Xero vs QuickBooks: Key Differences & What’s Best in 2021

Xero and QuickBooks are two of the most popular small business accounting software, and they have many similarities. Both are web-based, offer multiple plans that are priced on a monthly subscription basis, and provide a free mobile app that allows you to manage your accounting on the go. Taking all of its capabilities into account, it is clear that Xero is an ideal solution for businesses that rely on extensive inventory to make money while QuickBooks seems more suitable for service businesses.

When to Use Xero

Xero, a New Zealand-based company, is an excellent alternative to QuickBooks for startups and small business owners—especially those who are not that familiar with accounting principles but need to manage their finances properly. Its tagline is “Beautiful business,” which is apparent in its ability to make accounting sleek and enjoyable.

One of the most appealing characteristics of Xero is its clean and uncluttered interface, which is accessible easily to any accounting novice. Navigation is intuitive, and it provides a full range of tools and functionality. Xero has significantly more integrations than QuickBooks—more than 800 vs more than 200 with QuickBooks—and it also offers access to unlimited users.

If you’re looking for a QuickBooks alternative, Xero is one of your best options. It is ideal for those with a growing startup, as it scales beautifully in terms of depth of functionality and user experience. For those who prefer minimalist user experiences, Xero is also a good choice.

Even though QuickBooks Online integrates payroll processing, it only provides reports on total wages and payroll taxes, worker’s compensation, and employee details. Xero has far more reports, and they have built-in human resources (HR) functions, such as time-off balances and requests and wage garnishments.

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When to Use QuickBooks

QuickBooks Pro has an impeccable reputation, and for good reason—when it comes to small business accounting, you can’t beat its capabilities. Offering a strong chart of accounts, fixed asset management, and more than 130 customizable reports, QuickBooks provides growing businesses the ability to use an application that will grow along with them.

In addition to the core financial statements, basic accounts receivable (A/R) and accounts payable (A/P) aging reports track who owes you and what you owe. QuickBooks Online delves deeper into A/R than Xero.

Several of its standard features, such as the integration with electronic banking and solid invoicing functions, are broken down into specific categories that make the interface easy to navigate. QuickBooks is also ideal for businesses that have the need to track class and location with their transactions as well as an option for custom tags. In addition, QuickBooks will calculate the sales tax rate automatically to apply based on the customer’s address, which is a huge benefit for e-commerce companies. Taking all of this into account, it is clear that QuickBooks is the best choice for users who are seeking a lot of value at a low price point.

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Xero vs QuickBooks at a Glance

Is Xero or QuickBooks Best for You?

Xero vs QuickBooks: Pricing

Both Xero and QuickBooks are billed on a monthly basis. The monthly price is dependent upon the number of users and the features required.

Xero Pricing

Xero’s options are scalable, with three pricing plans available. All plans support unlimited users and range from $11 to $62, depending on the type of business. Below are the prices for each:

• Early: $11 per month for unlimited users
• Growing: $32 per month for unlimited users
• Established: $62 per month for unlimited users

Xero also integrates with Gusto for payroll, and its plans start at $39 per month, plus an additional $6 per month, per user. Xero users can also sign up for a third-party bookkeeping service, Bookkeeper360, which is similar to QuickBooks Live. Services are available either monthly or weekly and start at $399 per month.

QuickBooks Pricing

QuickBooks offers a choice of five different plans, which range from the most basic of services with the Self-Employed option to the Advanced option, which is intended for businesses with a large number of users. Below are the prices for each:

• Self-Employed: $15 per month for one user
• Simple Start: $25 per month for one user
• Essentials: $40 per month, which includes three users
• Plus: $70 per month, which includes five users
• Advanced: $150 per month, which includes 25 users
• QuickBooks Live: The cost of QuickBooks Live is in addition to the cost of the software

– Low volume: $200 per month for up to $25,000 in monthly expenses

– Medium volume: $400 per month for up to $150,000 in monthly expenses

– High volume: $600 per month for more than $150,000 in monthly expenses

Takeaway: Each of these packages for Xero and QuickBooks are structured differently, with Xero’s offered at three tiers—all of which are open to unlimited users—depending on the features that are needed. QuickBooks charges a monthly fee based on the number of users and the capabilities required. It is important to note that QuickBooks Self-Employed cannot be upgraded to any other edition of QuickBooks Online.

Xero vs QuickBooks: Features

Xero Features Table

QuickBooks Features Table

Takeaway: QuickBooks offers many of the same features as Xero. In some areas, like invoicing, project management, and lending, QuickBooks far exceeds Xero—especially since Xero doesn’t offer lending. But in other places, like contact management, Xero is the clear winner. The main benefit to Xero’s software is the ability to have unlimited users as compared to QuickBooks, which restricts users depending on the type of plan.

