QuickBooks vs Xero: Which Accounting Software is Better for Small Businesses?

 

• QuickBooks and Xero serve different small business needs: QuickBooks offers advanced features and reporting, while Xero is simpler and fully cloud-based.
• Pricing varies by plan and usage: QuickBooks can be more expensive at higher tiers, while Xero’s subscription pricing is predictable and scalable.
• Feature comparison matters: Both handle invoicing, expense tracking, and reporting, but QuickBooks has more customization and payroll options; Xero excels in ease of use and integrations.
• Ease of use and learning curve differ: Xero is more beginner-friendly; QuickBooks may require more time to master but offers deeper functionality.
• Customer support and accessibility: QuickBooks offers phone and chat support, while Xero relies mainly on email and live chat. Both are secure and cloud-accessible, but Xero is fully cloud-based.
• Choosing depends on business goals: Consider accounting complexity, budget, mobile access, and accountant preferences when selecting between the two.
• Try before committing: Both platforms offer trial periods, allowing small business owners to test usability, reporting, and app performance before deciding.

If you’re running a small business, managing finances can sometimes feel like juggling flaming torches. Choosing the right accounting software can make all the difference, but with so many options out there, it’s easy to feel overwhelmed. Two of the most popular choices are QuickBooks and Xero. Both have a lot to offer, but which one is actually better for small businesses? Let’s break it down.

What Are QuickBooks and Xero?

Before diving into the comparison, it helps to understand what these platforms are all about.

QuickBooks is a well-known accounting software developed by Intuit, and it’s been a staple for small businesses for decades. It’s available as both a cloud-based platform (QuickBooks Online) and a desktop version.

So, what is Xero? Xero is a fully cloud-based accounting platform that has gained popularity for its simplicity, integrations, and real-time financial insights. Unlike QuickBooks, Xero focuses entirely on cloud solutions.

Both software options aim to simplify bookkeeping, manage invoices, track expenses, and produce financial reports—but the way they approach these tasks can be quite different.

Who Should Consider QuickBooks?

QuickBooks is often recommended for small businesses that:

• Want a platform with extensive features and long-standing industry credibility.
• Prefer a mix of online and desktop options.
• Need advanced reporting and inventory management tools.
• Expect to scale their business and may eventually hire accountants familiar with QuickBooks.

QuickBooks is especially popular in the U.S., and many accountants are trained specifically on QuickBooks, which can make collaboration easier.

Who Should Consider Xero?

Xero is ideal for small businesses that:

• Prefer a fully cloud-based platform accessible from anywhere.
• Value simplicity and a user-friendly interface.
• Need multiple integrations with apps like Shopify, Stripe, or PayPal.
• Are comfortable with automatic updates and prefer a subscription-based pricing model.

Xero is known for its clean design, simple navigation, and strong focus on automation, making it appealing for small businesses with limited accounting knowledge.

Pricing Comparison: QuickBooks vs Xero

One of the first things small business owners notice is the cost. Here’s a breakdown:

QuickBooks Pricing

• Simple Start: $38/month – Basic features for invoices, expense tracking, and reports.
• Essentials: $75/month – Adds bill management and multi-user access.
• Plus: $115/month – Advanced features like project tracking and inventory management.
• Advanced: $275/month – Designed for growing businesses with complex needs.

Xero Pricing

• Early: $25/month – Ideal for sole proprietors, includes basic invoicing and bank reconciliation.
• Growing: $55/month – Adds unlimited invoices, bills, and bank transactions.
• Established: $90/month – Adds advanced reporting, multi-currency, and expense management.

Key Takeaway: QuickBooks can be more expensive at higher tiers, while Xero’s pricing is generally predictable and based on usage levels rather than feature limitations.

Features Showdown: QuickBooks vs Xero

When it comes to features, both platforms cover the basics—like invoicing, bank reconciliation, and financial reporting—but there are differences worth noting.

Invoicing

• QuickBooks: Offers customizable templates, recurring invoices, automatic reminders, and the ability to accept payments directly through the platform.
• Xero: Provides professional invoice templates, automated invoice reminders, and multiple payment gateway options, including Stripe, PayPal, and more.

Expense Tracking

• QuickBooks: Automatically categorizes expenses, tracks receipts, and integrates with bank accounts. Mobile app allows receipt capture on the go.
• Xero: Offers similar functionality with automated bank feeds, receipt capture, and expense claims. Xero’s interface is often praised for its simplicity.

Reporting

• QuickBooks: Extensive reporting tools including profit and loss, balance sheets, and customizable dashboards. Advanced reporting available in higher-tier plans.
• Xero: Strong reporting features for small businesses, but customization options are more limited than QuickBooks.

Payroll

• QuickBooks: Built-in payroll options (in certain plans) make it easy to manage employee paychecks, taxes, and benefits.
• Xero: Payroll is available in some regions and often requires add-ons or integrations for full functionality.

