Xero Vs Quickbooks: Which Is Best In 2024?

Xero is less expensive, but QuickBooks Online has more advanced features.

The question of which accounting software is best when comparing Xero vs QuickBooks Online depends on many factors, and there is no clear winner between the two.

Xero provides startups and small business owners who lack accounting knowledge with an easy-to-use accounting package that offers effective financial management.

Intuit, the company behind Quickbooks Online, provides business owners both desktop and online versions of its software and is currently the market leader in the U.S.

Key Takeaways

• Xero is cheaper.
• QuickBooks has more features.
• Xero doesn’t restrict users, while QuickBooks has user limits.
• QuickBooks Online is the best comprehensive accounting solution.
• Xero targets companies with more than five users.

QuickBooks is a good fit for both small and growing businesses and many accounting practices support it due to its robust functionality.

Xero aims at the lower end of the market, specifically startups that lack professional accountants, and owners can easily understand how it works.

Xero vs QuickBooks Online Quick Comparison

Before we get into the details regarding each software option, let's compare the most essential features of Xero and QuickBooks Online side by side.

These are two of the most popular accounting software platforms which offer small business owners a quick and easy way to manage their financial information.

With all that the gig economy offers, it’s become increasingly important that small business owners have a way to control their businesses' financial data.

Xero vs QuickBooks Online: What's Best in 2024?

If you’re a new business owner, getting to grips with accounting software is likely the least important item on your to-do list.

That’s where Xero’s clean and uncluttered accounting interface helps to minimize confusion and allow you to get on with running your business.

QuickBooks started with its popular QuickBooks Desktop application in 1992 and focuses on small- and medium-sized businesses requiring a full-featured, online accounting solution.

It is a cloud-based accounting package that offers a user-friendly interface accessed remotely by multiple users as well as accounting firms.

QuickBooks Overview

QuickBooks Online comes in four flavors: Simple Start, Essentials, Plus, and Advanced, with the option of adding Payroll to each of the offerings.

With most accounting firms supporting QuickBooks Online, you can easily share your data and receive reports and feedback based on your latest information.

However, if you have a large business with more than five users, you might want to consider moving to QuickBooks Desktop Enterprise, which supports up to 40 users.

The primary benefit of using QuickBooks Online is its full-featured functionality that is available across any device that supports browsing capabilities.

Users have access to features like bank reconciliations facilitated by connecting bank and credit card accounts to QuickBooks Online and automatically downloading transactions.

Users report that they find Xero slightly easier to set up than QuickBooks Online but find the QuickBooks reporting and management functions superb.

QuickBooks Features

QuickBooks Online has a comprehensive list of features that covers both service businesses, as well as retail and manufacturing, with great payroll integration.

Aside from the usual list of accounting and bookkeeping features, QuickBooks has recently included access to expert tax help from within the dashboard.

For an additional $50 per month, you can take advantage of bookkeeping assistance from QuickBooks-certified bookkeepers who can help you automate tasks.

They can help you correctly allocate transactions, reconcile accounts, review important reports and metrics, and keep you on track with tax preparation.

1. Live Tax Assistance

If you want to learn how to file taxes, then QuickBooks Online lets you consult experts who can assist you whenever needed.

You have access to tax experts to help minimize your tax burden, and the service comes with a guarantee that all tax calculations are correct for the full seven years.

QuickBooks Live Tax is a subscription add-on that starts at $169 per month, depending on the type of entity you have as well as the scope of work.

For those wanting additional accounting tips, the "Financial Planning" feature allows you to create budgets and forecasts using tools available in the dashboard.

2. Bookkeeping Automations

QuickBooks Online lets you save time by reducing the time it takes to capture financial transactions by automatically sorting transactions into categories.

Apart from setting up rules to categorize recurring transactions, QuickBooks also learns from your inputs, which reduces the time it takes to capture entries.

This means that up to five users can work within QuickBooks, capturing income and expenses, producing invoices, and making payments with ease.

When accounting for startups, this feature saves a significant amount of time and frees management time for more critical tasks.

3. Comprehensive Reporting

Available comprehensive reports include income statements and balance sheets, timesheet reporting, budgets and forecasting, management reports, and various customizable reports.

4. Full Function Accounting

This is all facilitated by full receipt capturing, sales and sales tax functionality together with estimates, which are available in multiple currencies.

5. Track Time And Inventory

What this means for business owners is that they can track time, inventory, and cash flow while organizing their bills online from anywhere in the world.

By following some basic accounting principles, business owners can get a quick snapshot of how their business is doing financially.

6. Live Feedback

You can share all your data with your accountant and receive live feedback on the full financial status of your business without leaving your desk.

QuickBooks Online Simple Start

This entry-level option comes with free guided setup assistance, full control of income and expense capturing as well as invoicing and payment capturing.

You have access to banking accounts offering 5.00% APY as well as full bookkeeping automation, general reporting, mileage tracking, and cash flow reporting.

You can accept credit cards, connect to various e-commerce tools, and automatically calculate sales tax to facilitate reporting and submission.

Owners can also customize your estimates, which customers can now accept via mobile signatures and then convert directly to invoices.

