Xero vs. QuickBooks: Which is Best for Your Small Business?

Small Business Owners Comparing Xero vs Square

If you haven’t taken any classes in accounting, using QuickBooks can feel overwhelming. People with accounting backgrounds love the software, but it lacks some user-friendliness for those outside of the accounting profession. Since QuickBooks has been the giant in the small business accounting industry for many years, the choices for keeping the books were limited.

Thankfully, the small business accounting software market is starting to change as new accounting apps are developed, offering alternatives to the old system.

In particular, Xero Accounting, which was created in New Zealand, and is the go-to accounting software in Australasia, has made doing the books a much easier and more fun part of running your small business.

Here’s what you need to know about how Xero Accounting compares to QuickBooks Online:

What Both Xero and QuickBooks Offer

If you need basic accounting software, you are generally going to get the same functions whether you choose Xero Accounting or QuickBooks Online:

  • Bank synchronization
  • Bank reconciliation
  • Accounts payable
  • Accounts receivable
  • Inventory
  • Invoicing
  • Bill management
  • Payroll
  • Financial reporting
  • Cashflow quick views
  • Multi-currency
  • Document sharing
  • Quotes

Price Comparisons

It’s a little tough to compare the prices of Xero and QuickBooks because they do not have exactly the same offerings at the same levels. The biggest financial difference between the two is the fact that every single Xero plan offers unlimited users, while QuickBooks limits the number of users allowed to access the software.

Xero’s most basic software, the starter plan, is $9 per month (although there are often introductory offers that can lower their prices for a period). With this program, users can create and send up to five invoices per month, enter and pay up to 5 bills per month, and reconcile up to 20 bank transactions per month. QuickBooks Simple Start, on the other hand, is $15 per month (with similar introductory offers), and will allow you to send unlimited estimates and invoices and download transactions from your bank and credit card account. You cannot manage and pay bills with Simple Start.

Unless you have very few transactions per month, QuickBooks Online Simple Start is a better option for small businesses needing bare minimum accounting software.

Once you go further up the ladder, however, Xero tends to offer more bang for its buck. In particular, if you want to take care of payroll in your accounting software and you have 10 or fewer employees, Xero’s pricing is going to be the better bet:

Plan-TypeXeroQuickBooks Online
Mid-LevelStandard ($30/month)Essentials ($30/month), Plus ($40/month)
With Payroll, 5 EmployeesStandard ($30/month)Essentials with Enhanced Payroll ($69/month, plus $2/employee per month), Plus + Payroll ($79/month, plus $2/employee per month)
With Payroll, 10 EmployeesPremium ($70/month)Essentials with Enhanced Payroll ($69/month, plus $2/employee per month), Plus + Payroll ($79/month, plus $2/employee per month)

Ease of Use

Any newbie who has ever tried to learn QuickBooks on the fly knows that the user interface is not exactly intuitive. Xero, on the other hand, aims to make their accounting software beautiful, and their easy-to-use dashboard does just that.

For instance, bank reconciliation with QuickBooks often feels like a soul-sucking, time-intensive chore. With Xero, you choose “Reconcile Account” from the Manage Account menu in the Bank Account view. At that point, the program offers you two matched columns: one on the left, showing the bank statement line items, and the one on the right showing the transactions recorded in the program. If your payment amounts align, they’re marked with a green OK button that you can click to verify the reconciliation.

In addition, you can define “rules” for incoming transactions so that every bill that comes in from the office supply vendor will be categorized as an office expense. Also, if you are having trouble reconciling a transaction, you can click “Find Match” to search through your records. This is invaluable if you have a customer who is paying two invoices with one check, for example.

Though Xero’s dashboard and interface tend to be more intuitive, QuickBooks does offer some ease-of-use benefits. In particular, accessing transactions in QuickBooks overlays the new transaction over top of the window you are already on, meaning that you are back in that same window when you close the new transaction and have not been navigated elsewhere.

Previous incarnations of Xero did not offer a universal or global search option like the one in QuickBooks, wherein you can search for something from anywhere in the software. However, Xero has been listening to its users, and they have added the global search option to its newest update.


Both QuickBooks Online and Xero are cloud-based programs, and they both offer free mobile apps for iPhone/iPad and Android devices. Xero’s mobile app (Xero Touch) is perfectly designed for monitoring real-time cash flow and keeping track of your transactions from a mobile phone. The app also allows you to make and send invoices right from the app, as well as snap pictures of receipts and store them within the app.

QuickBooks’ mobile app is more like the desktop dashboard shrunk down. Using the QuickBooks app on a tablet is a perfect fit, but it can be somewhat frustrating on any device with a smaller screen than that.


Whether you choose Xero or QuickBooks Online, you can rest assured that you will be receiving top-level security from your accounting software. Both companies house their servers in secure Tier 4 data centers, employ SSL encryption for data transfer, offer two-factor identification for logins, go through external security audits, and back up user data in multiple locations.

Customer Service

Encountering a problem in your software is one of the most frustrating aspects of doing your accounting, particularly since small business owners are not as likely to be doing the books during normal business hours, which means they have to wait until morning to get their questions answered.

However, Xero offers live email support 24/7/365, so hitting a snag in the wee hours before a deadline does not have to be the end of the world. Once you email with your issue, the customer support personnel will either email you a response back or will call you if the issue can’t be addressed via email.

QuickBooks, on the other hand, offers live phone support only from 6am-6pm PST Monday through Friday, and from 6am-3pm Saturday. If you have a problem late Saturday night with your QuickBooks Online software, you will not be able to get it resolved until bright and early Monday morning.

The Bottom Line

QuickBooks Online is a solid cloud-based accounting program that will take care of everything a small business owner might need. It is not, however, particularly intuitive, and new business owners who do not have a background in accounting may find that taking care of their books with QuickBooks will become their most dreaded task.

Xero offers a much easier-to-understand interface, which makes keeping the accounts more enjoyable. The fact that it also offers unlimited users and does not charge you per employee for payroll services makes it a great choice for most small business owners.

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