6 Best Xero Competitors & Alternatives (Free & Paid)

I chose QuickBooks Online as the overall best Xero competitor because it offers many of the same features as Xero but provides greater flexibility in areas like invoicing and bank reconciliation. What really stands out to me is its ability to automatically calculate sales tax rates based on the customer’s address—something Xero doesn’t offer.

QuickBooks Online also provides more robust customer support options, including live assistance. Also, its extensive network of independent ProAdvisors makes it easy for companies to find a ProAdvisor to support their DIY efforts.

Standout Features

• Manual reconciliation: Reconcile your checking account without connecting a bank feed or uploading a bank statement. This is particularly useful for businesses that prefer manual oversight or need to reconcile accounts with offline records.
• Inventory management: Set up and track inventory items and calculate the COGS. This ensures you have a clear understanding of your inventory levels and profitability at any given time.
• Check printing: Print checks through the program instead of writing by hand. It saves time and provides a professional touch by including your business details on the checks.
• Income tracking by class: Set up classes and locations for tracking P&L. This feature helps you gain deeper insights into the profitability of specific projects, departments, or locations.

Use Cases

• Businesses wanting something very similar to Xero: QuickBooks Online and Xero are tough competitors in the accounting software market. Though QuickBooks Online has an 81% market share in the US, as seen in our QuickBooks statistics, Xero remains competitive in terms of features that are also present in QuickBooks Online.
• Small businesses looking for general accounting software: QuickBooks Online offers necessary features for small businesses at an affordable price point. It has inventory tracking, invoice management, bill management, and project accounting.
• Businesses outsourcing accounting: Because of QuickBooks Online’s popularity, many CPAs and bookkeepers in the US get ProAdvisor Certifications to provide accounting services to QuickBooks Online users. It is easy to find a QuickBooks ProAdvisor or a bookkeeper with this certification on job boards.

As our best small business accounting software, QuickBooks Online offers almost everything that Xero has to offer. What makes QuickBooks Online stand out is its popularity in the US and its vast network of ProAdvisors, which helped it score much higher than Xero in our usability category.

Additionally, QuickBooks scored higher in banking, A/P, and A/R—but only by a few points. In banking, it can perform manual bank reconciliation, which is a great feature for users who don’t want to connect their bank accounts to their accounting system.

If you’re looking for a free alternative to Xero, I believe Wave Starter is a great choice. It offers solid expense tracking and invoicing features, though it’s limited to just one user. For businesses needing more, upgrading to Pro is worth considering since it allows unlimited seats for just $16 a month.

Standout Features

• Unlimited invoices and estimates: Create and customize unlimited invoices for free and send them on a recurring basis.
• Bill management: Enter a new bill and record an expense without paying, and track outstanding bills until they are paid.
• Expense tracking: Capture expense receipts for efficient expense tracking. Receipt capture is included in Wave Pro or can be added to Wave Starter for $8 per month.

Use Cases

• Mom-and-pop shops: If you have a home-based business on the side, Wave Starter is an outstanding free alternative to keep track of income and expenses.
• Freelancers with basic accounting needs: Wave is more for tracking expenses after the fact as opposed to actively managing your business. It lacks more sophisticated features like time tracking, professional-looking reports, and class and location tracking. If you only have basic accounting needs, it’s good to start with Wave’s free plan before moving on to paid software.

I tested Wave Pro and found its performance to be a mixed bag, with some marks above average and others below. When compared with Xero, Wave fell short because of its more basic features. Its above-average scores in A/P and A/R show that it can do basic functions like recording invoices and bills but skip more premium features like issuing credit memos or setting up recurring expenses.

Zoho Books is my recommendation for the best mobile accounting app because of its robust features. These include sending invoices, entering bill payments, assigning expenses, recording time worked, and viewing reports.

It outshines Xero’s app, offering superior functionality, better invoice customization options, and excellent customer service. Unlike Xero, Zoho Books includes live customer support via telephone or chat across all paid packages, ensuring help is always within reach.

Standout Features

• Invoicing: Get plenty of design options and templates to create unique invoices.
• Bank reconciliation: Reconcile bank accounts by connecting your bank account (live bank feeds) or manually importing bank statements.
• Inventory management: Track the cost of inventory on hand and allocate that cost between ending inventory and COGS—even without the Zoho Inventory integration.

Use Cases

• Mobile app accounting: Zoho Books aced our mobile app accounting criterion and leads our roundup of the best mobile accounting apps. It can perform functions that are not present in Xero’s mobile app; you can view reports, assign expenses, and record time worked.
• Freelancers and self-employed individuals: If your freelancing business has less than $50,000 in annual revenue, I recommend getting Zoho Books Free. The features of the free tier are more than enough to track income and expenses and perform basic accounting.
• Growing businesses: Zoho Books has five paid plans with different feature combinations that work well for growing companies.
• Existing Zoho users: I recommend choosing it if you’re already using Zoho services like Zoho Expense, Zoho Inventory, and Zoho Checkout. It’s always easier to have software that can seamlessly integrate with your existing system.