QuickBooks Online Essentials

Along with the basic features, "Essential" users now get to connect to three sales channels instead of only one and can access multiple currencies.

You get access for three users and can link to your accounting firm so that they can access your books and provide feedback and reporting directly.

QuickBooks Online Plus

For companies looking for all the bells and whistles, Plus provides an additional inventory module along with project control as well as financial planning.

The inventory module allows you to track products, calculate your cost of goods, track your bestsellers, and create purchase orders on the go.

You can manage your vendors and also track the profitability of projects by keeping an eye on costs and expenses for each one.

The financial planning module allows you and your team to create budgets with real-time data as well as sync with Excel spreadsheets.

QuickBooks Online Advanced

The "Advanced" option allows you to auto-track fixed assets, providing complete control of this vital area for businesses with many fixed assets.

For greater transparency and reporting assistance, you can import and export data to Excel, and employees can upload expenses directly for quick and easy tracking.

Medium-sized and larger businesses can batch their invoices and expenses, providing better control and efficiency when entering large volumes of data.

Control Sensitive Data

Advanced users can allocate work to specific users and create custom permissions for greater control over access to sensitive data.

To help manage workflow, "Advanced" users can save themselves time and reduce risk by automating work processes as well as setting reminders – improving cash flow.

They can also organize a tax prep checklist using the information available online without worrying that it is accessible to unauthorized users.

QuickBooks Pricing

QuickBooks has four pricing plans together with various add-ons that assist in making it a tailored solution for your business.

You can opt for the base price, less 50%, for the first three months, or you can opt for a 30-day free trial with each of the options below.

• Simple Start – $30 per month with one month’s free trial, or $15 for the first three months.
• Essentials – $60 per month with one month’s free trial or $30 for the first three months.
• Plus – $90 per month with one month’s free trial, or $45 for the first three months.
• Advanced – $200 per month with one month’s free trial, or $100 for the first three months.
• Assisted Bookkeeping – $50 per month.

All the plans above include a free mobile app that allows you to access your accounting data whenever you need it.

You also get access to a QuickBooks support team member when you need help, as well as the ability to integrate apps with QuickBooks.

QuickBooks Support

Apart from the vast network of accounting firms and professional accountants that support QuickBooks, you have access to additional resources.

Included in the Resources Center are quick-start guides to help you set up and learn about QuickBooks as well as help you manage your business.

The “Find aAn Expert” feature puts you in contact with certified advisors, bookkeepers, and accountants who are familiar with QuickBooks.

QuickBooks Pros

QuickBooks is the acknowledged leader in online accounting solutions in the U.S. and has an extensive network of accounting firms that support it.

Here are some of the reasons that business owners prefer QuickBooks:

• Pricing is competitive for the available features.
• Inventory management reporting is strong.
• It supports multiple third-party app integrations together with payroll options.
• The entry-level package has over 50 reports available.
• Task automation saves time by streamlining the bookkeeping function.
• Sharing information with accountants is easy.
• 24/7 support as well as live chat.

The range of options available and price points for each make Quickbooks one of the most affordable and comprehensive accounting solutions online.

QuickBooks Cons

While QuickBooks offers a wide range of features, it focuses on providing bookkeeping and accounting solutions and may lack some interface usability for non-accountants.

• The price is considered a little high by smaller startups that don’t require all the features.
• A steep learning curve to use the system properly.
• Users are limited compared to other software options available.
• Payroll costs extra.
• Barcode scanning is supported only through third-party apps.

Who Do We Recommend QuickBooks For?

QuickBooks’ entry-level Simple Start is a great option when accounting for small businesses that are looking for a good balance between cost and functionality.

At $30 per month, it offers you the ability to send invoices, control your expenses, and keep your tax information in order.

For businesses that require integration with multiple sales channels, more robust reporting, and access for additional users, the Essentials package is perfect.

Medium-sized businesses that need additional reporting functionality will find that the Plus and Advanced options cater to their needs, depending on the number of users.

Bottom Line

If you need to send out an unlimited number of invoices each year, then QuickBooks Online's affordable option is superior to Xero.

QuickBooks Online's mobile app that integrates with your online data is a quick and convenient way to capture expenses by taking photos of invoices.

This is an option that Xero offers, but only as an additional feature that is included in the top-tier option under Xero expenses.

US accountants are more likely to have experience with QuickBooks than with Xero as QuickBooks has over 8 million online and desktop users.

Xero Overview

Xero accounting software enjoys a growing list of companies that are attracted to its unlimited-user feature and lower price point than QuickBooks.

It also offers fixed asset and inventory management across all its pricing plans, making it an affordable option for businesses requiring these features.

The biggest obstacles are the five-invoices-and-quotes-per-month limit for Xero’s cheapest price plan, as well as the limited reconciliation volume (20 items).

Unless you are a one-person business with a few clients, you’re going to need the additional transaction volume of the higher-priced options.

The flagship accounting software (Growing), is suitable for most small- to medium-sized businesses with multi-currency functionality and project modules providing comprehensive time and cost tracking.

Xero Features

While Xero was more limited than QuickBooks Online in the past, it has caught up in terms of functionality and features with their recent upgrades.

