Xero and QuickBooks Online are pretty even in the features they offer, but your business situation will determine which one is right for you. If you have ten employees or less, choose Xero because payroll is included at no additional cost. However, if you prefer an accounting software most accountants are familiar with, choose QuickBooks Online.
When to Use QuickBooks Online
If you are looking for an accounting software that you can set up on your own, go with QuickBooks Online. QuickBooks has an ecosystem of 50,000 certified ProAdvisors in the U.S., which means you won’t have any problems finding a local expert. In addition, all QuickBooks plans include live telephone and chat support.
When to Use Xero
If you’re looking for an affordable way to process payroll for less than 10 employees or you prefer an accounting software that doesn’t charge you to add additional users, choose Xero over QuickBooks Online. Unfortunately, with only 400 certified advisors in the U.S., finding an accountant who knows Xero might be a challenge.
When to Use an Alternative Provider
If you just don’t have the budget to purchase an accounting software but you need a better way to track your income and expenses, try Wave. Wave is a free accounting software that you can use to track accounts receivable, accounts payable, connect your bank/credit card accounts and run detailed financial reports. Head over to their website and sign up for your free account.
Xero vs. QuickBooks Online at a Glance
| Monthly Pricing Plans | Growing plan : $30 Established plan : $60 | Essentials plan : $35 Plus plan : $60 |
| Manage Accounts Receivable | ||
| Manage Accounts Payable | ||
| Connect Bank/Credit Card Accounts | ||
| Inventory Tracking | ||
| Multi-Currency | ||
| 1099 Tracking & Reporting | ||
| Budgeting/Forecasting | ||
| Certified Advisors (U.S. only) | ||
| Customer Service/Support | ||
| Users Included | ||
| Payroll Processing | ||
| Ease of Set up/Use | ||
| Get Started |
How We Evaluated Xero & QuickBooks
There are some basic features that should be included in an accounting software. As part of our research, we looked at cost, ease of use and setup, the ability to create invoices, manage bills, and give other users access to your data, and the customer support available should you need help.
We used the following criteria to conduct our evaluation of Xero and QuickBooks:
- Cost – includes a pricing plan that is affordable for small businesses
- Ease of Set Up/Use – the set up time is minimal and the software is intuitive
- Manage accounts receivable – able to invoice customers and track open balances
- Manage accounts payable – able to keep track of unpaid bills and track payments made
- Give other users access – can give other users (e.g., your bookkeeper) access to data
- Customer support options – access to customer support and self-help tools available
- Payroll processing – able to calculate paychecks and make payroll tax payments
After taking both QuickBooks Online and Xero for a test drive and evaluating their ability to meet the above criteria, we have chosen QuickBooks Online over Xero. While Xero did meet all of the criteria listed above, it fell short in one key area: no live customer support options.
Most small business owners don’t have the budget to hire someone to set up their books, so they do it themselves. As a result, we felt that having a live person to call or chat with was a critical component to success. Live customer support is included with all QBO support plans, so they are our top pick.
Xero vs. QuickBooks Online: Pricing & Features
When it comes to pricing and features, you couldn’t find two more similar products than QuickBooks Online (QBO) and Xero. Xero has got QuickBooks beat when it comes to number of users and payroll processing. However, QBO has got Xero beat when it comes to customer service and its large ecosystem, which makes it easy to find a bookkeeper/accountant who is familiar with QuickBooks.
QuickBooks Online Pricing & Features
QuickBooks Online has three pricing plans that run between $20 and $60/month. When it comes to features, all three plans can manage accounts receivable and you can connect all of your bank/credit card accounts so your data downloads into QuickBooks. Check out our QuickBooks Online comparison guide to learn more about the benefits these plans have to offer.
QuickBooks Online Tiered Features
| Monthly Pricing | |||
| Manage Accounts Receivable | |||
| Manage Accounts Payable | |||
| Connect Bank/Credit Card Accounts | |||
| Inventory Tracking | |||
| Multi-Currency | |||
| 1099 Tracking & Reporting | |||
| Budgeting/Forecasting | |||
| Users Included | |||
| Payroll Processing | |||
| Get Started |
Listed below are the QuickBooks Online pricing plans:
- QuickBooks Simple Start:
QBO Simple Start is ideal for a startup business that primarily pays all of their bills online through their financial institution or via credit card. However, if you need to keep track of bills prior to payment, then you will need to go with the QBO Essentials plan.
