QuickBooks Online (QBO) and Xero—these two accounting applications dominate the business world because of their convenient accounting features. Get one of them instead of hiring an accountant, and you will save a lot of money, especially if you own a small business.
QuickBooks and Xero have so many things to offer, and they can really make a difference in bookkeeping. However, you only have to select one between QBO and Xero.
This article will provide you a better understanding of Xero accounting vs. QuickBooks Online. Moreover, you will see their differences and if one of them suits your business needs.
Gather your team and familiarize yourselves with the valuable services QBO and Xero have to offer!
The Importance of Business Accounting
Accounting is the systematic and detailed documentation of financial information for the reference of stakeholders and shareholders. Its primary goal is to keep and report the cash flows, financial transactions, and performance of a business or organization.
The latest financial records and historical data that accounting generates help business owners and financial experts assess the performance of your business. Accounting allows the management to decide on expansion measures or improve operational performance depending on the recorded data.
Accounting also aids external users such as creditors and investors in decision-making. Through accounting, creditors can analyze the risk of lending resources to a business. Meanwhile, investors can foresee the outcomes when they buy shares.
Proper accounting guarantees accurate documentation of assets and liabilities for legal purposes. The US IRS is a tax authority that utilizes standard accounting statements to evaluate the reported net income and gross revenue of a business. Thus, you must accurately compute your taxes. Fortunately, accounting applications are available for faster and more accurate tax computation and bookkeeping.
Accounting applications can generate three key statements from your financial records.
- The balance sheet gives you the information on the financial track of your business for a specific period.
- The income statement is an account of the profit and loss of a business.
- The cash flow statement is reflective of the balance sheet and income statement. It shows how your business generates and uses cash.
What You Need to Know About QuickBooks Online
About the Software
Intuit Inc. is an American company known for its financial software such as TurboTax, Mint, and QuickBooks. It launched QuickBooks in 2002. After three years, QuickBooks became a popular accounting software in the United States, holding a 74% share in the market.
Like any product, QuickBooks has had glitches before. Fortunately, the talented accountants, programmers, and developers behind this software dedicated their time and talent to fixing all the earlier versions of QuickBooks. To this day, these professionals keep QuickBooks improving.
Intuit unveiled QBO from the offline version and gave it a major optimization in 2013. With QBO, a user can now upload financial records from the desktop version for faster and round-the-clock accessibility. In 2019, QBO reached a whopping 4.5 million subscribers worldwide.
Overview of Features
QBO provides flexibility, scalability, and functionality. It is also customizable to suit your accounting needs. With QBO, you can perform double-entry accounting, which allows you to have sophisticated record-keeping and comprehensive report generation.
You can integrate QBO into hundreds of third-party applications, making information sharing easier. QuickBooks is also very popular, and many business owners and financial experts are using it. It means that you can consult a large pool of experts and online resources if you need help. Furthermore, invoicing, billing, and purchasing are easier with QuickBooks.
Pricing and Plans
You can subscribe to QBO at a regular price of $25 per month, and you can upgrade the subscription depending on your needs. However, every plan has its limitations, and you will have to spend some time learning more about QBO.
The package features can also help you decide if you will subscribe to QBO. The basic package, Simple Start, allows one user and two accounting firms. However, as your business grows, you can upgrade your subscription to cover a wider scope of your business needs.
You may choose to upgrade to the following packages:
|QuickBooks Plan||Price per Month||Number of Users Allowed|
|Essential||$50||Three users and two accounting firms|
|Plus||$80||Five users and two accounting firms|
|Advanced||$180||25 users and three accounting firms|
Simple Start, Essentials, and Plus allow a maximum of 250 financial accounts while the Advanced has unlimited. You can easily share your financial records on QBO with your accountants via email at no additional charge.
QBO is user-friendly. However, you still need to allot some time to familiarize yourself with the software and its functionality.
The general navigation on the left side of the software is collapsible. It contains the setup and connection to your bank and credit card accounts. QBO connects to your bank accounts and automatically downloads and sorts different transactions for you once you provide your bank details.
On the right side is a gear icon that leads you to the settings and chart of accounts. The search parameter, meanwhile, allows you to find existing transactions. Below the search bar, you can see the most recent ones you created. It also has a quick Create button that gives you the list of all transactions you can create with QBO.
When you go to the homepage of the application, you will see a dashboard that gives you a quick analysis of your income, expenses, bank balances, profit and loss, and sales.
What You Need to Know About Xero
About the Software
Xero is a New Zealand-based company and one of the fastest-growing software in the market. A two-time holder of the title “World's Most Innovative Growth Company” by Forbes, Xero is popular cloud-based accounting software for start-up businesses, with over 2.7 million subscribers worldwide.