Xero vs. QuickBooks: Ease of Use

Both Xero and QuickBooks can be described as having steep learning curves, but that can be supplemented by the multitude of resources that both software packages offer. Xero is more approachable for users who don’t know much about accounting as they have access to a comprehensive help center called Xero Central, which walks you through nearly every feature of the software.

Xero Ease of Use

The best way to determine a software’s ease of use is by signing up for a free trial. In the case of Xero, it requires you to set up your business completely before you can start using the software.

Xero’s intelligent design takes the hassle out of daily accounting tasks. Its main entry screen includes a menu bar at the top, which allows you to access system functions. If you need help, you can access it easily from any data entry screen. You can also practice with a demo company first if you’re worried about making mistakes with your own data.

View of the Xero Dashboard.

Xero places its features into five main categories: Dashboard, Business, Accounting, Projects, and Contacts. As shown in the screenshot of the Xero Dashboard above, each tab at the top allows you to navigate to that feature. The five categories are described below:

1. Dashboard: The dashboard is completely customizable and offers a nice summary of your business, including bank balances, invoices owed, and the cash flow of your business.
2. Business: This is where you’ll find invoicing, bills to pay, purchase orders, and products and services.
3. Invoices: This option displays a nice summary view of all invoices and their current status. Once you have completed an invoice, you can send it via email with online bill payment options included. The payment will be applied once it is received automatically, or you can process it during your regular bank reconciliation process.
4. Accounting: This is where you’ll handle all of your banking transactions as well as manage your chart of accounts and financial statements. The Projects category allows you to manage any projects or record time spent using the time tracking feature.
5. Contacts: This allows you to manage all contacts, from suppliers to customers to contractors, in one central location.

QuickBooks Ease of Use

Below you will find a snapshot of the QuickBooks Online Dashboard. We have also provided some details of the information that you can expect to see on this page:

Sample QuickBooks Online Dashboard.

1. Left menu bar: You can access most tasks from the left menu bar, including creating invoices, generating reports, and tracking mileage.
2. Cash flow: This gives a quick summary of money going in and out of the business during a designated time period.
3. Invoices: View both paid and unpaid invoices and generate reports based on a particular date range.
4. Expenses: View total expenses for a designated time period, along with your top three categories.
5. Profit & loss: View your cash flow summary at a glance, which is customizable for a certain time period.
6. Bank accounts: Check your available bank balances directly from the dashboard. Connect QuickBooks to your online accounts and view both the bank and QuickBooks balances.

Most transactions in QuickBooks Online can be initiated in a variety of ways. The quickest way is to click on the New button above the left menu bar. A screenshot is shown below:

Add new transactions in QuickBooks Online.

Takeaway: Both Xero and QuickBooks offer accessible user interfaces that are easy to navigate and completely intuitive. While the vocabulary may differ for each, they are ultimately very similar in functionality.

Xero vs QuickBooks: Integrations

Xero offers more than 800 integrations as compared to more than 200 integrations available for QuickBooks. If integrations are important to you, Xero is the way to go.

Xero Integrations

Xero’s app marketplace lists a range of existing solutions that integrate seamlessly with its software, including tools that they built from scratch, such as Xero Projects, Xero Practice Manager, Hubdoc, and WorkFlow Max. It has also built connections with a few key software providers like Mailchimp and HubSpot.

Here’s a sample of the integrations that are currently available for Xero:

• Invoicing & jobs: ApprovalMax, ServiceM8, PracticeIgnition, and WorkflowMax
• Time tracking: WorkflowMax, Deputy, simPRO, and Harvest
• Manage expenses: Spendesk, Receipt Bank, and Xero Expenses
• Process payroll: Gusto, Tanda, RUN Powered by ADP, and Wagepoint Pay
• E-commerce & brick-and-mortar stores: BigCommerce, Veeqo, Timely, and Shopify
• Payment management: Stripe, Chargebee, GoCardless, PayPal, and Bill.com
• Sales platforms: Salesforce and Pipedrive

QuickBooks Integrations

There are currently two integrations that are accessible directly through QuickBooks, payroll, and timesheets. There are also several third-party apps that integrate with the software. See below for more information:

• QuickBooks Payroll: Click on QuickBooks Online from within the software and access full payroll functionality.
• TSheets by QuickBooks: Use the TSheets mobile app to track time and then bill it to customers or use it for payroll within QuickBooks Online. TSheets has many advanced features, which include GPS tracking of employees and timeclock terminals with facial recognition.