- QuickBooks Online Essentials:
QBO Essentials is ideal for small and large service-based businesses that have heavy accounts payable and accounts receivable; it is also ideal if you need to keep track of hours worked by project/job.
- QuickBooks Online Plus:
QBO Plus is ideal for a product-based business that needs the ability to create purchase orders, record inventory receipts and track product sales. In addition, if you have 1099 employees, this is the only QBO plan that allows you to do 1099 reporting.
- QuickBooks Self-Employed:
QuickBooks Online Self-Employed (QBSE) is not included in the above table but it is another online QuickBooks product. QBSE is ideal for freelancers like web designers and bookkeepers who want simple software that will help them to track income and expenses and calculate their quarterly tax payments.
Based on our minimum criteria, here is how QuickBooks Online stacks up against Xero:
Accounts Receivable
Similar to Xero, QuickBooks Online has a robust accounts receivable module that allows you to create custom invoices, email invoices to your customers and accept online payments. You can also run a detailed accounts receivable aging report to stay on top of unpaid invoices.
Accounts Payable
You can manage your bills in two out of the three QBO plans—QBO Essentials and QBO Plus. However, Xero includes accounts payable features in all three of their plans. Track and pay bills via check or online and stay on top of what you owe suppliers in by generating a detailed accounts payable aging report.
Give Other Users Access
Both QuickBooks Essentials and QuickBooks Plus allow you to give multiple users access to your data. QBO Essentials allows you to give up to five users access and QBO Plus allows you to give up to seven users access. However, Xero has got QuickBooks beat in this area because all three of their plans allow you to give unlimited users access to your data!
Bank/Credit Card Integration
Both QuickBooks Online and Xero allow you to connect all of your bank and credit card accounts so that all of your transactions automatically download into the software. Connecting your bank account to QBO takes just a few minutes. Check out our How to Import Banking Transactions video tutorial to see how this works.
Inventory
Both QBO and Xero allow you to keep track of the products that you sell. However, this feature is only available in QBO Plus, Xero Standard and Xero Premium editions. Inventory tracking is not available in the starter plans. The inventory tracking feature includes creating purchase orders, updating all quantities and costs when purchasing goods and tracking cost of goods sold when sales are made.
Multi-Currency
Similar to the Inventory tracking feature, multi-currency is only available in QBO Plus and Xero Premium 10 plans. This feature allows you to invoice customers and pay suppliers in their native currency, and all of the exchange rate calculations are done for you!
1099 Reporting
You get access to 1099 reporting in the QBO Plus and Xero Standard and Premium plans. This feature allows you to track payments made to contractors so that you can meet 1099 reporting requirements. You have the option of sending 1099 forms via email or snail mail.
Budgeting/Forecasting
Unlike QBO, Xero does not include budgeting/forecasting in any of their pricing plans. With QBO, this feature is only available in the top tier plan, QBO Plus. This feature allows you to create income and expense budgets as well as create budgets for a specific job or customer.
Payroll
Both QuickBooks Online and Xero have payroll processing options that integrate seamlessly. To turn on payroll in QBO, you must pay an additional fee of $39/month plus $2 per employee vs $39/month plus $6 per employee to add payroll to Xero.
Xero Pricing & Features
Xero has three pricing plans that run between $9 and $60/month. While the Starter plan that runs at $9 per month is limited, all three plans include unlimited users, accounts receivable and accounts payable tracking and key financial statements such as the profit and loss statement, balance sheet report and statement of cash flows.
Xero Tiered Features
| Monthly Pricing | |||
| Manage Accounts Receivable | |||
| Manage Accounts Payable | |||
| Connect Bank/Credit Card Accounts | |||
| Inventory Tracking | |||
| Multi-Currency | |||
| 1099 Tracking & Reporting | |||
| Users Included | |||
| Payroll Processing | |||
| Get Started |
Listed below are the three Xero pricing plans and the type of business each is right for:
- Xero Early Plan:
Unfortunately, the Starter plan is just too limited for us to recommend to even a startup business; with the limitations you have with tracking income and expenses, you will quickly outgrow this plan. Instead, we recommend that you go with the Xero Standard plan.
- Xero Growing Plan:
The Xero Standard plan is ideal for a service-based or product-based business that has employees and 1099 contractors that they need to pay.