Overview of Features
Xero intends to make accounting simple for small businesses and conserve time. Like QuickBooks, Xero omits the need to manually enter financial data for different bank transactions. Instead, the software allows you to easily create invoices and pay bills in just a few clicks.
With its customizable dashboard, you can upload snapshots of modules you want to access right away. The dashboard also permits you to have a bird's eye view of all its accounting functions.
Xero, however, does not offer live phone support.
Pricing and Plans
Xero allows unlimited users in all of its packages and has inventory management. When using Xero, you can include your accountant as a user and designate the permissions you want them to have. We suggest that you assign the accountant with Advisor permission to allow access to advanced accounting tools.
You can also generate full reporting no matter what subscription you paid for. It also has automated bill and receipt documentation and allows double-entry accounting.
Offering a bottomless space for accounts is a major advantage of Xero against its competitors. However, its entry-level plan ($11 per month) is limited in terms of billing and invoicing, and it only allows a maximum of 699 accounts to keep the pages loading without interruption. When the accounts exceed 999, you have to add data manually.
You can have a 30-day trial with Xero to see if this accounting tool is the one for your business. As your business grows, you can upgrade your plan from Early to Growing and Established for $32 and $62 per month, respectively.
The software is intuitive, but if you need help navigating it, you can find online courses on Xero’s website.
When you go to the application, you can see the Bills You Need to Pay and Pay sections on the right side, and you can either show or hide different modules. Meanwhile, you can add bank details and design invoices under the Sales module and record purchases and manage checks under the Accounts section.
You can also easily manage payroll with Xero. All you have to do is to provide your company information and your payout schedule. Then, enter all your employees' information and set up your tax requirements. Finally, select the account you will use to pay your employees. From there, you can manage your payroll using timesheets and scheduled payroll runs.
Generating financial reports is also easy on Xero. You can do it by going to Reports at the top of the menu, and then you can choose from several options. For example, by selecting All Reports, you can have quick access to all the different kinds of reports you may want to generate. You can also get business performance and balance sheet reports.
Which One Is Better: QuickBooks Online vs. Xero?
Now that you have an overview of QBO and Xero features, you must decide which one dominates each criterion for the best accounting application.
Comparing the pricing of Xero vs. QuickBooks Online, Xero is way cheaper than QBO, considering the unlimited users Xero can accommodate.
QBO is the dominant one in terms of invoicing because it can support unlimited invoice generation. In contrast, Xero allows only 20 invoices.
Reports are critical, and QBO bested Xero when it comes to the generation of complex reports. QBO also offers more detailed reports as you upgrade your subscription.
QBO is more popular with over 5.1 million users today compared to the 2.7 million subscribers Xero has.
QBO and Xero are tied when it comes to the user interface. Both applications are easy to use, and users can easily see results from the dashboard.
Bank reconciliation is an important aspect of an accounting tool. Both QBO and Xero have an easy process when connecting to banks without compromising the security of their clients.
Tracking and Support Features
QBO remains superior when it comes to claiming expenses, transaction tracking tags, customer service, mileage, and time tracking compared to Xero. QBO permits users to claim expenses across all of its subscriptions. Meanwhile, Xero offers that feature on its highest-tier package. Xero also allows users to generate two active tracking categories. In contrast, QBO allows 40.
Fixed Asset and Inventory Management
Xero proves to be better in fixed asset and inventory management than QBO. The fixed asset management feature is available in all plans of Xero. Meanwhile, QBO encourages its users to download a third-party add-on or set up an asset account manually.
Moreover, the inventory management feature of QBO is available only on its high-tier plan. In contrast, Xero makes it available to all of its plans.
Xero is good, and you can give it a try if you want. Aside from offering a 30-day trial, Xero offers more budget-friendly plans compared to QBO. Its functions are also almost the same as other accounting software. However, Xero has limitations that QBO overcomes.
Your vision as a business owner is to expand your business and build a better future and help your community by creating more jobs. If that is your goal, the only choice is to select the best, QuickBooks Online, vs. Xero.
Based on the information we have about Xero and QBO, the latter dominates most criteria and can still dominate the areas where Xero has the edge through optimization. Though QBO is more expensive than Xero, it guarantees you satisfaction and easier accounting.
Accurate financial reports are why you need accounting software, and QBO has proven to be the leading accounting tool for generating complex reports. You have no reason to settle for less if you have big dreams for your business.
QBO will never be a popular accounting tool among business owners and financial experts if it does not satisfy their business needs. You can also easily find QBO experts to help you along the way.
If you are still looking for the best accounting tool, choose QBO. Alternatively, you can work with accounting experts who use it, such as Unloop. QuickBooks is part of the financial stack we set up for our clients.
Contact us today at 877-421-7270 to learn more about our accounting and bookkeeping services.