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

Both Xero and QuickBooks Online offer comprehensive accounting features that help you manage complex business processes, such as billing, invoicing, financial reporting, and tax management.

While Xero and QuickBooks Online both have rich feature sets, they do have significant differences and are built for specific business uses. For example, Xero allows unlimited users in all its plans while QuickBooks maxes out at five users in its Plus plan, which has a cost most comparable to Xero. Xero is more suitable for businesses with fixed assets while QuickBooks Online is preferred for companies needing easy access to local bookkeepers.

In this article, we conduct an extensive case study to uncover the nuances that differentiate the programs so you can find out which one is right for your business.

When to Use Xero

Xero is commonly preferred to QuickBooks Online by small businesses that need multiple user access. If you have a team of in-house accountants working on your books or working with a company partner, you can add all of them to Xero. Also, Xero has a very neat and simple user interface that’s attractive to many accounting novices. The program is also ideal for growing startups, as it scales in terms of depth of functionality. Xero is our overall best alternative to QuickBooks.

Xero is better for:

• Businesses that need an alternative to QuickBooks: Small businesses that find QuickBooks expensive switch to Xero because it offers many of the advanced features found in QuickBooks Online Plus, but at a lower price.
• Companies with fixed assets: What makes Xero unique is that it has a fixed asset manager. The fixed asset manager calculates and tracks depreciation on your machinery and equipment so that you can claim the proper gain or loss when you dispose of the asset.
• Businesses with multiple users: QuickBooks Plus, their most popular plan, only allows five users while Xero supports unlimited users in all its plans.

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When to Use QuickBooks Online

QuickBooks Online has an impeccable reputation when it comes to small business accounting. In addition to basic accounting features, like invoicing and income and expense tracking, QuickBooks Online also offers enhanced bookkeeping functionality, like mileage tracking, project accounting, inventory management, and income and expense tracking by class or location. Because of its robustness and scalability, QuickBooks Online is our pick for our overall best small business accounting software.

QuickBooks Online is better for:

• Businesses looking for a local bookkeeper: Quickbooks Online is so widely used among small business owners and accountants that you’ll have no problem finding a local bookkeeper to help you use QuickBooks.
• Businesses that want customer service: QuickBooks offers live customer service via both telephone and live chat while Xero doesn’t offer any live help. With Xero, you must email customer support or use their online resources to solve the problem yourself.
• Businesses that need manual bank reconciliation: Xero requires a bank statement to be uploaded to perform a bank reconciliation. QuickBooks is one of the few software programs we’ve reviewed that allows you to reconcile a bank account without importing your bank activity.

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When To Use an Alternative

Xero and QuickBooks are both powerful tools, but they aren’t completely flawless. Aside from the fact that both are paid programs, there are still a few reasons why you’ll need to look elsewhere.

You need an alternative for:

• Multi-company 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 book. For tracking multiple companies or businesses, we recommend QuickBooks Desktop.
• Small businesses looking for free accounting software: While QuickBooks Online and Xero are arguably two of the most powerful accounting software applications, they’re also among the most expensive. If you can’t afford premium accounting software, you should check out our list of the best free accounting software for small businesses.

Fit Small Business Case Study

We compare Xero and QuickBooks Online across 11 categories to see which of these two industry-leading accounting software programs stands out. The detailed results of our case study are presented in our Xero review and QuickBooks Online review. The chart below sums up our case study.

Is Xero or QuickBooks Best for You?

Xero vs QuickBooks Online at a Glance

Xero vs QuickBooks Online: Pricing

Xero and QuickBooks Online both offer paid plans that are billed on a monthly basis. Xero has no limit to the number of users in each package, and the higher plans include more advanced features. Prices for QuickBooks Online, on the other hand, depend on the number of users you have and the features you desire.

Xero Pricing

Xero offers three paid plans with prices that start at $12 per month. The plans vary in terms of the number of bills you can enter every month, the number of invoices and quotes you can send, and the availability of advanced features, such as multi-currency support and project tracking.

• Early: $12 per month for unlimited users, including five bills and 20 invoices
• Growing: $34 per month for unlimited users, with unlimited bills and invoices
• Established: $65 per month for unlimited users, unlimited bills and invoices, plus project accounting

You can add Gusto for Payroll for $39 per month.

QuickBooks Online Pricing

Small businesses with basic accounting needs, like invoicing and income and expense tracking, can start with Simple Start at $25 per month for a single user. If you need more users and advanced features, like accounts payable, project accounting, and inventory management, you should scale up to QuickBooks’ most popular plan, Plus, at $80 per month.