Integrations

• QuickBooks: Over 650 third-party app integrations, including e-commerce platforms, CRMs, and payment processors.
• Xero: Over 1,000 integrations with apps covering invoicing, inventory, time tracking, and banking.

Mobile Apps

• QuickBooks: Mobile app is robust, allowing users to send invoices, track expenses, and view reports from smartphones.
• Xero: Mobile app is intuitive, with focus on easy navigation and real-time updates. Some users prefer Xero’s app for simplicity.

Ease of Use: Which is More User-Friendly?

Ease of use is subjective, but here’s what most small business owners report:

• QuickBooks: Steeper learning curve, especially for beginners. Offers tutorials, customer support, and accounting resources.
• Xero: Known for a clean, intuitive interface that is easy to navigate even for users with minimal accounting experience.

Tip: If you are new to accounting, Xero may be less intimidating. QuickBooks might feel more complex initially but offers deeper functionality as your business grows.

Customer Support: QuickBooks vs Xero

Reliable customer support can make or break your experience with accounting software.

• QuickBooks: Offers phone support, live chat, a community forum, and extensive online resources. Priority support is available for higher-tier plans.
• Xero: Primarily offers email support, live chat, and an extensive knowledge base. No phone support, which can be a drawback for urgent issues.

Security and Data Protection

Both platforms take security seriously:

• QuickBooks: Uses bank-level encryption, multi-factor authentication, and regular backups. Cloud-based versions offer additional security features.
• Xero: Offers 256-bit SSL encryption, secure data centers, and two-step verification. Data is automatically backed up and updated.

Both are considered secure, but QuickBooks’ hybrid option (cloud + desktop) may appeal to businesses that want local control.

Accounting for Taxes: Who Handles It Better?

When it comes to taxes, small business owners need reliable tools:

• QuickBooks: Strong tax tracking features, including sales tax calculation, automated forms, and integration with tax software.
• Xero: Provides tax reporting, VAT tracking, and integration with tax services, but U.S. tax users may find QuickBooks more familiar.

Mobility and Accessibility: Cloud vs Desktop

• QuickBooks: Offers cloud access with QuickBooks Online, but desktop versions require installation on specific machines.
• Xero: Fully cloud-based, accessible anywhere, any time, from any device. This flexibility can be a game-changer for mobile or remote teams.

Pros and Cons Summary

Here’s a quick comparison to help summarize:

QuickBooks Pros

• Established reputation and widespread use
• Extensive reporting and advanced features
• Built-in payroll for U.S. businesses
• Numerous integrations

QuickBooks Cons

• Steeper learning curve
• Higher cost at advanced tiers
• Desktop version may feel outdated

Xero Pros

• Fully cloud-based and accessible anywhere
• Simple, clean interface
• Strong automation and integrations
• Predictable subscription pricing

Xero Cons

• Payroll features limited in some regions
• Less customizable reporting than QuickBooks
• No phone support

Real User Feedback: What Small Business Owners Say

Many small business owners have shared their experiences:

• QuickBooks users often praise the depth of features, particularly for tax season and inventory management.
• Xero users love the simplicity, smooth integration with apps, and easy collaboration with accountants.
• Some users switch between the two, starting with Xero for simplicity and moving to QuickBooks as their business scales.

Tips for Choosing Between QuickBooks and Xero

When deciding, consider these questions:

1. How complex are your accounting needs?
   If you need advanced reporting, inventory, or payroll, QuickBooks may be better.
2. Do you prefer simplicity or feature depth?
   Xero is more intuitive, QuickBooks more feature-rich.
3. What’s your budget?
   Xero’s predictable pricing may be ideal for small businesses with tight cash flow.
4. Do you work with an accountant?
   If your accountant already uses QuickBooks, sticking with it may save time.
5. How important is mobile and remote access?
   Xero is fully cloud-based, making remote access seamless.

Final Verdict: QuickBooks vs Xero

Ultimately, there’s no one-size-fits-all answer.

• Choose QuickBooks if you need a robust platform with advanced features, extensive reporting, and payroll options. It’s a great choice for U.S.-based businesses and companies planning to scale.
• Choose Xero if you want simplicity, cloud accessibility, and smooth integrations. It’s ideal for small businesses, startups, or freelancers looking for an intuitive solution.

Both platforms are excellent tools, and the “better” option depends on your business size, accounting complexity, and personal preference. Many small business owners even try both through free trials before committing.

Pro Tip: Try Before You Buy

Both QuickBooks and Xero offer trial periods. Testing each platform with real business data is the best way to see which fits your workflow. Pay attention to:

• How easy it is to enter transactions
• How quickly reports are generated
• How intuitive the mobile app feels
• How customer support responds

Final Thoughts

Choosing between QuickBooks vs Xero doesn’t have to be stressful. By evaluating your business needs, budget, and level of accounting experience, you can make a decision that will save time, reduce stress, and help your business thrive. Both tools have strong features, security, and support, so it ultimately comes down to which aligns better with your workflow and growth plans.