What is the best accounting software for small businesses? At Acuity, we get asked that question rather frequently, as many of our entrepreneurs and business owners want to know which accounting system they should use: Xero vs. QuickBooks. As a proud partner of both platforms, we can confidently say that each one is a reputable, effective accounting tool that can alleviate many pain points when it comes to managing the financial side of your business. But how do you choose?
“Imagine that QuickBooks is vanilla ice cream and Xero is chocolate ice cream,” explained Kenji Kuramoto, Acuity’s founder and CEO. “Both flavors are good and life’s much better having ice cream than not having ice cream. It’s just up to you which flavor you prefer.”
So, let’s get to it.
Xero vs. Quickbooks: What’s the Difference?
Much like Kenji’s ice cream comparison, having a trusted piece of accounting technology is much better than not having one. And you can rest assured knowing that you can’t go wrong with either Xero or QuickBooks. Both of these small business accounting software options cost about the same and both work in similar ways.
As a cloud-based accounting tool, Xero really simplifies bookkeeping for small businesses and larger companies alike. Beyond being a succinctly designed platform (and beautiful, too), Xero’s cloud-based services and iOS app make it easy to manage your accounting needs on the go. It really is one of the best cloud-based accounting services out there.
On the other hand, QuickBooks is generally considered to be the global leader in cloud accounting, with 3+ million subscribers worldwide. It’s designed with small business success in mind, as it automates complex tasks such as bookkeeping and invoicing, integrates well with other apps and platforms, and allows small businesses to customize certain elements to fit their needs.
Here’s a general overview of what you can expect from both platforms:
- Seamless Integration: Xero and QuickBooks both make cloud-based accounting quick and simple. If you’re already using another platform for your business accounting, converting is easy and best of all, fast. You can move your old Quickbook files directly into Xero in a short amount of time—or vice versa. Enter your banking information is also easy and allows you to get the latest updates on your accounts, Paypal, and credit card transactions.
- Complete Visibility: Simply log in to your dashboard and see real-time data about your business finances. On both QuickBooks and Xero dashboards, you can see pertinent information like transactions, invoices, and bills. Members of your team can get instant access, too. Invite your accountant, bookkeeper, or other team members to view your accounts, and they’re in. You have control over who can see what, all while make sure everyone is on the same page.
- Anytime, Anywhere Access: Mobile apps for both QuickBooks and Xero help you manage business finances on the go, perfect for checking in on things in between Skype calls or other meetings. Send and receive invoices, approve employee leave, and view payment history all from your phone or tablet. No more waiting to get to a computer to get caught up on your business; truly work from anywhere, at any time.
- Intuitive Accounting in the Cloud: Xero and QBO both operate in the cloud, so no downloading is required. Not only does that clear up valuable computer memory space, but it also means you receive automatic updates when new features are released. They do the thinking so you don’t have to, and you’re left with the latest versions working to your financial benefit, ultimately saving you time and energy.
Now, let’s break it down further.
Xero vs. QuickBooks: General Philosophy
Xero definitely plays better with others, and Quickbooks wants everything to be contained in their app.
Xero will have a more open API and be easier to build to generally. Xero will try to integrate with partners when their software doesn’t meet their product standards. You can look back to the Xero decision to abandon their US payroll module and more closely integrate with app partner Gusto because the experience was better for their customers. Contrast that with Quickbooks who make it almost impossible to rip and replace Intuit merchant services when you set up credit card payment authorization in Quickbooks.
So if you want simple and easy most people default to Quickbooks, but if you want flexibility and the ability to make choices, Xero tends to be philosophically more aligned.
Xero vs. QuickBooks: Pricing
Two other questions we often get are “How much does Xero cost?” and “How much is QuickBooks?” Surprisingly enough, they are pretty comparable in price, although Intuit has been hiking prices more recently.
Xero offers three different pricing plans, starting at $11 per month. This tier is recommended for “good for sole traders, new businesses, and the self-employed.” The second option is $32 per month and is geared towards small businesses in the growth stage. Finally, the $62-per-month plan is aimed at larger, established businesses.
QuickBooks Online offers five different pricing tiers. There is a $15/month option for freelancers, a $25/month “Simple Start” option, a $50/month “Essential” option (although Essentials is likely to be retired soon), an $80/month “Plus” option, and a $180/month “Advanced” option.
The Bottom Line in the Xero vs. QuickBooks Debate
At the end of the day, neither option is a bad one—both QuickBooks and Xero have user-friendly dashboards, comprehensive features, flexible pricing tiers, and a number of integrations for your CRM system, time tracking tools, reporting tools, eCommerce platforms, and so much more.
The bottom line is that, as a business owner or founder, deciding between accounting software will be one of the easier items on your to-do list. Xero and QBO are both solid tools for entrepreneurs and estimates put them at >90% of the total accounting systems market for small businesses. As long as you’re shifting away from desktop software, spreadsheets, bank statements, and sticky notes, you’re headed in the right direction.