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Xero vs QuickBooks: Which Is the Better Accounting Software?

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Hey there!

Managing the finances for your small business is no easy task. As an entrepreneur myself, I know how difficult it can be to keep up with tracking income, expenses, invoices, taxes, and everything in between.

That‘s why using accounting software can be a total game-changer for your business. It automates many of the tedious financial processes and gives you greater visibility into the numbers.

In this comprehensive guide, we‘ll be comparing two of the top accounting platforms on the market:

  • Xero – a favorite among growing startups
  • QuickBooks – trusted by established small businesses

I‘ve used both Xero and QuickBooks extensively over the years, so I‘m excited to share my experiences and help you determine which solution may be the better fit.

Let‘s dive in!

A Quick Intro to Xero and QuickBooks

First, what exactly are Xero and QuickBooks?

Xero is a cloud-based accounting platform founded in 2006 in New Zealand. It‘s designed to be simple and user-friendly for non-accounting folks like you and me.

Over 3 million subscribers across 190 countries use Xero today. It‘s best suited for fast-growing startups that need scalable accounting software.

QuickBooks, developed by Intuit, has been around since the 1980s. Over 5 million businesses use QuickBooks Online or the desktop version.

It‘s designed for established small businesses and has incredibly robust accounting capabilities and reporting. QuickBooks offers industry-specific editions as well.

Both tools provide excellent general accounting features for most small businesses, like:

  • Invoicing
  • Expense tracking
  • Reporting
  • Bank connections
  • Mobile apps

However, Xero and QuickBooks go about these features in very different ways. The right software for your business depends on your needs and stage of growth.

Now let‘s do a deep dive on how Xero and QuickBooks compare across some key factors:

Features Face-Off: Xero vs QuickBooks

The features available make up the foundation of any accounting platform.

While Xero and QuickBooks have tons of overlapping capabilities, there are some big differences that set them apart.

Simple and Intuitive: Xero

One of Xero‘s biggest selling points is its user-friendly interface. It‘s designed to make accounting tasks simple for non-accountants.

Some of Xero‘s most beginner-friendly features include:

  • Visual dashboard – The dashboard uses graphics like bars, charts and trends to represent financial data visually. This makes it easy to spot patterns.

  • Project tracking – Xero provides helpful job tracking features and reporting to manage client projects. This takes the guesswork out of profitability.

  • Expenses – Employees can submit cash or mileage expenses via a mobile device. Managers get notifications to quickly review and approve.

  • Invoicing – The invoicing screen shows outstanding invoices and makes it easy to track payments. You can customize the look and feel.

The beauty of Xero is that it grows with you. While the core features are simple to start, you can access more advanced functions as needed.

Powerful and Customizable: QuickBooks

QuickBooks Online packs a huge amount of accounting power under the hood. It offers in-depth reporting and the ability to customize features for your business needs.

Some of QuickBooks‘ most robust features are:

  • Job costing – QuickBooks provides real-time tracking of costs vs. revenue per project or service line for precise profitability metrics.

  • Inventory – Advanced inventory makes it easy to manage stock levels, transfers, reorders, and item details from one centralized platform.

  • Payroll – QuickBooks‘ payroll features include direct deposit, tax calculations, payments, and filings. This saves tons of time and headaches.

  • Reporting – You get access to over 100 built-in reports you can customize, export, and share to extract key business insights.

QuickBooks also offers access to certified bookkeepers and accountants to provide virtual assistance and advice within the platform if you need it.

The Verdict: It Depends on Your Business Needs!

When it comes to features, Xero is better for simplicity and user experience while QuickBooks excels at customization and complex accounting.

For straightforward financial management, Xero provides the basics like invoicing, bank reconciliation, reporting, and more without the bells and whistles. QuickBooks gives you more control to tailor everything to your business but can feel overwhelming.

Most startups and very small businesses find Xero to be a better fit for their needs. But as your business grows and requires more financial insights, QuickBooks starts to pull ahead.

You really can’t go wrong with either one – it just depends on your priorities and stage of growth. The key is matching the features to your current and future needs.

Battle of Use Cases: When To Use Xero vs QuickBooks

Xero and QuickBooks are both excellent general accounting systems. But each platform shines brighter for certain industries based on the specialized tools on offer.

Xero Industry Standouts:

  • IT and tech – Xero integrates with popular platforms like Gusto, ReceiptBank, and Slack. This appeals to tech-focused businesses.

  • Professional services – The project management tools help agencies track time and profitability for client work.

  • Ecommerce – Online sellers benefit from connected inventory, payment processing, and Shopify integrations.

  • Non-profits – Non-profits can engage supporters through tools like Xero Me and manage fundraising.

According to data from SoftwarePath, Xero holds 32% market share in the tech industry and 29% for non-profit accounting.

QuickBooks Industry Standouts:

  • Construction – QuickBooks Job Costing accounts for costs per job and integrates with field service apps.

  • Retail and distribution – Advanced inventory features help retailers and distributors manage high volumes of goods.

  • Manufacturing – Manufacturers can track every detail of the production process in QuickBooks using connected sensors and IoT devices.

  • Franchises – QuickBooks provides transparency into individual location performance while consolidating financial data.

Industry research shows QuickBooks dominating the construction industry with over 60% market penetration. It also leads in manufacturing, retail, and hospitality accounting.

