Xero vs QuickBooks: Key Differences & What’s Best 2022

Whether Xero or QuickBooks Online is right for you depends on the specific features you need and how much you can afford to pay. If you need multiple user access at a low price and you manage fixed assets, you might consider Xero. If you’re willing to pay more for a comprehensive bank reconciliation feature and strong customer service, QuickBooks Online is preferable.

Xero vs QuickBooks Online At-a-Glance Comparison

When To Use Each

When To Use an Alternative

• Multicompany businesses: Xero is a single-entity program, which means it can’t manage multiple companies within a single Xero account. That’s possible with QuickBooks Online, but you need a separate subscription for each business. For tracking multiple companies or businesses, we recommend QuickBooks Desktop. It lets you set up and manage as many companies as needed without an additional fee.
• Small businesses looking for free accounting software: While QuickBooks Online and Xero are arguably two of the most powerful accounting applications, they’re also among the most expensive. If you can’t afford premium accounting software, you should check out Lendio Accounting (formerly Sunrise).
• Businesses that need a fully functional mobile app: Xero’s app doesn’t let you view reports and accept payments, and the QuickBooks mobile app can’t record bills and bill payments. Zoho Books has a capable mobile app that contains almost all features of the desktop interface, such as the ability to send invoices, accept payments, and enter bills. Its unbeatable mobile app makes it our top-recommended alternative to QuickBooks.

Fit Small Business Case Study

We compared Xero and QuickBooks Online across 11 categories to see which industry-leading accounting software stands out. The detailed results of our case study are presented in our Xero review and QuickBooks Online review, whereas the chart below sums it up.

Xero vs QuickBooks Online: Pricing

Xero is more affordable and scalable than QuickBooks since all subscriptions come with unlimited users. If you’re a very small business and only need to manage and track a few bills and invoices, then you might do well with Xero’s Early plan. However, if you work with multiple vendors and customers and need more enhanced features, you should consider QuickBooks Online Plus.

Xero vs QuickBooks Online: Features

We evaluated Xero and QuickBooks across several accounting categories, and we found significant differences in terms of bank reconciliation and fixed asset accounting. Below, we include a detailed assessment of the two programs across our preset metrics.

Xero vs QuickBooks Online: Banking & Cash Management

While both programs include bank reconciliation features, QuickBooks is much more flexible as it allows you to reconcile a bank account by entering the ending bank balance and manually marking transactions that have cleared your bank. Another notable difference is that QuickBooks Online lets you upload your file of transactions, so you aren’t required to connect your bank account. With Xero, you have to hook up your account to reconcile your transactions.

Xero vs QuickBooks Online: Invoicing

QuickBooks Online is more versatile than Xero in terms of invoicing. There are plenty of customization options, which can be a great deal for those wanting to present and maintain a professional brand image. Another reason QuickBooks Online stands out is its ability to calculate sales tax rates automatically based on the customer address, which is something Xero can’t do. Hence, it’s no surprise that QuickBooks Online is our overall best invoicing accounting software.

Xero vs QuickBooks Online: Accounts Payable

Both programs have great accounts payable features, but QuickBooks Online is slightly better due to its ability to generate recurring payments. Xero lets you create a recurring bill but not the payment, which means it doesn’t charge your checking account automatically.

Xero vs QuickBooks Online: Fixed Assets Management

Xero is far ahead of QuickBooks Online in terms of fixed asset accounting. You can record a fixed asset purchase in QuickBooks Online, but you can’t track your fixed assets and calculate depreciation. On the other hand, Xero’s fixed asset manager is impressive. It allows you to record a fixed asset purchase and then calculate depreciation. You can also create asset types and assign an account ID for each asset. When you sell an asset, the program will calculate a gain or loss. If fixed assets are an important part of your business, you should choose Xero.

