks Online integrates mileage tracking into all plans, and time tracking is available from the Essentials plan onwards. If you have few users and no projects to keep track of, you can consider the Essential plan from QuickBooks Online through Xero.

    A closer look at QuickBooks Online vs. Xero

    More than 1,000 apps including deep integration with Gusto for payroll.

    More than 650 apps including QuickBooks Time, QuickBooks Payroll and Gusto.

    Yes. Apple’s App Store awards 4.5 out of five stars based on more than 470 reviews.

    Yes. Apple’s App Store awards 4.7 out of five stars based on more than 126,000 reviews.

    Comes with Essentials plan and above.

    New users get 30 days of free access to all of Xero’s features before they decide on a plan.

    50% discount for the first three months or try a free 30-day trial.

    24/7 online support. No phone support.

    Simple Start, Essentials, and Plus provide customer support by phone or messaging Monday through Friday 6:00 a.m. to 6:00 p.m. PT and Saturday 6:00 a.m. to 3:00 p.m. PT. The Advanced plan offers 24/7 support.

    Although Xero is affiliated with multiple lenders, it does not offer small business loans of its own.

    Apply for small business loans directly through QuickBooks Capital.

    20 with early plan; Unlimited with growing and established plans.

    Unlimited with all plans.

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