• Simple Start: $25 per month with a single user
• Essentials: $50 per month, which includes three users and allows bill payments and tracking
• Plus: $80 per month, which includes five users and adds inventory tracking
• Advanced: $180 per month, which includes 25 users
• QuickBooks Payroll: Starts at $45 per month (Payroll Core)

Check out our comparison of QuickBooks Online plans to decide which package is right for you.

Takeaway: Xero is more affordable and scalable than QuickBooks since all plans come with unlimited users. If you decide to scale up and add project accounting, you’ll save money on Xero’s Established plan at $65 per month, compared to QuickBooks Online Plus at $80 per month.

Xero vs QuickBooks Online Features

Xero Tiered Features Table

QuickBooks Online Tiered Features Table

Our case study shows a significant difference between QuickBooks Online and Xero in terms of bank reconciliation and fixed asset accounting. Below we include a detailed assessment of the two programs across these two essential categories.

Xero vs QuickBooks Online: Banking and Cash Management

Based on our case study, QuickBooks Online is slightly better than Xero in terms of banking and cash management. Both programs connect to a bank or credit card account to synchronize your transactions but also give you the option to manually upload a file of transactions if you don’t wish to connect to your bank.

Xero requires you to upload a bank statement to perform a bank reconciliation. QuickBooks is much more flexible and allows you to reconcile a bank account by entering the ending bank balance and manually marking transactions that have cleared your bank. If you need the flexibility to manually manage your bank accounts, then you’ll want QuickBooks.

Another subtle difference between Xero and QuickBooks is how they handle the grouping of multiple customer checks and cash into a single bank deposit. This is an important step, as the deposit in your books needs to match the deposit on your bank statement. While Xero provides an account to record checks received but not yet deposited, the feature isn’t nearly as advanced as QuickBooks.

QuickBooks provides a feature that lets you view the checks sitting in undeposited funds, place a checkmark next to the checks included in your current deposit, and then add any additional cash or non-customer checks to your deposit. After recording the deposit, all checks included will be removed from the deposit screen:

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 it ends there. You can’t track your fixed assets or calculate depreciation. On the other hand, Xero’s fixed asset manager is impressive. The program 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.

You can find Xero’s fixed asset manager under the Accounting menu of your dashboard. To enter a fixed asset, you need to complete several fields, such as Asset Name, Asset Number, Warranty Expiry, Serial Number, and Asset Type:

Xero vs QuickBooks Online: Inventory

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 included in the Plus and Advanced versions of QuickBooks Online.

Takeaway: Both software programs have great features that are very similar, but we give QuickBooks the slight edge for banking as it’s a little more flexible and easier to use. Xero’s fixed asset manager is a unique feature in small business bookkeeping software and something to consider if your business uses a lot of machinery and equipment.
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Xero vs QuickBooks Online: Ease of Use

Xero is more straightforward than QuickBooks Online in terms of inputting your business details, like company name, address, and entity type. It also has a simpler user interface that’s easy to navigate even for beginning users. QuickBooks Online may have a steep learning curve, but it also has more extensive customer support resources.

Xero Ease of Use

When you set up your Xero account, the dashboard displays key panels that walk you through different features. Your dashboard provides you quick links to set up your cash flow tracker, payroll, bill payments, project management, taxes, and external integration. After setting up your account, your Xero dashboard will display a screenshot of your business transactions and financials. You can customize your dashboard by simply moving the panels or hiding them.

With its 30-day free trial offer, you can try out the software and explore its features before signing up for one of its tiers. If you don’t want to upload your data, you may use a demo company during sign-up.

QuickBooks Online Ease of Use

You need 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 to Xero. QuickBooks Online makes up for it with its centralized dashboard, where you can access all major tasks from the left menu bar of your dashboard, along with an overview of your company’s financials:

QuickBooks Online also provides a shortcut for creating transactions through the +New button. The process of entering new transactions in QuickBooks Online is generally easy, but for more complicated tasks like printing checks, you may need to seek support from an agent or browse some online help resources.

Takeaway: With practice, both programs should be easy to learn and use. However, for users with no accounting experience, we recommend Xero.

Xero and QuickBooks Online: Integrations

Xero and QuickBooks Online both have strong integration with other software so you can get more work done. While QuickBooks Online boasts its seamless integration with the other Intuit products, Xero has an impressive collection of third-party apps that it directly integrates with.

Xero Integrations

Xero boasts around 800 integrations, connecting to plenty of major business software applications, including HubSpot, Mailchimp, Microsoft Outlook, Google Contacts, WorkflowMax, Hubdoc, Fathom, Pipedrive, Constant Contact, Agile CRM, Spotlight, and PayPal. It also integrates with thousands of popular apps in the marketplace through Zapier.