Xero vs QuickBooks Online: Inventory Management

Both Xero and QuickBooks Online do a great job of accounting for inventory and calculating the cost of your inventory sold automatically. However, inventory accounting is included in all Xero plans, while it’s only in the Plus and Advanced versions of QuickBooks Online. So, if you want a low-cost inventory management solution, go with Xero.

Xero vs QuickBooks Online: Project Accounting

You can rely both on Xero and QuickBooks Online for project accounting, but if you want a more detailed option of tracking your profitability, then Xero may be better. Unlike QuickBooks Online, it allows you to compare estimated and actual project costs, which is crucial in budgeting.

Xero vs QuickBooks Online: Ease of Use

Xero is more straightforward than QuickBooks Online in terms of company setup as you need the patience to set up a company in QuickBooks Online. You can enter your company details, but the process is a bit more labor-intensive compared.

Both have shortcut links and buttons on their dashboards, but QuickBooks Online is a bit more complex, especially when performing complicated tasks like printing checks. With practice, both programs should be easy to learn and use. However, for users with no accounting experience, we recommend Xero.

Xero vs QuickBooks Online: Integrations

Xero boasts around 800 integrations, connecting to plenty of major business software applications, such as:

QuickBooks Online also has plenty of integrations, including:

Just because one accounting program has more software integrations than another doesn’t mean it’s more functional. Xero and QuickBooks both have a large collection of integrated apps, so the best fit for your business depends on the specific business workflows you want to automate.

Xero vs QuickBooks Online: Mobile App Capability

The ability to accept payments on your smartphone through the QuickBooks Online mobile app is a very convenient feature for many on-the-go business owners. You can even track the spending habits of your company by simply viewing the reports on your phone. Meanwhile, Xero’s mobile app might be preferable if you often need to record bills and bill payments on the go.

Xero vs QuickBooks Online: Assisted Bookkeeping

If you have no accounting experience to execute crucial bookkeeping tasks like reconciling bank accounts, then assisted bookkeeping is useful. If you have complex bookkeeping needs and require a QuickBooks-specific virtual bookkeeping service, then choose QuickBooks Live. However, if you want a more scalable solution with the option to hire additional services like payroll and tax filing, then Xero is a more suitable choice.

Xero partners with Bookkeeper360 to provide assisted bookkeeping services, and this lets you have on-demand access to a team of accounting and tax professionals who can help you manage your bookkeeping duties.

Bookkeeper360 offers three virtual bookkeeping packages, depending on how often you need assistance, i.e., pay-as-you-go, monthly, or weekly basis. However, you and your bookkeeper can also work together to create a custom service plan, depending on your needs.

Meanwhile, you can add QuickBooks Live bookkeeping, an add-on that can be activated from the left menu bar of your QuickBooks dashboard, if you need a QuickBooks-certified bookkeeper to help you complete your bookkeeping tasks. They’ll help you reconcile your bank and credit card statements and prepare your monthly reports.

After the initial cleanup, you’ll receive assistance with importing historical data, customized setup of your chart of accounts, live one-on-one video chat support with your bookkeeper, customized reports, and a free audit request of your books at any time.

QuickBooks Live doesn’t offer tax filing or payroll services, unlike Bookkeeper360. Prices for QuickBooks Live Bookkeeping scale with the monthly expenses of your business, which means higher costs for businesses with higher expenses.

Xero vs QuickBooks Online: Customer Support

QuickBooks Online’s customer support is better than Xero’s since you can interact with an agent through a phone call. You can’t initiate a call, but you can submit a ticket and then wait for an agent to call you. You can also talk to a real person through live chat.

Bottom Line

Xero and QuickBooks Online are powerful accounting software programs and, in our case study, both prove why they’re the leading tools in the industry. They may have almost the same features, but each has its own strengths and drawbacks. If your business needs many users to access your accounting data and requires low-cost inventory and fixed asset accounting, Xero is the better choice. If you need a comprehensive bank reconciliation, class and location tracking, good customer support, and easy access to local bookkeepers, then QuickBooks Online wins.