You can utilize Hubdoc to enter accounting data into Xero, using your cellphone to take pictures of invoices, which then update expenses.

Business owners can stay on top of the expenses and get cash flow reports in real time by using Xero’s expense management tools.

1. Automated Bank Reconciliation

Updating your cashbook is as simple as connecting bank feeds to your company account and using the automated bank reconciliation feature to save you time.

Invoices can be set up so that customers can pay directly from the document via credit or debit card or by direct debit.

2. Project Tracking

You can set up project profitability reporting by tracking time and receive reports on expenses allocated to each job using a simple-to-understand user interface.

Although the accounting software has limited CRM functionality, you can access customer and supplier data like addresses, contacts, and payment history through simple reports.

This helps business owners with both bill management and expense tracking, and related accounting tasks are simplified through automating the process.

3. Gusto Payroll

For an additional cost per employee, a small business can integrate Gusto Payroll into Xero to track employee deductions, tax, and state and IRS reporting.

4. HubDoc Data Capture

Instead of worrying about hard copies, a small business can take photographs of their expense receipts and invoices and send them directly to the accounting system.

The software reads the accounting terms on each invoice and enters it automatically into Xero so that you can save time with basic bookkeeping tasks.

You can also manage and share other documentation such as contracts, quotes, and bills, knowing that they are safe and securely stored on the cloud.

5. Multi-Currency Accounting

The accounting software supports more than 160 currencies with the facility to keep up to date with exchange rates in real time while enjoying instant currency conversions.

6. App Integrations

There are more than 800 third-party apps from which to choose if you require a feature or facility that is not available within Xero’s core offering.

Trustpilot shows a 4.3 out of 5.0 rating for Xero’s functionality and service, pointing to the company’s ability to keep their customers satisfied.

Xero Pricing

Xero’s pricing is aimed at providing one of the cheapest options for startups and small businesses that require basic bookkeeping functionality.

The options are split into three segments: Early, Growing, and Established, each of which builds on the previous one, adding functionality as the business grows.

There is a 90% discount for the first three months, or you can opt to try out the software for 30 days for free with no obligation to continue after it expires.

• Early – $15 per month with one month’s free trial, or $1.50 for the first three months.
• Growing – $42 per month with one month’s free trial or $4.20 for the first three months.
• Established – $78 per month with one month’s free trial or $7.80 for the first three months.
• Payroll – $40 + $6 per person per month.

The accounting software includes a free mobile app that allows you to enter data and access reports on your cellphone whenever you require them.

There is an option to include a full payroll service on each plan at an additional cost of $40 per month plus $6 per person.

Xero Support

Xero support is available in the form of articles on their website, and if you can’t find the answer to your query, you can contact Live Support.

 “Live Support,” which is provided by a third-party service provider in the Philippines, is restricted to helping with the software, not bookkeeping or accounting.

You can also email support, who will answer your questions within 24 to 48 hours or phone you back if necessary when you provide your telephone number.

Xero Pros

• A low price point makes Xero accessible to startups and small businesses.
• The user interface is easy to understand for non-accountants.
• Xero supports unlimited users who can access online data concurrently.
• Dashboards and real-time reporting are easy to access and understand.
• Overdue payments and financial health are accessible from your app.
• Automated data capture through Hubdoc.
• Support is responsive, and online queries are quickly addressed.
• Xero offers automated sales tax tracking for all states.
• Integration with over 800 third-party apps.

Xero Cons

• Limited invoicing is available on the "Early" plan.
• Dashboards provide limited information for accountants.
• Not really suited to larger organizations' volume requirements.
• Limited inventory management.
• Advanced reporting customizations are missing.

Who Do We Recommend Xero For?

Xero is a great alternative to QuickBooks Online, especially if you are a sole trader or small business looking for an affordable and straightforward accounting solution.

As your business grows in size and complexity, Xero’s upgradeable functionality keeps pace with your requirements for more detailed accounting information.

If you need to track various projects and time spent on jobs, Xero’s “Established” tier is easy to integrate at minimal additional monthly cost.

The basic inventory management functionality allows retailers to track their stock efficiently and obtain trend data to help manage buying.

A rating of 8.2 out of 10 on Capterra for how likely users will recommend Xero to their contacts shows how well they have captured small businesses.

Bottom Line

Xero offers companies unlimited users at a very affordable price with access to all the basic bookkeeping functionality necessary for a small business.

They have approximately 3 million users who are spread all over the world, so, although they are an excellent accounting solution, they're not that popular in the U.S.

The online platform is easy to use and is aimed squarely at non-accountants, although it still provides sufficient information to prepare annual financial statements.

Summary

QuickBooks Online offers plenty of value at a relatively low price point and supports that with advanced reporting and robust functionality for growing businesses.

Xero is better suited to smaller entities and startups that can manage with its minimalist interface and comprehensive bookkeeping features. 

QuickBooks Online enjoys broad support within the United States, while Xero is growing strongly internationally, where it is more popular with small businesses.

When comparing Xero vs QuickBooks Online, the type of business and your requirement for advanced accounting features will determine which is best for you.