Overall, Zoho Books scored higher than Xero. They are head-to-head in A/P, A/R, banking, and inventory, with either leading by a fractional point. However, Zoho Books shines in the mobile app criteria. In fact, Zoho Books has the best mobile app in this guide. Unfortunately, I had to dock points in Zoho Books’ usability because it has limited bookkeeping support in the US and limited customer support.

I chose FreshBooks as the best Xero competitor for very small service-based businesses because it offers practical features like time tracking, making it easy to track billable hours and add them to invoices. That said, creating invoices is easier in FreshBooks than in Xero, thanks to its user-friendly and intuitive interface.

It also lets you set up automatic recurring billing for customers and communicate directly with clients through its mobile app—something Xero doesn’t provide. FreshBooks is specifically designed for users without accounting experience, so it’s simple to set up and easy to navigate. I don’t recommend it for larger companies because it becomes more expensive than more powerful alternatives when you add a few additional users.

Standout Features

• Invoicing: Create and design unlimited customized invoices in all its plans. Invoice customization is FreshBooks’ best feature because it lets you add a logo, change the style and color, and include other elements in invoices.
• Phone support: Place a call to an agent instead of waiting for a callback like QuickBooks.
• Job costing: Compare your budget with actual time and expenses.

Use Cases

• Freelancers and solopreneurs: It offers one seat for all plans. The design of the software makes it easy for nonaccountants to perform accounting tasks without the need to study bookkeeping.
• Service providers: It lacks inventory management features but is very good for service providers as you can assign time and expenses to customers and projects and then generate invoices easily.
• Businesses looking for simple accounting software: If you don’t want complicated accounting software, its interface is easy to use, and even home-based businesses can use it to track income and expenses.
• Individuals billing by the hour: With the time tracking tool, you can track time worked per client and bill them right away within FreshBooks.

FreshBooks earned high marks for project accounting and A/R—but Xero still comes out ahead overall. Since it lacks inventory features, as seen in its 0.00 mark in my assessment, it’s best suited for service-based businesses needing to track projects, billable time, and project-related income and costs.

It scores very poorly in banking because it doesn’t allow you to specify which bank or credit card account a payment comes from when the payment is made. Instead, the payment always comes out of cash on hand. Then, the petty cash transactions are automatically transferred to the proper account when matched to a transaction from the bank feed. This workflow makes it impossible to track your available checking account balance after outstanding payments and checks.

If inventory management is a priority, I recommend QuickBooks Online for basic to intermediate inventory features.

QuickBooks Solopreneur is a straightforward alternative to Xero. It’s specifically designed for one-person businesses wanting to track income and expenses for Schedule C reporting.

This revamped product replaces QuickBooks Self-Employed, offering enhanced features while maintaining its focus on the needs of solopreneurs. Its tools are tailored to help you accurately categorize transactions, track expenses, and ensure compliance with IRS Schedule C requirements, and I believe it is a reliable choice for tax preparation.

Standout Features

• Basic invoicing: Create and send basic invoices to clients in any language or currency.
• Mileage tracking: Use the mobile app that logs your travel automatically and keeps a record of your business miles.
• Expense categorization: Set up user-defined categories to separate personal and business expenses as they flow through from your bank feed.

Use Cases

• Freelancers needing tax filing: QuickBooks Solopreneur helps you calculate your estimated tax payments and exports your Schedule C information. These features are something that Xero can’t do.
• Tracking income and expense: It simplifies income and expense tracking without the complications of full accounting software, making it ideal for self-employed individuals with few transactions.
• Professionals with side gigs: If you’re a full-time employee accepting part-time or freelance tasks, QuickBooks Solopreneur can help you manage your finances. It’s less complicated than Xero, but it can capture all your freelance transactions.

Quicken is a great choice for individuals managing a few rental properties because it combines personal finance and rental property management into one platform. It includes document storage and budgeting tools, making it easy to stay organized and on top of both personal and property-related finances.

Standout Features

• Tenant management: Track everything related to rentals, such as bank accounts, documents, loans, and income and expenses. Also, manage tenant details, rental agreements, and security deposits. These are things Xero lacks.
• Contact management: Manage all your contacts, including rental agreements, security deposits, and lease start and move-out dates.
• Market value tracker: Get insight into your holdings, and view your portfolio by type, sector, or allocation.

Use Cases

• Personal finances: Quicken is primarily an app for personal finances. You can manage spending, savings, and investments in Quicken.
• Landlords: It is good for tracking a few rental properties. However, I recommend checking our list of best real estate accounting software if you have more than just a few rentals.