Xero vs Quickbooks Online: Which Is Better For Your Small Business?

A small company owner seeking the finest accounting program to handle finances? Xero and QuickBooks Online (QBO) are two of the most popular accounting software options.

Both programs have outstanding features, making selecting one hard for company owners like you. So, how do they compare?

This blog post compares Xero with QBO to help you choose! After reading our comparison guide, you can choose between Xero or QBO for your small business.

Xero 

New Zealand-based Xero joined the accounting software industry to simplify and maybe improve the accounting experience.

Xero's intuitive GUI is the gold standard for accounting software. The program has a very high acceptance rate due to its easy design; therefore, customers have a short learning curve.

Quickbooks Online 

Intuit's QuickBooks Online (QBO) is a platform developed to assist businesses in streamlining routine chores and procedures, especially those pertaining to the management of bills, invoices, time, and assignments.

Accountants swiftly accepted QBO after being on the market longer than Xero, and it has subsequently become the prefered platform. Using the same software your accountant uses for your business is useful.

The Benefits of Xero

1. Users

You can add an unlimited number of individuals to your Xero account irrespective of which of the three packages you select; that is one of the significant benefits of Xero compared to QuickBooks Online and other accounting software.

Because you might desire to give access to a Bookkeeper, Accountant, Tax Expert, or merely employees on your team if you operate a small business, having the adaptability to add as many users as you want (without incurring extra costs) is particularly important for cooperating in a way that is both more seamless and more efficient.

You will need to upgrade your package to add a specific number of people to QuickBooks Online. The highest number of individuals that even the most advanced package can support is 25.

2. Integration Options

Integration capabilities are another area in which Xero stands out from QuickBooks Online as a competitive option for small businesses. Despite the fact that QuickBooks offers a wide variety of connectivity options, some of their branded items are challenging to compete with the approximately 700 options available through Xero.

Your company will have the capability to manage a variety of tasks inside of your Accounting Software thanks to the Third-Party interoperability choices that are offered in Xero. These possibilities cover a variety of classifications and enterprises, enabling your company to use the accounting software you are already familiar with.

In addition, if you want to add payroll features to your Xero membership, you can benefit from Xero's partnership with Gusto Payroll for direct, complete implementation of payroll processing if you use Gusto Payroll. Xero customers have the option to receive free services from Gusto for a period of two months.

3. Customer Support

Finally, while contrasting Xero with QuickBooks, the Customer Service that Xero provides stands out as being superior. Xero offers free online support 24/7, regardless of plan level or location. The other platform does not offer this. In addition, Xero doesn't really contract out its customer assistance; all representatives are Xero workers.

However, QuickBooks Online telephone assistance is only available Monday through Friday from 6 a.m. to 6 p.m. and Saturday from 6 a.m. to 3 p.m.

The Benefits of QuickBooks Online

1. Plan Options

Compared to Xero, QuickBooks Online distinguishes out due to its Four Plans available, each offering an increasing capability focused on serving companies of varying sizes and types.

There are Three Different Options Available in Xero, but the first one has serious restrictions on the number of Invoices, Bills, and Quotes that the user can create. In addition, if your business requires additional capabilities beyond those offered here, you will be required to move to the Growing package, which comes at a cost greater than three times that of the Early package.

In contrast, QuickBooks Online doesn't really differentiate its packages in the same manner as the desktop version. In spite of the significant price gap between each of the QuickBooks Online packages, upgrading to a more expensive plan grants you access to a plethora of additional capabilities.

The Essentials plan comes with Bill Management, Time Tracking, and Multi-User Access, in addition to the features in the Simple Start package. However, the Essentials plan costs $15 more than the Simple Start plan.

Because the three QuickBooks Online packages vary, you're more likely to choose the right one for your business. It lets you pay just for the features you need.

2. Tax Tools

In a head-to-head comparison between Xero and QuickBooks Online, the Tax Capabilities offered by this QuickBooks System stand out as one of the most notable ways QuickBooks prevails. While Xero's subscriptions come with Sales Tax Software, the company offers a different amount of Total Tax Help than QuickBooks Online.

None of the three QuickBooks Online subscription packages feature tools for controlling sales tax and maximising tax deductions. Still, they also include capabilities for handling payments and maximising tax exemptions.

As you prepare to file your corporation taxes, use QuickBooks Tax Categories, establish your own, and have them automatically accept your Expenses by utilising these capabilities. You and your accountant can organise your quarterly taxes and share or download relevant tax information. Both of these options are available to you.