The Bottom Line

If you‘re in a tech-centric or services industry, Xero probably has the specialized tools you need. More product and inventory-focused businesses tend to benefit from QuickBooks‘ advanced capabilities.

Of course, your individual business needs trump your industry every time. But the industry trends give helpful perspective into whataccounting features are important.

Xero vs QuickBooks Pricing: What‘s the Damage?

Pricing often plays a significant role in choosing accounting software. Xero and QuickBooks take different approaches with their billing models.

Xero Pricing Plans

Xero offers four core plans, with prices based on number of billable transactions per month:

  • Early – $9/month for 5 invoices/bills
  • Growing – $30/month for 20 invoices/bills
  • Established – $60/month for 150 invoices/bills
  • Premium – custom quote

Xero charges per organization rather than per user. Unlimited users are included on all plans.

The Early plan has limited reporting features. But Growing and up give you unlimited projects, expense claims, invoicing, bank reconciliation, and more premium features.

Xero also offers an extensive app marketplace to add capabilities like payroll, workflow automation, ecommerce, and CRM. These integrations range from $5 to $40 per month.

QuickBooks Pricing

QuickBooks Online has three main plans primarily based on number of users:

  • Simple Start – $15/month for 1 user
  • Essentials – $20/month for up to 3 users
  • Plus – $35/month for up to 5 users

Unlike Xero, you pay per QuickBooks user license. Additional users over the base plan cost $5/month extra.

All three plans include QuickBooks‘ core accounting features. But the higher Essentials and Plus plans have perks like custom chart of accounts, budgeting, inventory, project tracking, and advanced reporting.

You can add payroll, payments, time tracking, and other apps à la carte starting at $4/month per feature. Industry-specific editions are also available.

And the Winner Is…

For the best value, Xero comes out ahead for companies that need lots of invoices and transactions. QuickBooks is the more cost-effective choice for larger teams.

With QuickBooks, you pay per user license vs. Xero‘s per organization pricing. But Xero has more generous caps on transactions included for base plan prices.

My recommendation is to take advantage of the free trials offered by both platforms. See what features you actually need, then calculate the true cost for your business.

Ease of Use: Xero vs QuickBooks User Experience

No accounting software can be effective if it‘s difficult and frustrating to use. Let‘s explore how user-friendly Xero and QuickBooks are.

Xero: Designed for Simplicity

Xero thoroughly focuses on user experience for non-accounting folks. The interface is clean, intuitive, and minimal.

Some standout aspects include:

  • Dashboard – The dashboard uses visual graphs and insights that are easy to understand at a glance. You can customize the layout as well.

  • Navigation – A vertical menu bar makes it easy to jump between tasks like reconciling, invoicing, reporting, and bill payment.

  • Searching – Xero has powerful global search capabilities to instantly pull up transactions, contacts, invoices, and more in a few keystrokes.

  • Mobile – The Xero mobile app provides easy access to accounting tasks from your smartphone. Seamless syncing keeps everything up-to-date.

  • Support – You get free access to email and chat support, an extensive help center, webinars, and an active user community forum.

QuickBooks: More Advanced Capabilities

QuickBooks Online has made major strides in usability over the years. But it still tends towards more robust power under the hood.

Elements that support advanced use cases include:

  • 30+ Software Editions – Get tailored features for your industry, like manufacturing, retail, contracting, nonprofit and more.

  • Customization – Tailor QuickBooks to your business processes and reporting needs, like adding custom fields and columns.

  • Advanced Reporting – QuickBooks provides sophisticated data visualization and analysis tools for pro-level insights.

  • Multi-User Access – Manage permissions across users and set controls for what actions team members can take.

  • API & Integrations – QuickBooks gives developers access to financial data via APIs and offers hundreds of integrated apps.

Ease of Use Winner: Xero

Xero takes the cake when it comes to simpler, more intuitive accounting software for new users and non-accountants. QuickBooks requires more training and benefits from having accounting experience under your belt.

But QuickBooks‘ advanced customization does enable you to streamline more complex financial workflows once you learn the ropes.

For most startups and small business owners doing their own books, I‘d recommend Xero just for faster onboarding and simplicity. But if you plan to hand off QuickBooks to an accountant or bookkeeper, its power can be worth the learning curve.

And the Overall Winner Is…

So in the battle of Xero vs QuickBooks, which accounting platform comes out on top?

Pick Xero If You Want:

  • A user-friendly accounting solution you can learn quickly
  • Great value for companies with lots of transactions
  • Simple workflows that handle basic accounting needs
  • Strong integrations with modern cloud-based business apps

Pick QuickBooks If You Need:

  • Sophisticated inventory management features
  • In-depth payroll capabilities
  • Advanced job costing and reporting
  • Accounting tailored specifically for your industry
  • A solution you can highly customize to your workflows

Both are excellent modern accounting systems that can scale with your business. There‘s no universally "better" option. The right software depends entirely on your business needs and stage.

I‘d recommend trying out the free trials for both Xero and QuickBooks Online to experience them firsthand. Get a feel for the workflows and capabilities to determine which platform feels like the best fit.

Hope this guide gives you the insights you need to make the smartest accounting software decision for your small business! Feel free to reach out if you have any other questions.

Good luck!

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