Xero vs. QuickBooks Online: Which Accounting Solution is Right for Your Business?

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Xero and QuickBooks Online (QBO) provide bookkeeping and accounting software with pricing much lower than an ERP system with full functionality to manage business processes throughout the organization. Both Xero and QuickBooks Online integrate with many third-party add-on apps that supplement the basic accounting features, adding more capabilities and efficiency.

Xero is cloud accounting software. We compare Xero to QuickBooks Online because QuickBooks Online is a more likely purchasing choice for companies seeking cloud-based software than QuickBooks Desktop, which is offered as on-premises with optional remote hosting instead.

Our Xero accounting vs QuickBooks Online comparison will help you evaluate both invoicing and business accounting software solutions. As part of your accounting software evaluation, decide whether Xero or QuickBooks for small business is a better match for your business needs. 

Pros and Cons of Xero vs QuickBooks Online

Pros of Xero vs QuickBooks Online

  • Xero is a newer product designed with an intuitive and modern user interface 
  • Xero has more mobile apps and features than QuickBooks Online
  • Xero number of users is unlimited, but transaction limits apply in lower pricing plans
  • Xero lets you select a default customer discount for your contacts 

Cons of Xero vs QuickBooks Online 

  • Xero offers free online 24/7 support, but QuickBooks Online offers more free customer support, including online support and the option to speak to a human for more information
  • QuickBooks Online includes automatic backups and feature updates, but Xero doesn’t provide automatic backups
  • Xero’s AI-driven short-term cash flow forecasting only covers either seven days or 30 days in the future, but QuickBooks Online Cash Flow Planner forecasts for 90 days

What is Xero?

Xero is an innovative cloud accounting solution developed and provided by a New Zealand company, Xero Limited, which has U.S. and other global regional operations. Xero users are small businesses. The software is user-friendly with a modern user interface that provides a fast learning curve to master its online accounting features, customizable dashboards, and real-time data and reports. 

Xero serves two million users worldwide, with leading cloud accounting market share in New Zealand, Australia, and the U.K. 

In U.S. dollars, Xero had $877.6 million in SaaS annual recurring monthly revenue (AMRR), according to its investor presentation for the six months ended September 30, 2020. Xero is experiencing 15% AMRR year-over-year growth in constant currency. 

What is QuickBooks Online?

QuickBooks Online is a cloud-based invoicing and accounting software for small businesses and their accountants, bookkeepers, or small business owners, with a fast-growing worldwide user base. Intuit, a U.S.-based company that also makes TurboTax, owns QuickBooks. QuickBooks Online provides real-time data, reports, and dashboards.

The QuickBooks Online Advanced pricing plan brings QuickBooks Online into mid-market-sized small businesses with up to 100 employees, according to the Intuit Form 10-K SEC filing for the fiscal year ended July 31, 2020. 

In the same 10-K filing for the fiscal year ended July 31, 2020, Intuit reported that QuickBooks Online Accounting net revenue of $1.354 billion grew by 38% for the fiscal year and 41% in the prior year. For the quarter ended January 31, 2021, Intuit disclosed that QuickBooks Online growth was 22%, resulting from customer growth and a shift in product mix ( to higher pricing plans). (QuickBooks Online growth is much faster than that of QuickBooks Desktop.)

