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Xero vs. QuickBooks Online: Can an Upstart Small Business Accounting Software Company Unseat the Incumbent in July 2022?

With so many options for small business accounting software on the market, it's not easy deciding which one to get. We give you an overview of two of the most popular choices, Xero and Quickbooks Online, helping you to select the one that fits your needs.


Shira Mizrachi
Shira Mizrachi
July 22, 2022

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The Ultimate Guide to Choosing Between Xero vs. QuickBooks Online

Looking for the perfect small business accounting software for your business can be extremely difficult. The options are endless as each comes with its own unique set of features at various different prices. 

During your searches you've probably stumbled upon the two very popular accounting softwaresXero and QuickBooks Online. Both of them have several similarities as they are both web-based accounting softwares, known for their range of features, ease of use, and flexibility.

This brings us to the question of which platform is the best for you and your small business. First, we'll give you a quick overview of the comparison between the two. Going through the price range, features as well as their strengths and weaknesses.

“The two most popular accounting software options available in the market, with some similarities”

QuickBooks Online vs. Xero: Overview

Xero and QuickBooks Online are the two most popular accounting software options available in the market and they have some similarities. For example, they are web-based platforms. This means that you can access your account as long as you have the internet and they have a mobile app for you to use on-the-go and many third-party integrations for you to use. They also offer a variety of plans, which you can choose from depending on what features you want and how many users you have. 

Xero

If you’re looking for a simple-to-use software but with more multifaceted features then maybe you should try Xero.

Xero’s most notable features are:

QuickBooks Online

Regarded as one of the best accounting software programs available on the market, Quickbooks Online offers a huge range of features for you to use. They offer four plans:

1. QuickBooks Online Simple Start – the most basic plan starting at $25 per month. And you will get:

2. QuickBooks Online Essentials – This plan includes all the features of Simple Start and the additional features given below. This plan is $50 per month.

3. QuickBooks Online Plus – This will cost you $80 per month and it offers all the features from the previous 2 editions as well as:

4. QuickBooks Online Advanced – The most expensive plan but also the one with the most functions. It will cost $180 per month and in return you will receive the previous features plus:

Check out a more detailed comparison on their website.

Screenshot of Xero homepage, with a menu of features, plans, use cases, support and tryout option.

Xero vs. QuickBooks Online: Deep Dive Feature Comparison

Since we now know what both platforms offer, let's look at their capabilities more closely and see how they compare to one another. We will compare Xero and QuickBooks online in terms of two significant features including Reporting and Costs. 

Screenshot of Quickbooks homepage, with a menu of products and features, plans and pricing , support and resources.

QuickBooks Online vs. Xero: Reporting

Reporting is considered one of the most crucial accounting software features to help inform you about your business's growth and financial planning. So, when you compare Xero and Quickbooks Online make sure you choose the software that fits all your accounting needs.

Report Customization

QuickBooks online has more to offer in terms of customizing reports as compared to Xero. For example, you can use QuickBooks Online to generate a monthly profit and loss statement. All you have to do is run the report for the date range you want. To do this in Xero you'd have to run the report for the last month and then compare it to the previous months.

So, in terms of report customization QuickBooks takes the win over Xero.

Cash Flow Statements

There are two ways to generate a cash flow statement including the direct and indirect methods. You minus your expenses from your earnings through the direct method. And while using the indirect method you can use your net income in depreciation to estimate your operating cash flow. Xero only uses the direct method whereas QuickBooks online uses both.

AR/AP Reports 

The best choice would be QuickBooks Online For a more detailed report on accounts payable or accounts receivable as it allows you this view while Xero doesn’t.

Report Layout

Xero’s report layout goes from the most recent to the oldest but this is the opposite of what they want for most business accountants. They would have to reverse the order and that is not so easy.

“More affordable prices with less features vs. many functionalities but more expensive”

Quickbooks Online vs. Xero: Costs

Both platforms are great options for small businesses but there are some differences price-wise. For example, Xero has slightly more affordable prices but lacks many features; while QuickBooks Online has many functionalities but is way more expensive.

Another factor to consider is that Xero offers unlimited users for all its plans while with QuickBooks you are limited depending on which plan you have. This may prove to make a difference if you need a larger number of users for your business.

You can also try applying for a small business loan to purchase accounting software. 

Xero vs. Quickbooks: Which Software is Right for You?

As we have seen throughout our extensive comparison both softwares have significant capabilities on offer. But we have also seen some notable differences, including the cost, the features, expansion opportunity etc. So ultimately the software which is best for you depends on what you are looking for. If it is tax tools, plan options and time tracking then QuickBooks may be better. And in case you are looking for a large user allowance, customer support and integration options then Xero is the way to go.

The Bottom Line

Whether you choose QuickBooks or Xero, you will be able to manage your accounting processes efficiently. Choosing which is better is difficult because both have their strengths and weaknesses. So, it ultimately depends on what you are looking for in accounting software and your budget.


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