Here is a sample of the integrations that are currently available for QuickBooks Online:

• Time tracking: TSheets, ClockShark, and eBillity
• Inventory tracking: eBay by OneSAAS, Shopify by OneSAAS, Amazon Fulfillment by Amazon (FBA) & Seller Fulfilled Accounting by Entriwise, and Katana Inventory and Manufacturing
• Pay bills and receive payments: Bill.com, Deluxe eChecks, Plooto, and Veem
• Manage customers: Method:CRM, Insightly CRM, WORKetc, and Capsule CRM
• Manage projects: BigTime, Service Trade, Jobber, Corecon, and Knowify for Contractors
• Perform analytics: Syft Analytics, Qvinci, Fathom, and LivePlan
• Process payroll: QuickBooks Payroll, Gusto, ADP, and Paychex

Takeaway: With more than triple the number of integrations, Xero allows users to select from a variety of functions that can be customized to each business type. However, both provide sufficient solutions for several small business needs, including project management and payroll processing.

Xero vs QuickBooks Mobile App

Xero has a mobile app available for both iOS and Android devices, although you won’t be able to access all of the features that are found in the full version. For example, you can import customer data into Xero, but you would need to download the comma-separated values (CSV) file template to import the data correctly.

With the QuickBooks Online mobile app, you can access your financial data instantly. You can use your device to enter transactions, record expenses, and send reports. It backs up the data to the cloud automatically and syncs it across all of your devices.

Takeaway: While mobile apps are available for both Xero and QuickBooks, many of Xero’s features are not completely accessible and are restricted to viewing only. However, while Xero may have a more limited approach to its mobile services, it has a stronger focus on the functionality that you’re more likely to use.

Xero vs QuickBooks: Customer Support

Xero and QuickBooks have different approaches to their customer support. While Xero doesn’t offer live or immediate customer support, it has an extensive array of online resources that can provide assistance with basic questions. QuickBooks offers a variety of support options that include articles, videos, online chat, telephone, or paid assistance by a QuickBooks Pro Advisor.

Xero Customer Support

Xero’s customer support options are limited to online, with no live customer support available and emailed responses sometimes taking up to a day. This is supplemented with learning materials and support resources, but it can be difficult to obtain a quick answer to questions about Xero.

QuickBooks Customer Support

QuickBooks offers a variety of customer support options depending on the complexity of your needs. You can visit the Learn and Support page, which includes articles and videos on frequently asked questions (FAQs). You can also email the support team if the answer is not immediately apparent, and questions are usually addressed within 48 hours.

Customer service representatives are also available via online chat or via telephone, although it is not possible to call QuickBooks Support directly. Instead, you must submit a call request online. For a complicated issue, you may wish to hire a QuickBooks ProAdvisor. Certified by Intuit, these financial professionals must pass an exam to certify that they are proficient with QuickBooks.

Takeaway: The support options available for QuickBooks are much more extensive than Xero’s, which may require a bit of patience before receiving a response.

Xero vs QuickBooks Reviews

Both Xero and QuickBooks have overall good reviews, with the majority of customers ranking the software an average of 4.5 stars on customer review sites. An area of improvement for both is their customer service.

Xero Reviews

When reviewing Xero, many users cite its ease of use as one of the most attractive features. It’s described as an ideal alternative to QuickBooks, with a user-friendly interface. One complaint users have are the limited customer service options, which is limited to email support. Xero also limits its features like receipt capture and project management to its most expensive plan.

QuickBooks Reviews

Overall, QuickBooks receives high marks for its user interface and navigation as well as its customizability for various small business users. Its dashboard allows you to access tasks easily, and the mobile app provides an additional option of performing all of your core bookkeeping functions on the go.

Takeaway: Both Xero and QuickBooks Online have received customer reviews that are overwhelmingly positive. The negative reviews for these software packages mostly relate to the lack of online support.

Bottom Line

Both Xero and QuickBooks Online are excellent options for your small business accounting needs. They are almost evenly matched in terms of overall features, usability, and accessibility. They both offer an instinctive user interface and access to common accounting functions that will assist you with everything from invoicing customers, receiving payments, reconciling transactions, and generating customizable reports. Depending on your budget, you can select from a variety of pricing plans that range from basic to more extensive. Both also offer a robust mobile app that provides users with substantial accessibility.

In addition to these similarities, they also have their differences. In comparing the two, QuickBooks stands out in terms of their more diverse plan options, time tracking, and tax tools. Xero distinguishes itself with user allowances—unlimited for every plan—and integration options. Whether you choose Xero or QuickBooks Online, you’ll be using top accounting software that will allow you to manage and streamline your accounting processes efficiently. The best option for you ultimately depends on your business—what features you need, what capabilities are most important to you, and what your budget allows.