Is Xero a more superior option than QuickBooks?
The search for the appropriate business accounting software can be a time-consuming process. You will need to determine what functions are necessary, how much money you have available, and, of course, compare the various software packages that are available.
If you’re already in the middle of this process, you’ve undoubtedly already become familiar with Xero accounting and QuickBooks Online, which are two of the most popular accounting solutions designed for small businesses.
Both Xero and QuickBooks Online are web-based accounting software platforms, and both are renowned for their extensive feature sets, flexibility, and user-friendliness. Xero and QuickBooks Online are comparable in many respects.
Despite these parallels, you may be curious about the differences between Xero and QuickBooks Online.
What are the key distinctions between the two? Which platform is most suited to your company’s needs?
The following analysis of Xero and QuickBooks Online was prepared for your perusal and convenience.
We will start by providing an overview of each of these accounting software solutions, during which time we will discuss both their features and their pricing. After that, we will investigate the ways in which Xero and QuickBooks Online are different from one another, and finally, we will highlight the aspects of each of these platforms that set them apart from one another.
When it comes to the day-to-day operations of your organisation, having an accounting tool that is hosted in the cloud has the potential to be one of the most significant contributors to those operations.
You may get a crystal-clear perspective of your accounting, stay on top of projects and time tracking, and maximise tax deductions using a system such as Xero or QuickBooks Online.
Both Xero and QuickBooks Online are extensive tools that are likely to meet your accounting needs because both of these programmes include the capabilities that are necessary for the majority of firms. However, their strategies are distinctive, and each of them possesses a unique set of strengths.
Getting started with Xero and QuickBooks Online: What You Need to Know
In 2006, Xero was established in New Zealand, and since then, the company has worked to solidify its position as one of the best accounting solutions available on the market.
“Beautiful business” is the company’s tagline, and it accurately conveys the most important aspect of Xero, which is that the software can make accounting both simple and pleasurable.
Xero is created to assist their customers in doing better in their businesses by providing accounting solutions that are simple to use, yet strong. Xero is extremely user-friendly, simple, and powerful.
“Smarter business tools for the world’s hardest workers” is the tagline for QuickBooks Online, the industry-leading accounting software developed and distributed by Intuit. Using their cloud-based system, businesses are able to automate a significant portion of the routine duties and procedures that make up their operations.
This includes tracking projects, handling bills, and even automatically tracking kilometres with a smartphone.
What sets QuickBooks and QuickBooks Online apart from one another? The standard accounting software offered by Intuit is referred to as QuickBooks, whereas the cloud-based service offered by Intuit is referred to as QuickBooks Online (QBO).
With Quick Books Online (QBO), rather than paying a one-time cost, you pay a monthly subscription, and Intuit is responsible for providing all software fixes and upgrades. In this post, we are going to refer to QuickBooks Online quite a bit because we believe that this is the version of QuickBooks that you will end up using rather than the desktop version that Intuit offers.
Since Xero and QuickBooks Online are designed for smaller to medium-sized companies, it may be difficult for larger companies to find a solution that satisfies all of their needs if they have more sophisticated requirements. However, there is a lot to like about Xero and QuickBooks for the vast majority of businesses, including agencies, retail establishments, and startups.
Our conclusion is presented below, along with a comparison of the prices, feature sets, accountant preferences, reporting, ease of use, integrations, and user evaluations of each option.
The Early plan is Xero’s most fundamental offering, and while it only costs $9 per month, the feature set is extremely restricted. You are only allowed to send five bills and quotes, enter five bills, and reconcile two bank transactions at a time. This is not going to be sufficient for the vast majority of companies.
Their plan with a pricing point in the middle, called Growing, is ideal for most small enterprises. For the low, low price of $30 per month, you can send invoices and bids, enter bills, and reconcile bank transactions.
To access all of Xero’s features, you will need to upgrade to the most expensive plan (Established). You get everything included in the Growing plan in addition to multi-currency capabilities, expenses (to capture and manage claims), and projects for an additional $60 per month (to track project time and costs).
Pricing begins at $39 per month for the standard plan plus $6 per month for each employee if you want access to Gusto’s full-service payroll (which is available in all 50 states for customers in the United States).
The Simple Start plan is the most basic one offered by QBO, and it costs $20 per month.