- Xero Established Plan:
The Xero Premium 10 plan is ideal for a business that is planning to do business on a global level. If you have customers in foreign countries or suppliers abroad, you can create invoices in any currency and pay your suppliers in their native currency.
Based on our minimum criteria, here is how Xero stacks up against QuickBooks Online:
Accounts Receivable
Xero includes the ability to manage full cycle accounts receivable in all three of their pricing plans. Like QBO, this includes creating invoices, recording payments and generating a detailed accounts receivable aging report to keep an eye on open customer invoices.
Accounts Payable
Unlike QBO, which does not include A/P in their Simple Start plan, Xero includes the ability to manage bills in all three of their pricing plans. However, these features are limited in the Xero Starter plan. You can track bills, payments and run a detailed accounts payable aging report to ensure you pay your suppliers on time.
Give Other Users Access
You can give as many users as you need to access to your Xero account and you won’t have to pay any additional fees to do so! Unlike QBO, Xero allows you to give an unlimited number of users access to your data for free. This is available for all three Xero pricing plans.
Bank/Credit Card Integration
If you prefer to pay your bills online and you don’t write checks, you can connect all of your bank and credit card accounts to Xero. Like QBO, connecting your accounts is very easy to do. Check out our Setting Up Bank Feeds tutorial to see for yourself!
Inventory
Similar to QBO, you can set up and track all of your products in Xero. This includes creating purchase orders, automatic updates to inventory for purchases and sales, and keeping track of inventory costs. For step-by-step instructions, check out our How to Set Up Products and Services video tutorial.
Multi-Currency
Xero is able to keep track of transactions in a foreign currency. You can create customer invoices, pay vendor suppliers and manage bank accounts in multiple currencies. Like QBO, Xero will do all of the calculations for you. Check out our video tutorial on How to Set Up Multi-Currency in Xero to learn more.
1099 Reporting
If you need to do 1099 reporting, you will have to sign up for the Xero Premium 10 plan. It is the only Xero plan that includes this feature. Similar to QBO Plus, you can track all payments to 1099 contractors and generate the required tax filings at the end of the year.
Budgeting/Forecasting
Unfortunately, none of the Xero plans include the ability to do budgeting and forecasting. If this is a feature that you need, we recommend you go with QBO Plus.
Payroll
Similar to QBO, Xero does not include payroll processing in its plans. However, you can sign up for Gusto which integrates with Xero. Pricing plans start at $39 per month plus $6/month per person. With Gusto payroll, you can perform the following tasks:
- Unlimited payrolls
- Multiple pay schedules and pay rates
- Direct Deposit or Check payments
- W-2s and 1099s
- Calculation of federal and state payroll taxes
- Automated payroll filings and tax payments
Xero vs. QuickBooks Online: Ease of Use
QuickBooks Online and Xero are both very user friendly. I’ve been able to do several company file setups using both programs and in my opinion, QuickBooks is easier for someone who has no accounting/bookkeeping background. On the other hand, I felt like I needed my accounting knowledge to understand certain areas in Xero, like the chart of accounts. However, when I couldn’t figure something out, I used the support tools within Xero, which are very good.
QuickBooks Online Ease of Use
Similar to Xero, QuickBooks Online is easy to navigate. It has a colorful homepage with a dashboard to give you a snapshot into every aspect of your business: invoices, expenses, profit and loss, and sales. The QBO menu bar is on the left side of the screen, whereas in Xero it is located at the top of the screen.
Here is a snapshot of the dashboard you will see once you log into your QBO account. Below, we have provided a brief explanation of the information you will find here.
QuickBooks Online Dashboard
- Left Menu Bar: To navigate the program, just make your selections from the menu located on the left side of the screen.
- Invoices: This section provides you with a snapshot of invoices that are overdue, not due yet, payments received that have been deposited, and payments that have not been deposited yet.
- Expenses: In this section, you will find a snapshot of the total expenses along with a breakdown of the categories for the top three for your business. In the above example, the top three expenses are Miscellaneous, Legal & Professional, and Job Expenses.
- Profit and Loss: Keep tabs on your profit/loss status by reviewing this section. You can choose the time period you would like to see by clicking on the drop-down arrow in the upper right corner.
- Sales: Stay on top of sales by reviewing this section, which shows the total amount for the year ($10,280) as well as a graph that shows sales by month. You can choose the time period from the drop-down in the upper right-hand corner.