QuickBooks Online Integrations

In addition to its built-in integration with other Intuit products like QuickBooks Payroll, QuickBooks Commerce, QuickBooks Time, and QuickBooks Payments, the QuickBooks Online accounting software also connects with more than 500 third-party programs, like Insightly CRM, Gusto, ADP, Bill.com, Veem, ClockShark, and eBillity. Like Xero, QuickBooks Online can be integrated with thousands of other apps through Zapier.

Takeaway:

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 better software program depends on what specific business workflows you want to automate.

Xero vs QuickBooks Online Mobile App

Both Xero and QuickBooks Online have a mobile app version that you can use to perform basic accounting tasks on the go. If you often need to invoice your customers while you’re on the road, both apps can save the day. However, if you need to execute more tasks, like accepting payments, then the QuickBooks Online mobile app is a better choice.

The table below shows a brief comparison of Xero and QuickBooks Online mobile applications.

Takeaway:

You can do more with the QuickBooks Online mobile app. The ability to accept payments on your smartphone 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 through the QuickBooks app.

Xero vs QuickBooks Online: Assisted Bookkeeping

While Xero offers assisted bookkeeping service through Bookkeeper360, a virtual bookkeeping service provider, QuickBooks Online has an add-on called QuickBooks Live Bookkeeping that allows QuickBooks users to hire a QuickBooks-certified accountant to help them manage their books.

Xero Assisted Bookkeeping

Xero partners with Bookkeeper360 to provide assisted bookkeeping services to its users. With Xero and Bookkeeper360, you’ll 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, whether it’s on a 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.

While bookkeeping is the core service, Bookkeeper360 offers other services, such as chief financial officer (CFO) advisory, tax preparation, human resources (HR) and payroll, and back-office services. If you subscribe to any of the plans, you’ll receive a mobile app that you can use to track revenue and expenses and manage payroll.

Here’s a breakdown of Bookkeeper360’s pricing for businesses using the cash-basis accounting method:

• Pay-as-you-go: Starting at $99 per hour for support—includes easy setup and a dedicated accountant for on-demand bookkeeping, training, and advisory
• Monthly: Starting at $399 per month—includes monthly reconciliation, profit and loss, balance sheets, and excellent customer support
• Weekly: Starting at $499 per month—includes everything in the monthly plan, plus a dedicated accounting team, weekly updates, and advanced reporting

QuickBooks Online Assisted Bookkeeping

You can add QuickBooks Live Bookkeeping if you need a QuickBooks-certified bookkeeper to help you complete your bookkeeping tasks. Your dedicated bookkeeper will 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 set up 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. Unlike Bookkeeper360, QuickBooks Live doesn’t offer tax filing or payroll services. Note that QuickBooks Live Bookkeeping is an add-on that can be activated from the left menu bar of your QuickBooks dashboard.

Prices for QuickBooks Live Bookkeeping scale with the monthly expenses of your business, which means higher costs for businesses with higher expenses. Below is a breakdown of QuickBooks Live’s pricing:

• Low-volume bookkeeping: $200 per month—for businesses with $25,000 in monthly expenses
• Medium-volume bookkeeping: $400 per month—for business $25,001 to $150,000 in monthly expenses
• High-volume bookkeeping: $600 per month—for businesses with $150,001 or more in monthly expenses

Read our QuickBooks Live vs Bookkeeping360 comparison to learn more.

Takeaway: If you have no accounting experience to execute crucial bookkeeping tasks like reconciling bank accounts, then assisted bookkeeping is useful. Whether Bookkeeper360 or QuickBooks Live is better for your business depends on your budget and your needs. If you have complex bookkeeping needs and require a QuickBooks-specific virtual bookkeeping service, then choose QuickBooks Live. If you want a more scalable solution with the option to hire additional services like payroll and tax filing, then Bookkeeper360 is a more suitable choice.

Xero vs QuickBooks Online: Customer Support

QuickBooks Online tops Xero easily in terms of customer support. One important feature in accounting software’s customer support is the ability to talk to a real human over the phone, but that isn’t possible with Xero.

Xero Customer Support

Xero’s biggest weakness is customer support. You can’t talk to a representative over the phone, and there’s no live chat for instant support. The only way to get support is to send an email or use a chatbot, which might not be ideal if you need help with complicated problems. You can also browse some self-help resources, like:

• 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 Central: Xero Central 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, and small business owners―and are ideal for beginner, intermediate, and advanced Xero users.

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. There are also plenty of self-help resources you can use, such as accounting blogs, FAQs, and forums. You should consider hiring a QuickBooks ProAdvisor if you have critical bookkeeping needs.

Takeaway: QuickBooks Online’s phone call support comes in handy if you run into a very important issue that needs to be addressed immediately.

Bottom Line

Xero and QuickBooks Online are both powerful accounting software programs, and they both prove in our case study why they’re the leading programs in the industry. They may almost have the same features, but each program has its own strengths and weaknesses. 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.