Whenever you are out in the market searching for the best product, you must undergo a couple of steps to ensure that you’re making the right purchase. First thing, find out what people are saying about the product—look at the customer reviews on the product page, and expand your research even further by googling its pros and cons, watching how-to videos, and even following the brand on different social media platforms.
If you’re doing the same thing to search for the best accounting tool for your business, you are on the right page—a Xero VS Quickbooks Online article. We hope that after reading this, you can weigh the different advantages and disadvantages and decide, once and for all, which software is best for your business.
What Quickbooks Offers
Let’s begin checking the main services you will get when you sign up for Quickbooks accounting software.
First among the services you will enjoy with Quickbooks is bookkeeping. When you sign up, you will be partnered with an expert bookkeeper who will help you backtrack all your income and expenses for the year. You just need to provide the right documents, and your business finances will be updated and ready for tax season.
Through these bookkeeping services, you can also ensure that all the transactions and the money coming in and out of your business are all tracked and categorized accordingly. Receipts and invoices will be kept in one place, and you'll have data readily available for reporting and data analysis.
Next is an accounting service, where you make sense of all the data you collected, put them into graphs, and prepare them for reporting. With Quickbooks, you can customize and get the following reports and more:
- Balance Sheet
- Profit and Loss Statement
- Income Statement
- Account Receivable Aging
- General Ledger
- Cash Flow Statement
- Revenue by Customer
- Statement of Retained Earnings
Because you have all the data stored in one software, you can run these reports instantly and as often as possible. As a result, you can make decisions and adjust game plans right away and based on data.
You can integrate to Quickbooks the time tracking software you are using so that you can easily generate your employees’ payroll. The highlight for the payroll services is that it also includes tax and sales tax calculation, filing, and payment by Quickbooks. Computation accuracy is assured, and Quickbooks even vows to pay $25,000 if there are any mistakes in tax computation. These steps are all possible because of software automation.
By the end of every cutoff, your company accountant would need to check the details. You just need to click the approve button for the payment to be sent to your employees.
Payments And Bank Reconciliation
The advantage of bank account connection is the convenience of tracking the money coming in and out of your account. The software will also automatically categorize these transactions. You can easily raise a red flag for unaccounted transactions.
Payments are made easier as the invoice you send to your customers already has “Pay Now” buttons, which makes the payment process convenient, cashless, and digital. You can also create and schedule recurring invoices, send them to your clients, and receive payments automatically.
Quickbooks is designed for freelancers and small businesses, but it adjusts as you grow your business. If you’re in the planning stages of building a business in the eCommerce world, you can integrate your inventory to Quickbooks from different platforms:
You can utilize multiple tools for your eCommerce business, but it would help if you integrate all these into a single software. In addition, doing so will organize your data and money and ensure convenience.
About Xero Software
Moving on, let’s talk about the services being offered by Xero, the equally recognized software for accounting.
You can rely on Xero accounting to generate reports based on all the data you’ve stored in the system. The reports are all customizable, from the dragging and dropping of columns, formula creation to determining which area of your business you want to keep track of.
Whether you have weekly, monthly, quarterly, or yearly reviews, you can generate reports instantly with up-to-date information. All these reports are stored in the system as historical data, which you will find useful for case studies for your present decision-making. In addition, you can import and convert reports to PDF or spreadsheets documents.
Pay Bills And Claim Expenses
Some bills and expenses are generated consistently, while some are paid only a few times or one time only. No matter what type of transactions you have, Xero has solutions for you.
- Recurring payments can be scheduled and automatically be paid.
- Receipts from claim expenses and reimbursements are kept in the system, and the costs are tracked.
- Invoices can be scheduled and created easily.
- Xero has a contact list integration you will find helpful in sending invoices.
All the money going out of your account will be tracked by the system and tagged as expenses.
Send And Receive Payments
Utilize the bank connections capability of Xero to receive and give out payments easily. You can also integrate the following payment methods:
- Different banks
The invoice you send will have a “Pay now” button, so your clients can send payment instantly. If you have regular customers, you can also schedule acquisition of payments via bank-to-bank transactions or direct debits to ensure all fees will not pass due dates. The charges you get will be tracked and categorized as income, while the payments you make will fall under expenses. Reporting will be made easier with data tracked right away.
Time And Project Tracking
Whether you have a business with in-house employees or remote workers, the project and time tracking features of Xero can be extremely helpful. You’ll see project progress and the work rendered by your employees. When payroll generation comes, it will be easy to create invoices and compute salaries based on the time rendered. You can also check the cost for each project and use all the data collected to foresee future spendings with the same project.
Since Xero allows integrations, you can use Trello project management software for projects and collaborations and integrate it with Xero.