This comes with significantly more capability than Xero’s most basic plan, including all of the fundamentals of monitoring income and expenses, recording and organising receipts, issuing invoices, and receiving payments.
Additionally, you will have access to fundamental reporting. The fact that the QBO Simple Start plan is only accessible to a single user is the plan’s primary drawback. In addition, you are unable to manage your time or your bills.
The Essentials plan is $35 a month and includes all of the features listed above as well as up to three users, time tracking, and the ability to manage bills.
The majority of businesses will select this option. As is the case with most other cloud-based accounting systems, the most expensive tier includes all the bells and whistles: Plus, for a cost of $60 per month. You can keep tabs on inventories, manage up to 1099 contractors, and take advantage of QBO’s most recent addition, which is the ability to monitor project profitability.
Self-service payroll costs $35 per month plus $4 per employee per month, while full-service payroll costs $80 per month plus $4 per employee per month. Both of these add-ons are included with all plans at a discounted rate of 50%. In addition, receipt capture, knowledgeable support, and pre-built interfaces are all included with every subscription.
If you need to keep tabs on your earnings, costs, invoices, and hours worked, you’ll probably need to pay $35 per month for QBO or $60 per month for Xero. Both of these companies’ most expensive plans, which cost $60 per month, give you access to functionalities that are comparable to one another.
Xero is a Cloud-Based Accounting Software
Beginning with the Xero accounting software, Xero provides you with the chance to select from their three available plan options, which are referred to as Early, Growing, and Established, respectively. You may anticipate that Xero will give you the whole set of accounting tools and functionality, which includes the following items:
- The linkages between banks and the reconciliation
- Billing, pricing estimates, and invoices
- Users with no limits
- Administration and control of the inventory
- Orders placed for purchase
- Sales tax management
- The dashboard as well as the reporting
- Organizing your contacts, creating smart lists, and storing your files
- Administration of Fixed Assets
- Accept payments made online with the integration of a payment processor.
- Free mobile app
- Collaboration with Gusto on payroll matters
- Integrate with over 700 different platforms provided by third parties.
- Support for online customers around the clock
Quickbooks Online Accounting Software
Having established what the Xero accounting plans have to offer your company in terms of both functionality and pricing, let’s continue our comparison of Xero and QuickBooks Online by going into detail about QuickBooks.
Simple Start, Essentials, Plus, and Advanced are the names of the different subscription tiers that are available through QuickBooks Online. This is one of the most obvious and straightforward ways in which QuickBooks Online is distinguished from Xero.
In addition, whereas the differences between the plans of Xero are primarily determined by the number of invoices, bills, and bank transactions, the differences between the plans of QuickBooks Online are more analogous to those that exist between the Xero Growing and Xero Established tiers of service.
Each level of the QuickBooks Online plans comes with new features and capabilities, and the price of those plans increases along with them (that were not available in the previous level).
Having said this, though, you can anticipate some features to be included with your QuickBooks Online software regardless of the plan that you select, just like with Xero. These features include the following:
- Keeping tabs on one’s earnings and expenditures
- The billing process and cost estimates
- Capability to take payments from customers
- Reporting on the basics
- Establishing a connection to the bank account and doing reconciliation
- Instruments for organising taxes
- Receipt capture and organisation
- Provide your accountant with access.
- Free mobile app
- Integration with third-party systems and other QuickBooks applications
- Support for customers via the phone.
What Xero can do for you
The functionality of Xero is organised into five primary sections, which are the Dashboard, Business, Accounting, Projects, and Contacts. The accounting dashboard provided by Xero provides a beautiful picture of your company, including bank balances, invoices owing, and total cash coming into and going out of your company. In addition, the dashboard is fully configurable.
You’ll discover products and services, purchase orders, invoices, and other business-related documents in the category labelled “Business.” The invoices option in Xero provides a useful overview view of all bills as well as the status of each invoice at the moment.
The invoice entry screen in Xero, which can be seen above, is neat and uncomplicated, and it provides simple look-up options for the majority of its fields. After you have finished creating the invoice, you may send it to the client through email, and the email should include options for paying the bill online.
If the payment was made online, Xero will immediately apply for the payment once it is received; otherwise, you can handle the payment during your regular bank reconciliation procedure. Xero will automatically apply for the payment if it was paid online.