Xero Ease of Use
Like QBO, Xero is easy to navigate. When you first login, you will see the menu bar at the top and below that is data that gives you insight into your bank accounts, your A/R balances and your A/P balances. Unlike QBO, Xero uses very simple language like “Invoices owed to you” and “Bills you need to pay.”
Below is a snapshot of the dashboard you will see once you log into your Xero account. We also provide you with a brief explanation of the information you will find here.
Xero Dashboard
- Menu Tabs: Easily navigate to other areas of the program by clicking the menu tabs as indicated above.
- Bank Accounts: In this section, you will see a snapshot of all bank accounts you have connected to Xero, including checking, savings and PayPal accounts.
- Invoices owed to you: In this section, you will see a summary of all open customer invoices (A/R) divided into three groups: draft, awaiting payment and overdue.
- Bills you need to pay: This section includes a summary of the status of your bills, which are categorized into three groups: draft, awaiting payment and overdue bills.
Xero vs. QuickBooks Online: Customer Service
When it comes to customer service, QuickBooks Online beats Xero hands down. Unlike Xero, QBO offers live customer support via telephone or chat in all of their pricing plans at no additional charge. Unfortunately, the only way to contact the Xero support team is to send an email. The good news is that they work 24/7, so hopefully the response will be less than 24 hours.
QuickBooks Online Customer Service
As discussed, QuickBooks Online offers live customer support. In addition, there are several other resources, such as detailed support articles and video tutorials, that you can access to get up to speed with QuickBooks.
Below are five free resources that you can utilize to get help with QuickBooks when you need it:
- Fit Small Business QuickBooks Course – This free course was designed to help small businesses like you get up and running quickly. It includes video tutorials as well as written instructions on how to set up QuickBooks.
- Chat – You can chat with a support agent by logging into your account and clicking on the Help option.
- Phone – Customer service reps are available Monday through Friday, 6 a.m. to 6 p.m. PST and Saturdays, 6 a.m. to 3 p.m. PST.
- Email – If you can’t find the answer to your question, you can submit a detailed question to the support team via email; you can generally expect a response within 48 hours.
- QBO Learn & Support – If you don’t mind doing a little research, you can check out the Learn & Support page. Use keywords on this page to locate the answers to your questions. The articles you will find provide step-by-step instructions.
Xero Customer Service
As mentioned, Xero does not have the option to speak to a real, live person. However, they do have some great self-help options that I have found very useful: the Xero Business Help Center and Xero University
Listed below are three free resources you can use if you get stuck on an issue in Xero:
- Xero Course by Fit Small Business – A free course that includes 30 video tutorials that cover how to set up your business in Xero, how to record sales, pay bills and run financial reports.
- Xero Help Center – A robust help center with video tutorials and step-by-step how-to articles on both basic and advanced Xero topics.
- Xero U (University) – Xero University includes video tutorial courses that you can take to learn how to use Xero. The topics are broken down into three user types (accountants, bookkeepers, small business owners).
Xero vs. QuickBooks Online: Customer Reviews
Both QuickBooks Online review and Xero reviews are mixed. Many of the reviews highlight some of the great features like payroll processing in Xero plans and the live customer support available in all QuickBooks plans. On the flip side, customers feel that QBO is a bit pricey and Xero customers wish there was an option to speak with a live customer support person.
QuickBooks Online Reviews
QuickBooks Online reviews indicate that customers like how user friendly QuickBooks is and how easy it is to access their data using the mobile app. A few customers feel that QuickBooks is expensive, but they feel that the amount of features and the unlimited customer support makes it worth it. You can read all of our reviews on the QuickBooks Online reviews page.
Xero Online Reviews
Xero users like how easy the program is to navigate. In addition, the inclusion of payroll processing for up to ten employees at no additional charge is also another feature that’s popular with Xero users. On the negative end, users feel that Xero should offer live customer support as opposed to email support. Check out our Xero Online reviews page to read all of the reviews.
Bottom Line
Now that you know more about Xero and QuickBooks, the decision should be easy. If you have tried QuickBooks in the past and you’re looking for a close alternative to QuickBooks, go with Xero. However, if you are looking for an accounting software that will provide you with the support that you need, go with QuickBooks Online. If you want to know how Xero and QuickBooks stack up against other products, check out our accounting software guide.
It takes just a few minutes to get started with QuickBooks Online. Just head over to their website and provide a few contact details about your business, such as your business name, business phone number and email address. You will be able to start entering your data to track your business finances immediately.
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