3. Time-Tracking

Finally, in contrast to Xero, QuickBooks Online has built-in time monitoring capabilities. This is a major selling point for QuickBooks Online. Xero does have a Time Tracking tool. However, you can only access it if you subscribe to their Established Package. The Time Tracking function is included in the Projects function set.

Time Tracking, on the contrary, is incorporated into each and every one of QuickBooks Online's subscription tiers, beginning with Essentials. In addition, you can purchase the TSheets add-on if the time-tracking capabilities included with QuickBooks Online need to be improved for your business. This add-on offers even more seamless Time Monitoring for billing, supervising staff, and processing payroll.

Comparing Xero with QuickBooks Online Regarding the Input of Transactions

When entering transactions, regardless of whether you use Xero or QuickBooks Online, you'll find a plus symbol (+) in the menu navigation. Clicking on this sign will enable you to enter whatever transaction type you need.

Both systems include a "Quick Create" feature, which allows you to post a transaction rapidly. You can rapidly access this feature from everywhere on either system.

1. Categorising Transactions

To compare Xero accounting with QuickBooks for transactions, hit the "Accounts" menu at the top and navigate to sales, expenses, or other outflows like inventory purchases. QuickBooks transactions are accessed through the "Banking" option.

Opening a new transaction and entering it from these sections is straightforward. All you need to do is navigate to the "Sales" section, and from there, you can submit and handle all transactions related to the sales of products or services.

You can configure your products and services in Xero and QuickBooks Online and then map those items and services to the relevant accounts in your organisational chart of accounts.

As an illustration, a bookkeeper may have their "Bookkeeping Services" income account connected to their "Accounting Services" income account. After that, they could link their "CFO Services" to the income account for their accounting services. Users are granted the option of keeping the data out of their chart of accounts through the utilisation of this functionality. As a result, it is much simpler to view profit and loss statements whilst running reports.

In addition, in the "Expenses" section, you can access your expense transactions and supplier list in the top navigation. Two places enable you to submit payments directly by account and transactions by goods when completing a transaction. As said, your object representation limits you.

You may alter the mapping from the goods and services list. You can then alter prior transactions. If you don't, the new mapping will only apply to transactions beginning after the update.

2. Transferring Transactions

When you are recording transactions in Xero, It lets you pay money to any account, even if it involves your product or service. No matter the account, you may use this function.

QuickBooks Online needs to provide this degree of adaptability to its users. Nevertheless, due to the fact that this capability can alter the consistency and trustworthiness of the mapping, you will want to make judicious use of this capability.

QuickBooks Online's left-hand interface lets you enter client and revenue transactions under "Sales". This lets you move operations. This section lets you move transactions from "All Sales" to "Invoices", "Customers", and "Products and Services" as needed.

Comparing Reporting Capabilities: Xero and QuickBooks Online

Regarding supporting your company's financial planning and development, reporting may be one of your accounting software's most significant services.

However, while deciding between Xero accounting and QuickBooks Online, you will verify that the option you select has the reporting abilities you require. Xero accounting is a cloud-based accounting system, whereas QuickBooks Online is an online accounting solution.

Let's compare the performance of these two different reporting methods.

1. Cash Flow Statements

In contrast to the indirect approach, the direct approach is used to construct the report for the cash flow statement included in Xero.

In summary, the direct method subtracts spending from income. To calculate operational cash flow, apply the direct or indirect method.

The indirect method considers depreciation, while the direct approach considers net income. However, Xero only allows the direct method, so your choice will depend on how your firm operates.

You have the flexibility to choose either of these two approaches when you use QuickBooks Online to create your cash flow statement.

2. Customising Reports

Furthermore, QuickBooks Online has more to provide than Xero when it concerns personalising reports.

In QuickBooks Online, you need to generate the report for the appropriate time window to obtain your business's monthly profit and loss statement or balance sheet. Then, you can display the rows by month in the choices area in the top region.

To accomplish this with Xero, you'll have to generate the report for the latest month in the timeframe and then select to contrast it with the prior 11 months.

All in all, Xero’s capacity to modify reports isn’t as simple as QuickBooks Online.

3. Report Layouts

The most recent month appears on the far left, and the oldest on the far right in Xero's monthly reports. Most corporate accountants consider this style outdated.

Accounting professionals must modify column sequences when moving monthly data into a spreadsheet to examine and forecast it.

4. AR/AP Reports

Additionally, if you would like to retrieve a thorough report on accounts receivable or accounts payable, Xero doesn't really provide an option to total those numbers by client or supplier. This might be a problem if you wish to track payments to multiple vendors. On the contrary, if you use QuickBooks Online, you can obtain this kind of display quickly.