Xero vs. QuickBooks Online

FeatureXeroQuickBooks Online
Cloud-based YesYes
Mobile app (iOS and Android)Yes, including Xero Accounting, Xero Expenses (to track expenses and mileage), Xero Projects (to quote, track projects (including time tracking and expense tracking), and invoicing jobs), and Xero Me (for employees of companies using Xero payroll –  to  submit timesheets for approval and payment, view and download payslips, and request leave)Yes, with limited features
Maximum number of usersXero doesn’t define a limit for the number of users, but lower-end Xero pricing plans have transaction limits25 users for QuickBooks Online Advanced; other QuickBooks Online plans have lower limits for the number of users
Invoice templatesYesYes
Online invoicing with a Pay Now button sent to customers in an emailYes, Xero lets users accept payments online, including invoices with a Pay Now buttonYes, for QuickBooks Payments users
Bank feeds of bank transactions for matching and recording and bank reconciliationsYesYes, included in QuickBooks Online.
Industry-specific editionsNoYes, but limited to service industries: QuickBooks Online Essentials for service businesses that invoice their time 
Calculate discounts by customerYes, Xero lets you add a sales discount to a contactNo
Inventory tracking and inventory managementYesYes
Project tracking and job costingYes, job costing including the Xero Projects app or WorkflowMax for businesses with more complex requirementsYes, in QuickBooks Online Plus or Advanced plans (called Projects used for project management), project profitability can be tracked
Time tracking Yes, in all versions of Xero with Xero ProjectsQuickBooks Online Essentials, QuickBooks Online Plus, and QuickBooks Online Advanced plans include time tracking
MulticurrencyYesYes, in QuickBooks Online Essentials, Plus, or Advanced, if users turn on the feature
Automated recurring payments collectionYesYes
Cash flow forecasting using artificial intelligence (AI)Yes, Xero has an AI-powered short-term cash flow forecasting tool (for a 7-day or 30-day future time period)Yes, QuickBooks Online added an AI-driven Cash Flow Planner with a 90-day time horizon
Bank account reconciliationsYesYes
Customer support24/7 online customer support with all plansQuickBooks Online support is free with limited hours excluding Sundays for Plus, Essentials, and Simple Start; any time and any day for QuickBooks Online Advanced that includes talking to a human for more information with phone support
Automatic data-encrypted backups and feature updatesNoYes
Restore company files with dataNoYes, included. 
QuickBooks syncing with LivePlan for business plan creation, forecasting, and budgetingYesYes
Accountant version for CPAs and bookkeepersYesYes
Third-party cloud-based add-on appsYes, 3,000+ add-on apps for CRM, eCommerce (including Shopify, Stripe, and GoCardless), AP automation, syncing, and other functionality are available for Xero in an app marketplace (700+), using Zapier, or directly from third-party vendors.Yes, 3,000+ add-on apps for CRM, eCommerce (including Shopify and Stripe), AP automation, syncing, and other functionality are available for QuickBooks Online in an app store (650+), using Zapier, or directly from third-party vendors.
PayrollYes, Xero offers optional payroll, with Gusto for an additional priceYes, QuickBooks offers optional online payroll for an additional price

Xero vs. QuickBooks Online Pricing

Xero  Pricing

Xero pricing plans have a SaaS monthly subscription fee:

Xero Pricing Plan Standard Price Per MonthCurrent Discounted Price Per Month for  First Two Months
Optional add-on Payroll with Gusto Additional monthly fee from $39

Discounts offered may change. Xero doesn’t charge a per-user fee in the United States. 

QuickBooks Online Pricing 

QuickBooks Online pricing is based on a SaaS monthly subscription:

QuickBooks Online Pricing Plan Standard Price Per MonthCurrent Discounted Price Per Month for the First Three Months
Simple Start$25.00$12.50
QuickBooks Online Essentials
(for service businesses)
QuickBooks Online Plus $70.00$35.00
Self-Employed (Freelancer)$15.00$7.50
Add-on Payroll and QuickBooks Time (formerly TSheets) for time trackingAdditional monthly fees

Discounts offered may change. For QuickBooks Online, optional one-time bookkeeping setup is $50.00. QuickBooks Online doesn’t have a per-user fee. 

Do Xero and QuickBooks Online Offer Payments Processing?

Both Xero and QuickBooks Online can be used and synced with online payments processing transactions from different online payment processors. 

Xero uses third-party add-on connections allowing users to accept payments online. With Stripe integration, users can accept credit cards, debit cards, and Apple Pay from their customers. With GoCardless, customers can pay them by using an ACH debit (bank transfer). Users can choose other third-party add-on apps to integrate with Xero for payment processing. 

QuickBooks Payments for QuickBooks Online is an optional payment processing service that offers approved users a choice of payment methods, including credit card, debit card, Apple Pay, PayPal, online invoices, or ACH bank transfer (through Intuit Merchant Services). Customer payments are remitted to the merchant’s designated bank account. 

Do Xero and QuickBooks Online Use AI and ML to Automate and Streamline Workflows?

Both QuickBooks Online and Xero use artificial intelligence (AI) and machine learning to automate workflows to some extent. Businesses can integrate a scalable SaaS third-party AP automation solution to access more advanced automation and global payments capabilities. 

Xero uses AI and machine learning, including HubDoc, to automate workflows, available in all of its pricing plans. 

QuickBooks Online is emphasizing the importance of using AI to automate some workflows with QuickBooks Online Advanced. 

Add-on third-party AP automation software can be integrated with both Xero and QuickBooks Online accounting software or ERP systems. The best AP automation software starts with self-service supplier onboarding through a supplier portal.  AP automation software uses AI and machine learning (ML), rules-based screening, and robotic process automation (RPA) to provide more efficient and extensive end-to-end payables and global payments solutions

Summary – Xero vs. QuickBooks Online

Both New Zealand-based Xero and U.S.-based QuickBooks Online are large, established companies with impressive revenues and growth rates, serving a worldwide small business customer base, beginning with startups. QuickBooks Online is more widely used in the United States. 

Which is the best accounting software for small business?

When you evaluate and compare Xero to QuickBooks Online for your small business, refer to our guide and find as much other information as you can for these cloud accounting software solutions. Only your company can decide if Xero is better than QuickBooks Online or QuickBooks Online is better than Xero, based on your specific business needs and checklist. 

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