Within Xero’s Accounting section, you’ll handle all of your banking transactions, as well as manage your chart of accounts and financial statements. This section is also where you’ll view and print your company’s tax returns. Within the Projects section, you have the ability to manage any projects and keep track of the amount of time spent on them using the time tracking feature.
Through the use of the Contacts category, you are able to centrally manage all of your contacts, including customers, suppliers, and contractors. The reporting functionality in Xero is robust, and users have access to a wide range of financial statements and management reports.
Xero provides its users with the ability to do typical operations using a mobile app that is compatible with both iOS and Android devices. These tasks include the maintenance of receipts and contacts, the reconciliation of bank accounts, and the production of invoices.
The benefits that QuickBooks Online provides
QuickBooks Online, much like Xero, provides users with common services such as internet banking, a robust invoicing capacity, bill administration, and payment acceptance. Nevertheless, it separates them into a wider variety of categories as opposed to classifying them under a single umbrella heading.
Your personal choice can play a part in determining which format you like, but in general, a primary navigation page should be as self-explanatory as possible to make it simpler for new users to navigate their way around.
QuickBooks Online makes it easy to enter an invoice, and it also gives users the option of adding a customer’s credit card or bank account information to their QuickBooks Online customer profile. Because of this handy function, you are able to promptly conduct an online payment for that particular customer.
You also have the option with QuickBooks Online to apply for client payments automatically after they have been placed, or you can choose to leave that decision up to the user. You are able to add invoices from vendors and get them prepared for payment by using the Expense category. Quickbooks Online gives you the ability to manage your customers, vendors, and staff all inside the same platform, and it also gives you access to a payroll option provided by Intuit.
The Report Center in QuickBooks Online provides a centralised site for the processing of reports, which include all regular financial statements in addition to a robust range of management reports. These reports may be accessed from anywhere in the programme.
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Comparison of Xero and QuickBooks Online
QuickBooks and Xero are the two most well-known names in cloud accounting software respectively.
But when you have two extremely capable software solutions to choose from, both of which offer accounting services that are comparable to one another and almost the same set of features, how can you tell which one is the superior option? That is the question that we want to have answered here today.
QuickBooks Online was launched in 2004, two years before Xero, giving it an early advantage in the accounting market. It is simple to understand why accountants and bookkeepers regard this software as one of the industry’s best thanks to its extensive accounting capabilities, elegant invoices, more than 550 integrations, and a loan tool.
Xero is a powerful accounting solution that is competitive with QuickBooks in terms of both its capabilities and its widespread adoption. It has been on the market since 2006 and features robust accounting, access for an unlimited number of users, over 700 integrations, and an astounding array of features.
At Bookkept, our mission is to assist you in locating the most suitable software to meet the requirements of your small business. We’ve conducted in-depth research and evaluations of both goods so that you can make an informed choice. We’ll evaluate Xero and QuickBooks Online (QBO) in terms of their capabilities, pricing, customer service, reputation, and other factors so that you don’t have to.
What accountants think about Xero
Accountants sing Xero’s praises for its user-friendliness, the ease with which it can process payroll, and its automatic bank feeds.
When it comes time to prepare your tax return at the end of the year, they have everything at their disposal that is required to get started. Accountants will also find it simple to correct user errors in Xero, and the software comes equipped with the appropriate audit trails and safety checks.
Using the one integrated reporting solution that Xero provides, as of the year 2017, you can additionally generate a Statement of Cash Flows that complies with GAAP for the reporting needs of your clients.
If you live in the United States, the major criticism that your accountant might have is that they do not have enough expertise working with Xero. Because QuickBooks is the most popular accounting software in the United States, it is likely that they already have experience with it. It is more likely that accountants in the United Kingdom and New Zealand will advise you to use Xero because it is more widespread in those countries.
It’s likely that your accountant will be enthusiastic about QuickBooks Online.
QuickBooks has been compliant with GAAP and IAS for a longer period of time than Xero has, and it is also the accounting software that many accountants choose to use. In addition to this, it dominates the market in a number of different regions. In the grand scheme of things, it’s highly rare that your accountant will run across any problems while using QuickBooks.
It ends in a tie. QuickBooks and Xero are both well-known and widely used accounting software programmes. The location of your business is probably going to be the deciding factor for your accountant more so than any other factor.
Adoption as well as evaluations
On Capterra, 2808 people have given QuickBooks Online a rating of 4 out of 5, whilst Xero has received an average rating of 4.5 from 1570 users.