5. Uncleared Transactions

The "uncleared transactions" report should also be discussed. Accountants generate this report to show consumers why their balance is less than their bank balance. QuickBooks Online makes this easy. This view cannot be run in Xero reports since the programme lacks the capabilities.

To get this view, go to banking (bank feeds) and account transactions. An account registry-like object from Xero. Find what you want or filter by reconciling. Unencrypted transaction reports can be entered in Xero but not downloaded or shared.

Comparing the Prices of Quickbooks Online with Xero

Although both Xero and QuickBooks Online have prices that are comparable in most cases, Xero is less expensive overall. When comparing the two, one thing to bear is that QuickBooks Online offers slightly better quality than Xero regarding its capabilities and features.

In addition, the cheapest option offered by Xero is noticeably more cost-effective than the absolute cheapest plan offered by QuickBooks Online; however, you might well discover that it's not good enough to justify the low price because it places limits on the number of bills and invoices that can be created each month of five and 20, respectively.

Xero might not provide the same worth as QuickBooks Online; nevertheless, you will discover that its cost is probably especially suitable for medium- to large-sized companies because it provides an infinite number of users for all of its packages. This is the case despite the fact that Xero might offer a different significance than QuickBooks Online.

Comparing Xero and QuickBooks: Which Accounting Software Is Best for You?

As can be seen, both QuickBooks Online and Xero give small companies a substantial number of features and options to choose from. Now that we have gone through the specifics of these options let's showcase the most important distinctions between Xero and QuickBooks Online so that you may decide which one is ideally equipped for your requirements. Xero is a cloud-based accounting software, while QuickBooks Online is a web-based one.

When contrasting QuickBooks Online and Xero, there are specific aspects in which it is very challenging to conclude that one program gives superior advantages over the other. This is something that should be taken into consideration before beginning this comparison.

Although their prices are similar, Xero and QuickBooks Online provide the lowest and most costly software. Looking at the accounting tools and features offered with each bundle, Xero and QuickBooks Online offer good value.

Along these same lines, it is reasonable to conclude that Xero and Quickbooks Online are well-balanced in regard to the overall functionality, usefulness, and availability of their respective online accounting applications. In addition, both Xero and QuickBooks come equipped with extensive accounting tools that will undoubtedly enable you to take control of and improve the efficiency of your financial operations.

Both Xero and QuickBooks Online, web-based systems with powerful mobile apps, offer small business owners a lot of accessibility.

However, there are distinct variances between each of these systems. In the end, when contrasting Xero accounting with QuickBooks Online, QuickBooks comes out on top regarding the package alternatives, the time tracking features, and the tax tool possibilities. Xero, in contrast, distinguishes out because of its user permissions, the integration possibilities, and the customer assistance it provides.

Bottom Line

Both Xero and QuickBooks Online are formidable pieces of accounting software, and the results of our practical example demonstrate why these two programs deserve their positions as industry standard bearers. Although they share many traits, each has its own pros and cons.

Xero is the best choice if your firm needs affordable stock and fixed asset accounting and many users to see its accounting data. QuickBooks Online is the superior option if you require a thorough bank reconciliation, monitoring of classes and locations, high-quality customer service, and simple access to bookkeepers in your area.

