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QuickBooks Online vs. Xero: How They Stack Up

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Are you looking for quality accounting software for your small business? Chances are QuickBooks Online and Xero will pop up in your search right away. These two heavyweights vie for the hearts – and subscription fees – of business owners around the world.

Both options are extremely good; PC Magazine gives them both an “excellent” rating. Both are cloud-based so they can be used from anywhere, and both offer a wide array of features to cover a comprehensive set of business functions, including project management features. But differences do exist between the two. Figuring out which of these two major players might work for your business requires looking at the details and parsing your priorities.

So let’s dive in and compare Quickbooks Online vs. Xero.

QuickBooks Online overview

Intuit QuickBooks Online is one of the most popular and well-reviewed business accounting software options. It can satisfy the needs of a range of users, from one-person shops to medium-sized businesses with tens of employees. PC Magazine casts its vote for this product, calling it “the best online accounting application for small businesses, thanks to its depth, flexibility, and extensibility.”

QuickBooks Online excels because it is streamlined and comprehensive, a true “do-it-all”  software that has project management and payroll options integrated into its interface. With this type of inclusivity, it’s possible to manage your business’s banking, invoicing, payroll, taxes and reporting all from a single portal. Another plus: QuickBooks frequently offers deep discounted pricing, providing its services for as much as 50 percent off.

The disadvantages of QuickBooks Online are limitations on certain features, such as the restrictions on the number of users depending on the plan you use. For instance, the cheapest plan starts at $10/month and $20/month only allow a single user, while the $35/month plan allows up to three. To get five or more users, you must subscribe to the highest-cost $60/month plan.

The project and time tracking functions are also only available on more expensive plans, and the mileage tracking options is only available for the self-employed plan, even though other types of users may find this helpful.

Xero overview

Xero, while not as prominent as QuickBooks, is a worthy and popular competitor to Intuit’s dominant offering. Xero offers good functionality to help a wide range of small businesses manage financial and logistical affairs smoothly. PC Magazine offers a strong vote of confidence, calling it “an exceptionally good double-entry accounting app that excels at many of the basics a small business might need.”

Unlike Quickbooks Online, Xero allows unlimited users on each account, even on its cheapest plan. It has robust online support, including a portal called Xero Central and discussion boards on the Xero Communities site. It also offers the option to manage fixed assets, which QuickBooks Online lacks. Xero offers project management in its top-tier plan. It also integrates an attractive customer-management feature that creates a snapshot of where you stand with each client, including details of what they owe you, a chart that tracks your income from them, and an option to integrate your email to view your communications with them in Xero.

Xero’s drawbacks relate to its restrictions on basic functions in its lowest-level plan and its lack of an integrated payroll option. The cheapest plan restricts users to sending five invoices and quotes, entering five bills, and reconciling 20 bank transactions each month, a rate of operation that is quickly outpaced by all but the smallest operators, even among the self-employed. This means that the lowest level in Xero priced at $9/month and appropriately called “starter” is more or less an introductory offering that can’t be sustained. This forces users quickly to convert to the mid-level “standard” offering at $30/month.

Another potential disadvantage of Xero is that the company will no longer be providing its own integrated payroll service after 2018, instead introducing a new partnership with Gusto that will provide access to a full-service payroll option. Xero subscribers who use payroll will be dealing with a third-party vendor, which some may find less than ideal.


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QuickBooks Online vs. Xero: How they compare

QuickBooks Online and Xero provide very similar services to their customers, including all the basic accounting and bookkeeping functions. The features and tools they both incorporate include:

    • Income and expense tracking
    • Invoicing and accepting payments
    • Running financial reports
  • Estimating quarterly taxes
  • Sales tax management
  • Bank connection and reconciliation
  • Bill payments
QuickBooks Online vs. Xero: At a glance
Quickbooks Xero
Cost $10-60 $9-$60
Numbers of users 1-5+ Unlimited
Characteristics of cheapest plan Limited to one user; designed for self-employed workers; includes mileage tracking Limited to sending 5 invoices and quotes, entering 5 bills, and reconciling 20 bank transactions
Basic accounting functions such as invoicing, quotes/estimates, financial reports, tracking sales tax, connect with bank account Included Included
Inventory tracking function Included Included
Integration with outside apps Yes Yes
Project and time management functions Included in highest-level plan Available for extra fee (currently free as a trial)
Fixed asset management function Not included Included
Customer tracking Basic, with transaction listing and info page Enhanced, with outstanding invoice call-out, 12-month income chart, and integrated email option
Payroll option Integrated; optional add-on; up to 50 employees Third-party partnership; optional add-on; unlimited employees
Multi-currency accounting Available in top two plans Available in top-tier plan only


Bottom line

QuickBooks Online and Xero are both powerful, high-quality accounting software options. Any small- to medium-sized business will find a lot to like in either one.

Those who value integrated payroll and aren’t concerned with restrictions on numbers of users will gravitate toward QuickBooks Online, while business owners who need fixed asset management, are particularly interested in streamlined customer tracking, and don’t need sustainable use of a particularly low-cost option may want to try out Xero.


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