The undisputed frontrunner in the market for the long time, QuickBooks Online
QuickBooks states on their website that 98 per cent of clients think that their solution helps them operate their business more easily, and we can see why they would say that: there is a reason that QBO has built up such a strong reputation.
QuickBooks Online has been available to customers for a longer period of time than Xero has, has a very robust feature set, and is favoured by accountants worldwide, particularly in the United States market, which QBO has dominated. In 2015, it was estimated that QBO held an 80 per cent share of the market. According to QBO, consumers save an average of $3,534 in taxes each year using their software.
Xero, stands out thanks to its large community of customer advocates
Xero has a powerful value offer to compete with QuickBooks Online, and that is the fact that its clients adore the software. Despite having less reviews overall, Xero regularly receives higher ratings on average than its competitor, QBO.
Xero is significantly more popular in the realm of startups than QuickBooks is. This can be attributed to the company’s youthful brand image as well as its emphasis on user-friendliness.
The profit and loss statement, the balance sheet, and the cash flow statement are the three basic financial statements that are included in Xero and QuickBooks Online respectively.
These statements give you the ability to view information relevant to a variety of aspects of your company, and they may be modified to suit your needs. Adding columns, modifying account groupings, and displaying time periods next to one another are all very easy tasks that may be accomplished with ease.
In contrast to QuickBooks Online, Xero gives you access to an equity statement, which might be useful if your business has more than one investor in it.
It provides information regarding the profits or losses that were kept in the company, as well as the investments and equity withdrawals made by the owners of the business.
In the case that you are afraid that one of the owners may be taking out an excessive amount of money from the organisation, it will help you quantify your issues.
In addition to the core financial statements, there are also straightforward information on the ageing of the accounts receivable and payable. Maintain track of who owes you money and how much you owe them by organising the amounts into common time buckets that are overdue. This will also allow you to keep track of who owes you money.
QuickBooks Online provides greater in-depth coverage of accounts receivable than its competitor, Xero.
Users of QuickBooks Online have access to a range of reports, some of which detail profit and loss by customer, others compare estimates created for a customer with sales to that client, and still others detail collection activity.
Companies who report a significant amount of accounts receivable on their financial statements ought not to ignore the information that has been presented here because it is crucial.
In spite of the fact that QuickBooks Online has a payroll processing component, the programme only generates reports on total wages and payroll taxes, worker’s compensation, and employee particulars. The amount of reports offered by Xero is far greater, and it also includes built-in functionality for human resources management.
A number of these functions, such as wage garnishments, time-off balances and requests, and others are included here.
For businesses that aren’t quite as complicated as others, Xero offers all of the reports that are required. We prefer to utilise the service rather than QuickBooks Online since it enables us to modify reports by dragging and dropping data rather than going through the more laborious process that is involved in utilising QuickBooks Online.
QuickBooks Online comes out on top as the best option in this category due to the broad range of reports it offers and the fact that they are also very useful.
Whether you go with Xero or QuickBooks Online, at the end of the day, you’ll be using a top accounting software platform that will enable you to manage and simplify your accounting processes in an efficient and effective manner. Regardless matter the option you go with, this will always be the case.
In light of the information shown above, it is difficult to decide which of these two options—QuickBooks Online or Xero as accounting software—is objectively superior to the other when doing a comparison between the two.
Instead, the answer to the question of whether accounting software is superior between Xero vs QuickBooks Online depends on the particulars of your business. These particulars include the capabilities you need, the amount of money you have available, and the features that are most essential to you.
As we have discussed, the similarities between Xero and QuickBooks Online, including their overall functionality, reasonable pricing, usability, mobile access, and other features, indicate that these platforms have the potential to meet the needs of a wide range of small businesses in an effective manner.
It is therefore up to you to examine how the differences between them will effect your organisation and which choice will serve you and your goals in the best way possible in order to make the best decision.
You should keep in mind, however, that due to the complexity of the comparison between Xero accounting and QuickBooks, you may discover that it is necessary to test out both of these programmes on your own before deciding which one to use on a permanent basis. This is an important point to keep in mind.
Both Xero and QuickBooks Online provide free trials of their software for a period of thirty days, so you are in luck because you may choose any one of those options. During this period, you will have the opportunity to become familiar with the programme and determine whether or not it will satisfy the needs of your business.