Content Summary

• Xero and QuickBooks Online (QBO) are two of the most popular accounting software options.
• Both programs have outstanding features, making it hard for company owners like you to select one.
• After reading our comparison guide, you can choose Xero or QBO for your small business.
• New Zealand-based Xero joined the accounting software industry to simplify and improve the accounting experience.
• Xero's intuitive GUI is the gold standard for accounting software.
• You can add an unlimited number of individuals to your Xero account irrespective of which of the three packages you select; that is one of the significant benefits of Xero compared to QuickBooks Online and other accounting software.
• Integration capabilities are another area in which Xero stands out from QuickBooks Online as a competitive option for small businesses.
• Your company will be able to manage various tasks inside of your accounting software thanks to the Third-Party interoperability choices offered in Xero.
• These possibilities cover a variety of classifications and enterprises, enabling your company to use the accounting software you are already familiar with.
• Finally, while contrasting Xero with QuickBooks, Xero's Customer Service stands out as superior.
• Xero offers free online support 24/7, regardless of plan level or location.
• In addition, Xero doesn't really contract out its customer assistance; all representatives are Xero workers.
• Compared to Xero, QuickBooks Online distinguishes out due to its Four Plans available, each offering an increasing capability focused on serving companies of varying sizes and types.
• In spite of the significant price gap between each of the QuickBooks Online packages, upgrading to a more expensive plan grants you access to a plethora of additional capabilities.
• In a head-to-head comparison between Xero and QuickBooks Online, the Tax Capabilities offered by this QuickBooks System stand out as one of the most notable ways QuickBooks prevails.
• While Xero's subscriptions come with Sales Tax Software, the company offers a different amount of Total Tax Help than QuickBooks Online.
• None of the three QuickBooks Online subscription packages feature tools for controlling sales tax and maximising tax deductions.
• Still, they also include capabilities for handling payments and maximising tax exemptions.
• Finally, in contrast to Xero, QuickBooks Online has built-in time monitoring capabilities.
• This is a major selling point for QuickBooks Online.
• Xero does have a Time Tracking tool.
• In addition, you can purchase the TSheets add-on if the time-tracking capabilities included with QuickBooks Online need to be improved for your business.
• To compare Xero accounting with QuickBooks for transactions, hit the "Accounts" menu at the top and navigate to sales, expenses, or other outflows like inventory purchases.
• You can configure your products and services in Xero and QuickBooks Online and then map those items and services to the relevant accounts in your organisational chart of accounts.
• In addition, in the "Expenses" section, you can access your expense transactions and supplier list in the top navigation.
• You may alter the mapping from the goods and services list.
• When you are recording transactions in Xero, It lets you pay money to any account, even if it involves your product or service.
• However, while deciding between Xero accounting and QuickBooks Online, you will verify that the option you select has the reporting abilities you require.
• Xero accounting is a cloud-based accounting system, whereas QuickBooks Online is an online accounting solution.
• The indirect method considers depreciation, while the direct approach considers net income.
• You have the flexibility to choose either of these two approaches when you use QuickBooks Online to create your cash flow statement.
• Furthermore, QuickBooks Online has more to provide than Xero when it concerns personalising reports.
• In QuickBooks Online, you need to generate the report for the appropriate time window to obtain a monthly profit and loss statement or balance sheet for your business.
• All in all, Xero's capacity to modify reports isn't as simple as QuickBooks Online.
• The most recent month appears on the far left, and the oldest on the far right in Xero's monthly reports.
• Additionally, if you would like to retrieve a thorough report on accounts receivable or accounts payable, Xero doesn't really provide an option to total those numbers by client or supplier.
• To get this view, go to banking (bank feeds) and account transactions.
• Find what you want or filter by reconciling.
• In addition, the cheapest option offered by Xero is noticeably more cost-effective than the absolute cheapest plan offered by QuickBooks Online; however, you might well discover that it's not good enough to justify the low price because it places limits on the number of bills and invoices that can be created each month of five and 20, respectively.
• Xero might not provide the same worth as QuickBooks Online; nevertheless, you will discover that its cost is probably especially suitable for medium- to large-sized companies because it provides an infinite number of users for all of its packages.
• This is the case despite the fact that Xero might offer a different significance than QuickBooks Online.
• As can be seen, both QuickBooks Online and Xero give small companies a substantial number of features and options to choose from.
• Now that we have gone through the specifics of these options let's showcase the most important distinctions between Xero and QuickBooks Online so that you may decide which one is ideally equipped for your requirements.
• Xero is a cloud-based accounting software, while QuickBooks Online is a web-based one.
• When contrasting QuickBooks Online and Xero, there are specific aspects in which it is very challenging to conclude that one program gives superior advantages over the other.
• Although their prices are similar, Xero and QuickBooks Online provide the lowest and most costly software.
• Looking at the accounting tools and features offered with each bundle, Xero and QuickBooks Online offer good value.
• Along these same lines, it is reasonable to conclude that Xero and Quickbooks Online are well-balanced in regard to the overall functionality, usefulness, and availability of their respective online accounting applications.
• In addition, both Xero and QuickBooks come equipped with extensive accounting tools that will undoubtedly enable you to take control of and improve the efficiency of your financial operations.
• Both Xero and QuickBooks Online, web-based systems with powerful mobile apps, offer small business owners a lot of accessibility.
• In the end, when contrasting Xero accounting with QuickBooks Online, QuickBooks comes out on top regarding the package alternatives, the time tracking features, and the tax tool possibilities.
• Xero, in contrast, distinguishes out because of its user permissions, the integration possibilities, and the customer assistance it provides.
• Both Xero and QuickBooks Online are formidable pieces of accounting software, and the results of our practical example demonstrate why these two programs deserve their positions as industry standard bearers.
• Although they share many traits, each has its own pros and cons.
• Xero is the best choice if your firm needs affordable stock and fixed asset accounting and many users to see its accounting data.