QuickBooks is a popular business accounting software that is used around the world. Xero is a newer but also a popular business accounting software that is more geared towards larger companies. They offer similar services, but there are unique differences between them that you and your accounting department should consider. In this article, we will go over the differences between these two products and help you decide which one is right for your business.
What Is QuickBooks?
QuickBooks allows users to manage their finances in an easy-to-use interface that can be accessed from anywhere with internet access. It is available as both QuickBooks Online, which is a cloud-based service, and as QuickBooks Pro which is their desktop version. This makes it perfect for any type of company, whether they have employees or are a sole proprietor.
If you run a payroll service, QuickBooks helps you easily set up paychecks, calculate tax deductions, connect bank accounts, manage banking transactions and online payments, and get everyone on the company payroll with ease. It also manages timesheets and allows employees who work overtime to log extra hours directly onto tasks, making it easier to track wages accurately. You can easily manage your business taxes and your quarterly taxes.
If you sell items online, the inventory management system allows you to keep track of your inventory levels at all times. You can import inventory orders, add new items, update existing inventory, view sales history, and compare current inventory stock levels to previous years. You can easily view your balance sheet and expense tracking with this business accounting software.
QuickBooks’ customer relationship management system allows you to organize customer information into categories such as contact details, purchase histories, and more, making managing customers easier than ever before. Billing and Invoicing is generated automatically when certain events occur. For example, if you receive payment, you can generate an invoice immediately and it will calculate shipping costs, tax rates, and other fees associated with selling goods. There is also an invoice template if you are new to creating them and want to make sure you have included all the necessary information. Expense reporting is also simplified through categorized transactions based on location, category, date, and amount. You can quickly find specific expenditures using filters and search criteria. The ease of expense reporting and the search functions take away a lot of the guesswork and frustration with accounting, bank reconciliation, and business taxes, even for established accountants.
What is Xero?
Similarly, Xero is cloud accounting software designed specifically for businesses. Its main focus lies in helping companies save time and money by automating processes. In addition to this, it offers robust security measures to protect sensitive financial data.
The most obvious advantage of Xero over traditional desktop accounting programs is speed. Since it runs entirely in the cloud, there are no downloads required; all updates happen instantly. There are no installation steps either, which means less downtime during setup. Once installed, Xero takes care of itself. No more worrying about backups, upgrades, or system crashes! QuickBooks Online also benefits from automatic upgrades and backups without the need to initiate these on your own. However, while both systems are free from the worry of local problems that come with desktop, laptops and other devices, they are still sometimes vulnerable to network crashes since they depend on a consistent internet connection.
Another major advantage of Xero is scalability. Unlike desktop applications, Xero doesn’t limit growth. As long as you’re connected to the Internet, you’ll always have access to updated versions of your software. New features come along regularly, so unlike some legacy systems, your business won’t be left behind.
Xero was designed with simplicity in mind. It is easy to use and does not require any technical knowledge. It is suitable for small businesses and individuals, though their main customers do tend to be larger businesses. With their app, you can check your account anytime, anywhere, and access your account from any device. It is compatible with Android, iOS, Windows, Mac, and Linux operating systems, and seamlessly integrates with Google Drive and other third-party apps.
Xero also has comparable invoicing and billing systems to QuickBooks. It allows users the ability to customize reports for specific needs besides adding images, graphs, charts, and tables to their reports. The customizability of their reporting is an excellent feature if you have highly specific reporting needs.
Another big benefit to Xero are its powerful security features. Data encryption ensures that nobody but you can read your personal information. User authentication keeps unauthorized people off your computer. And user permissions prevent others from accessing areas of your account that aren’t meant for public viewing. You can add second factor authentication to your accounts, requiring each employee to login using both a password and a phone number to access Xero. Xero also includes automatic back-ups, giving you an extra level of protection for your small business data.
Xero also comes with 24/7 customer support via phone, email, chat, and social media. They offer free employee training and ongoing support through a customer service team that can answer any questions at any time.
So what’s the difference?
The main difference between the two comes down to the pricing plan and customization options based on your needs. QuickBooks has both a cloud and a desktop-based version, while Xero runs solely in the cloud. Both are user friendly and each accounting dashboard is attractive and simple to navigate. Managing bills, expenses, invoicing, connecting your bank, and managing other financial transactions is comparable between the two programs, giving you an accurate picture of your business transactions and your overall financial health.
Both provide multiple plan options where the pricing is based per month per person. Each option also offers a robust array of integration with various third-party apps, such as Google Drive, CRMs (customer relationship management software), time tracking tools, email marketing, project tracking, and ecommerce. You will need to compare and verify that your existing systems will work with QuickBooks and Xero, which can help you make a final decision on a software for your business bookkeeping.
In terms of pricing and scalability, QuickBooks is popular with freelancers and small businesses because of the low cost. QuickBooks Online offers three versions based on the number of users, going from $25 a month for one user up to $180 a month for 25 users, though they also regularly offer promotions to start using QuickBooks Online for half-price for the first three months. QuickBooks Pro offers an annual desktop subscription for $299.99, with a similar promotion for 50% off in the first three months. QuickBooks gives you an incredible amount of value at even the lowest price point, allowing you to access all the key features of their accounting software at a reasonable cost.
Xero is attractive to more mid-level companies with up to 1000 employees due to its scalability. Xero offers three pricing tiers from $11 per month with limited features to $62 a month with full functionality. They regularly offer joining discounts similar to QuickBooks Online, and also give you the option of an add-on feature, Payroll with Gusto, for an additional monthly fee. The difference between their cheapest plan vs. QuickBooks Online is that there is a limit to how many invoices per month you can process. These limits make the basic plan with Xero a better choice for freelancers or entrepreneurs with side hustles. Where Xero has the advantage is in its scalability, with additional features that can grow as your business and budget grow. It also has an excellent user experience and intuitive design. In fact, one of Xero’s marketing taglines is “beautiful accounting software”, and it really is both beautiful and easy to navigate.
So QuickBooks or Xero? The short answer is still, it all depends. But both are excellent options and you won’t go wrong with either choice. Think about the needs of your business now, both in terms of the functionality and budgetary restrictions, but also consider the future you envision for your business. Which option is going to best support the growth that you see. Finally, it never hurts to check in with your accountant for advice. They may have experience or a preference that helps you decide what is best for your growing business.
Sound Accounts provides bookkeeping, payroll, licensing, and notary services. Contact us for a free business assessment and consultation on what software best fits your small business needs.
