Running a small business means keeping track of a lot of things at once. Customers, sales, bills, payroll, suppliers, taxes and so on.
Bookkeeping usually starts out simple. You might keep a spreadsheet, save receipts in a folder, and check your bank account every few days. That works until the business gets busier. More sales mean more transactions, and before long, keeping the books starts taking up a good chunk of your time.
That's when accounting software becomes useful. This blog will help you differentiate between QuickBooks vs Xero, enabling you to choose the software that suits your business requirements.
QuickBooks vs Xero: What's the Difference?
QuickBooks and Xero can look very similar. Both software have the following functions:
- They connect to your bank accounts
- Record income
- They track expenses
- They create and send invoices
- Manage bills
- Generate financial reports
- They both are cloud-based and accessible online
The difference tends to show up in the details.
A self-employed consultant with a few clients doesn't have the same needs as an online store processing hundreds of orders. So before comparing individual features, think about how money actually moves through your business.
Where do customers pay you? How many bank accounts do you have? Do you have employees? Which apps do you use every day? How many transactions do you deal with each month?
Why Choose QuickBooks?
QuickBooks has been around for a long time, and that gives it one advantage that's easy to overlook: a lot of accounting professionals already know how to use it.
If you start out doing your own bookkeeping and later decide you'd rather hand the work over to someone else, you shouldn't have much trouble finding accountants and bookkeepers familiar with QuickBooks.
QuickBooks Online covers the main tasks a small business needs. You can:
- create invoices
- record expenses
- connect bank accounts
- categorize transactions
- reconcile accounts
- generate financial reports
- Businesses with more complex needs can move to plans with additional features.
For a growing business, that flexibility can be useful. Take a small design agency, for example. The owner might have five clients and only a few expenses each month. Keeping the books isn't a huge job.
A year later, the agency has twenty clients, several freelancers, a growing software bill, and more money moving through the bank account. The bookkeeping hasn't changed completely. There's just a lot more of it.
QuickBooks can give a business a system to grow into instead of having to rebuild everything once things get busy.
What Makes Xero Different?
Xero handles many of the same accounting jobs, but its approach is a little different.
The platform puts a lot of emphasis on working online and sharing financial information between the people involved in the business. That's useful when the owner isn't the only person looking at the books.
For example, you might have a business owner checking cash flow, a bookkeeper handling transactions, and an accountant looking at reports before tax season. Everyone can work from the same set of records rather than passing spreadsheets around.
Xero also connects with a wide range of business applications.
That's particularly useful for companies that rely on several online tools. Your accounting software might need to work alongside your payment processor, ecommerce platform, payroll system, inventory software, or subscription billing system.
The less manual copying you have to do between those systems, the better.
Of course, Xero's plans and available features vary by country, so check the current offering in your market before making a decision.
Which One Is Easier to Use?
You'll probably find plenty of people online arguing that one platform is easier than the other. Someone who has used QuickBooks for five years will probably find QuickBooks easier. Someone who learned Xero first may feel exactly the opposite.
Your own experience matters. If you know very little about bookkeeping, you'll probably want something that doesn't make simple tasks feel complicated. If you're already comfortable with accounting software, you may care more about reporting, integrations, or specific features.
There's another factor that's even more important if you're planning to take help from bookkeeping services. Ask your accountant or bookkeeper what they prefer.
If they've been using QuickBooks for years, there's little benefit in forcing them to learn another system just because you read that it has a nicer interface. The same applies if your bookkeeping professional works primarily with Xero.
The best accounting software for small business is the software that fits your actual workflow.
What About the Cost?
QuickBooks and Xero both have different subscription plans which can vary depending on the features you choose. Making a decision solely on the basis of monthly cost is not always the wisest.
Think about what the software will cost you in time.
Suppose one option saves you two or three hours every month because it fits your process better. That time has value. You could be using those hours to follow up with customers, work on your product, find new business, or simply finish work earlier.
Also think about the extras. Do you need payroll? Will you need inventory management? How many people need access? Are there specific apps you need to connect? Will you eventually have a bookkeeper working in the account?
A low monthly price doesn't help much if you end up paying for several add-ons or spending hours cleaning up transactions.
QuickBooks vs Xero: Accounting Software for SaaS Businesses
SaaS businesses need to look a little deeper when choosing accounting software.
A subscription company might have monthly customers, annual customers, upgrades, cancellations, refunds, discounts, and payment processor fees. Add payroll and a growing list of software subscriptions, and the bookkeeping can become complicated surprisingly quickly.
This is why accounting software for SaaS businesses needs to fit the company's entire financial setup. Don't just look at what QuickBooks or Xero can do on its own. Look at the other tools your company uses.
What handles subscription billing? Where are customers paying? How does your payment processor connect to the books? Which payroll system do you use?
It's also worth thinking ahead. A process that works for a company with 50 customers may become a headache when there are 500. Your accounting setup should be able to keep up with the business rather than becoming something you have to replace every time you grow.
What If You Run an Ecommerce Business?
Ecommerce bookkeeping has its own set of headaches. You could have to track sales from several marketplaces, and also have to track refunds, payment processing fees, shipping costs etc.
Your bank statement doesn't always tell the whole story.
That's why integrations deserve plenty of attention when you're considering QuickBooks vs Xero.
If you use Shopify, Stripe, PayPal, Amazon, or another platform, check the exact integration rather than assuming it will work perfectly. Find out what information gets transferred and whether you'll still need to make adjustments by hand.
A small amount of manual work isn't necessarily a deal breaker. But when you're dealing with hundreds of transactions every month, those little jobs add up.
Accounting Software Doesn't Do the Bookkeeping for You
This is something business owners sometimes discover the hard way. Buying accounting software doesn't mean the books will automatically be correct.
Someone still needs to review transactions, categorize expenses, reconcile bank accounts, check reports, and investigate anything that doesn't look right.
When the business is small, you may be happy to do that yourself. But ask yourself how you feel about bookkeeping six months from now.
If you already find yourself putting it off, it probably won't get more enjoyable as the business grows. That's where online bookkeeping services for small business can help.
When Does Outsourcing Make Sense?
There isn't a magic number for when a business should outsource its books.
Some owners outsource almost immediately. Others keep everything in-house until they have a much larger operation.
Maybe your books are always a few weeks behind. Maybe you aren't sure whether your profit-and-loss report is accurate. Maybe bank reconciliations have become something you keep promising to get around to. Perhaps your books are perfectly fine, but you're spending eight or ten hours a month maintaining them.
That's still a good reason to look at bookkeeping outsourcing services.
So, Which One Should You Pick?
There isn't a single answer to the QuickBooks vs Xero debate.
QuickBooks is widely used and familiar to most accounting professionals. Xero may be suitable due to its approach to online collaboration.
But don't choose based on popularity alone. Look at your business.
A freelancer with straightforward finances doesn't need the same setup as a SaaS company. An ecommerce business has different concerns from a local service company.
Your software should fit those circumstances.
AccountiPro: A Professional Bookkeeping Services Provider
The QuickBooks vs Xero debate can go on and on, what’s actually important to understand is that the best accounting software for small business is not the most popular one, but the one that fits your business processes the best.
AccountiPro is a small business bookkeeping service with accounting and bookkeeping expertise in multiple industries. We provide several pricing options that fit your growing requirements. When outsourcing your bookkeeping services requirements to us, you don’t need to worry about the QuickBooks vs Xero debate, we have ample experience using both. If you want to focus more on other main business functions and experience the best bookkeeping outsourcing services, contact us today.
