Choosing the right accounting software is one of the most important choices a business owner would make. When considering cloud-based accounting, Xero vs. QuickBooks Online quickly becomes a natural comparison, because both platforms are built around the desire to simplify accounting and financial reporting, to streamline communications with external stakeholders, and to provide insights into the overall health of your business. But which one is the best fit for your business?
In this blog, we will compare Xero and QuickBooks Online based on their features, ease of use, pricing, and the types of businesses they serve. By the end, you’ll have a better idea of which one is the best fit for your business.
Xero: What You Need to Know
Xero is that accounting software that, if you’re looking for something really easy to use and filled with loads of features, could be your first choice. Known for its simplicity and clean interface, Xero has made a name for itself, especially among small businesses and startups.
Xero gives you access to lots of tools that make your work in everyday financials easier. All of it – from sending invoices and tracking incoming payments, as well as reconciling the transactions of your bank – happens in just a few clicks. More than 700 third-party applications integrated into the software allow you to extend the capability of the system for your payroll or inventory management.
Why Businesses Love Xero:
- User-Friendly: Xero’s dashboard makes it accessible even for those not so good with accounts.
- Less Manual Work: Xero Automate with bank feeds to even invoicing.
- Pay-As-You-Go: Xero offers its price in a tiered manner and is therefore affordable as much as it depends on the business type from a freelancer to a growing business.
QuickBooks Online: What to Expect
On the other hand, QuickBooks Online is a household name in the accounting world, especially for businesses in the U.S.For those who look for accounting solutions beyond just basic reporting, QuickBooks has it all: robust reporting, payroll integration, and tax management.
QuickBooks Online works well for businesses of any size and has features that make it suitable for more complex accounting requirements. It is popularly known for in-depth reporting, customized invoices, and also tracks expenses. One of the strong selling features is its payroll facility, which can be a godsend for companies that require easy management of employee wages and taxes.
Xero vs QuickBooks for Specific Business Types
Each business has a different setup. This is why your choice between Xero and QuickBooks Online should be based on the number and needs of your company.
1. Small Businesses
Xero is fantastic for small businesses because it’s easy to use and inexpensive. The system is automatic and also does things like generating invoices and reconciling with the bank, so the person running it needn’t be an accountant. QuickBooks Online provides more advanced features, making them very suitable for small businesses looking to grow, such as if you require extra financial reporting or inventory management.
2. Medium to Large Businesses
QuickBooks Online is better for mid-sized and bigger companies, in particular, because of superior reporting, payroll, and inventory management. It handles complex accounting work pretty effortlessly and scales as your business grows. Xero is also suitable for mid-sized operations, but it stands out in international business operations, offering support for multiple currencies. Larger businesses might prefer QuickBooks Online more due to its deeper features.
3. Freelancers and Contractors
This simplicity is a huge plus for freelancers and contractors because the setup is easy, and one can easily create and send professional invoices to clients, track expenses, and reconcile bank transactions. If one is working in a one-person operation, there is no need for most of the options QuickBooks Online offers, so for a one-person operation Xero would be much better suited.
4. Retailers and eCommerce Businesses
Xero works well for small retailers and e-commerce businesses that have relatively simple inventory management and a desire to connect with third-party apps. More complicated inventory needs will be better served by QuickBooks Online, which tracks more aspects of inventory and reports on sales. This is also more useful for growing retailers or high-volume e-commerce operations.
5. Professional Services Firms
For service-based businesses, like attorneys or accountants, Xero provides a very straightforward way of tracking projects and billing clients on that work. It’s fantastic for firms needing the most elementary type of tools. QuickBooks Online has more advanced features in terms of time-billing and project management and would be ideal for larger firms, or firms with multiple complex projects.
6. Non-Profit Organizations
Xero could be considered cost-effective for very small non-profits, focused on simplicity around tracking expenses, but QuickBooks Online has much more detailed tracking and reporting of donations and, as such, would be far better suited to larger non-profits with complex funding and reporting requirements to stakeholders.
Need Help Deciding? Check out How to Choose the Right Bookkeeping Software for Your Business
Conclusion
At the end of the day, the choice between Xero and QuickBooks Online depends on your specific business needs. Xero is suitable for small businesses, freelancers, or even just a person looking for a simple, affordable accounting package. QuickBooks Online is suitable for businesses where there will be a need for more advanced features such as payroll, reporting, and scalability than what’s being offered in Xero.
But it does not end there. Having the right software is but one way of handling your accounting chores. This, when done in-house, is quite a time-consuming exercise prone to errors and mistakes. One solution, then, lies in outsourcing the bookkeeping work.
MeticMinds can help you with expert help tailored to your business needs. Whichever you may opt for, between Xero and QuickBooks, our bookkeeping outsourcing services at MeticMinds will make sure that your accounts are always up-to-date and ready while you focus on what matters to you most, growing your business.