Xero offers two data analytics versions Xero Analytics and Xero Analytics Plus. This accounting feature allows you to track your cash flow and check the financial status of your business because the data tracked are given sense through reports. If you upgrade to Analytics Plus, your decision-making will be made easier with AI simulations for specific financial decisions. Run your plans A-Z in the Xero Analytics plus first to see whether your venture will be profitable and to check what adjustments you need to make to work on your plans' weak spots proactively.
Xero VS Quickbooks: Which Accounting Software Is Better?
After seeing the two accounting software services, it’s now time to know when it is best to use Xero accounting software vs. Quickbooks and vice versa.
Why use Quickbooks accounting software?
As of 2019, Quickbooks announced that they already have 4.5 million customers. Meanwhile, Xero only had 1.82 million subscribers in 2019, according to their website. These numbers show that Quickbooks is the more widely used and trusted accounting app.
Quickbooks is designed for freelancers and small businesses, but its reporting and data tracking capabilities adjust as your business grows. If you look into the four plans offered by Quickbooks, you will see the increase of data being tracked—enough to cover the increased needs of your bigger business.
You don't need to worry about tracking the miles you take for business-related trips, as the Quickbooks mileage app will do it for you. The best thing is that you can enjoy this service even with the software’s basic plan. Doing so will give you peace of mind when tax season and IRS audit comes.
Although both software has customer service available, Quickbooks has it better because of phone and online support availability. If you want 24/7 customer service, the Quickbooks Advanced Plan also offers this. Whereas Xero provides 24/7 online support, but none for mobile.
Proportionate to the growth of your business is the increase in the number of invoices you need to create. You can count on Quickbooks' unlimited invoice creation for this in any plan type you sign up for. It is unlike Xero’s limited invoice offers of 20 invoices for its Early Plan.
Availability of Claim Expenses
Claim expenses begin the moment you start your business, so you need to track them as soon as possible. It's a great thing Quickbooks offers claim expenses from the basic plan to the more advanced offers. Xero also provides claim expenses, but only under its Established plan.
You can customize reporting as you grow your business.
As your business continues to grow, so should your Quickbooks plan. There are four plans you can choose from, and as the plan advances, so do its reporting and data tracking capabilities. For Xero, only a few services are added as the plan progresses.
In accounting, it is important to categorize all the data in the software, and with Quickbooks, you can create up to 40 categories. Your assets, liabilities, and equity can be broken down further into more classes to help you generate the reports you need.
Why use Xero accounting software?
The advantage of using cloud accounting software like Xero and Quickbooks is the ability to control who can access business financial data. If you need software that does not limit the number of users, Xero is the one for you with its Established plan allowing unlimited users for the software.
Number of accounts
In the same way, Xero also allows more accounts than Quickbooks. If you manage many businesses, you can track all the accounts with a single software. You can make up to 699 accounts using Xero. In comparison, Quickbooks can only create up to 250 accounts.
Capable of more integrations than Quickbooks
Xero has more than 1,000 applications you can integrate into its system to keep all your financial data in one software. This is higher compared to Quickbooks, with only 650 integrations. Some of the applications you can integrate with Xero are Trello, Gusto Payroll, and other payment software.
Fixed asset management
Do you own properties or assets like land, buildings, factories, furniture, or equipment? Quickbooks or Xero can account for even these details in your business. However, Xero makes it more accessible to users under all accounting plans.
So, Which One Is Better?
After giving you the details of what Xero and Quickbooks software offer and what features the two software are better at doing than the other, which one do you think suits your business best?
The answer depends on your current business needs and how you foresee your business growing.
Business needs: Consider the size of your business. Are you a freelancer, a startup, or a small business? Xero is software intended for bigger firms. As you can see, the software allows an unlimited number of users and creates more accounts. However, if you are a freelancer or a small business, Quickbooks offers much more efficient data tracking and reporting.
Growth of your business: Quickbooks' reporting and tracking capability are better when it comes to assisting a growing business. It offers even more features as you scale your plan from Simple Start to Advanced. Xero, too, makes its features accessible gradually from Early to Established plans, but the differences are not that much as compared to the increased services by Quickbooks.
Knowing which one is better depends on you and your business goals.
Get Assistance From Unloop!
Here at Unloop, we particularly use Quickbooks because it is the most widely used software by accountants. It perfectly caters to our clients, who are mostly freelancers and are still starting with their business.
If you need assistance on your business accounting and are looking into using Quickbooks, we’d be glad to help. Skip the hassle of learning the ropes on your own with our team of financial experts. If you’d like to learn more about our accounting services, please feel free to call us at 877-421-7270. We’d be most happy to assist you.