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Xero and QuickBooks Online are both powerful accounting software solutions for small businesses. However, when you compare features, QuickBooks Online is the stronger candidate, especially for business owners who prioritize scalability and the ability to loop in accountants. And if you want to gain deeper insight into the logistics behind your business as it grows, QuickBooks Online’s reporting capabilities scale up with each plan level.
This doesn't mean QuickBooks Online is the right choice for all businesses, though. Xero's unlimited-users feature makes it a winner among larger businesses and well-established small businesses that require more than five users. Its $11 per month Early plan is also a fantastic deal for self-employed people who don’t need to send out more than 20 invoices per year.
Xero vs. QuickBooks Online overview
Businesses that need more than five users and self-employed people who don't need to send out more than 20 invoices per year.
Businesses that plan to grow and want strong reporting capabilities.
Maximum number of users
Sharing with accountants
Good. Invite your accountant via email and assign them adviser permissions. With over 2.7 million subscribers worldwide, Xero is well-known but not as popular as QuickBooks Online in the United States.
Excellent. Email your accountant a link to log into your QuickBooks account. QuickBooks Online has 5.3 million users worldwide, meaning your accountant is likely familiar with it.
Good. Xero’s Growing plan gives small businesses room to expand with the option of upgrading to the Established plan down the road.
Excellent. Advanced, customized reporting capabilities in higher-tier plans could be a big asset to experienced business owners interested in running more complicated reports down the road.
Ease of use
Excellent with an 8.9 usability rating from TrustRadius, a review site for business technology.
Excellent with an 8.3 usability rating from TrustRadius, a review site for business technology.
Why QuickBooks Online wins
QuickBooks has a long history of accounting expertise. The company launched its desktop product in 1983 and the online version covered in this article has been around since 2001. While Xero, founded in 2006, is certainly catching up, QuickBooks Online is arguably the more familiar name among both consumers and accountants in the United States.
Aside from being an industry leader among accounting software products, its transaction tagging feature and selection of reporting customizations are especially noteworthy. These are both crucial to staying organized, setting goals and predicting trends, especially if a business owner wants to grow their operation.
This category carried the most weight in the scalability comparison. While the number of users and invoices are important, some small businesses will never need more than a few users or 100 accounts. However, as business owners learn more about accounting, they might want to run more detailed reports, and that capability increases with each of QuickBooks Online’s four plan tiers. While Xero’s highest-tier plan lets users graduate to tracking projects and claiming expenses, its other reporting capabilities stay relatively fixed.
Transaction tracking tags
Both Xero and QuickBooks Online have their own versions of transaction tracking tags, but QuickBooks Online is the winner in this arena. Xero lets users create two active tracking categories, while QuickBooks Online allows users to create 40. The more categories you create, the more reports you can run to get a better idea of how your business functions and where there's room to grow.
For example, you could create a location category with subcategories for each city where you deliver. (That would count as one category.) You could create an order status category with options like completed, pending and incomplete. Other category tag ideas include customer type, vehicle, needs receipt or ask my accountant.
Both accounting software products let users invite their accountants by email. The process shouldn’t take more than a couple of minutes. If you’re located in the United States, there’s a better chance your accountant is familiar with QuickBooks Online than with Xero.
Mileage and time tracking
Xero users track mileage and time through Xero Expenses, a tool included only in the highest-tier Established plan. QuickBooks Online incorporates mileage tracking into all plans, and time tracking is available in the Essentials plan and up. If you have only a few users and don’t need to track projects, you might consider QuickBooks Online’s Essential plan over Xero.
Business owners who prefer working through a hiccup on the phone will favor QuickBooks Online. The company offers support by phone or online chat Monday through Friday from 6 a.m. to 6 p.m. PT and Saturday from 6 a.m. to 3 p.m. PT. Business owners with the Advanced plan get 24/7 customer support. Xero primarily offers online support, which is available 24/7. The company says it has no published phone number but will call you if you provide your contact info.
QuickBooks Online allows users to claim expenses in all plans, whereas Xero requires Xero Expenses, an additional feature only included in the highest-tier Established plan.
Number of invoices
Though QuickBooks Online limits the number of users, all its plans support unlimited invoices. Xero’s Early plan, recommended for self-employed people or brand-new businesses, allows 20 invoices per year. If you only send out an invoice or two each month, the Early plan is an extremely affordable option at $11 per month. Otherwise, you’ll have to bump up your subscription or consider QuickBooks Online plans.
QuickBooks Online is an industry standard with 5.3 million users worldwide. If you count QuickBooks Desktop users, that number rises to 8 million. With more than 2.7 million users worldwide, Xero is popular but not as ubiquitous as QuickBooks Online. The numbers alone suggest there’s a better chance your accountant has worked with QuickBooks.
When you might choose Xero instead
If your business places top emphasis on inventory management, the number of users and fixed asset management, Xero could be the smarter choice. This is especially true for larger businesses that use reporting integrations and don’t have to rely on their accounting software for that.
If you need to give accounting access to more than five people, Xero could be the better option for you. QuickBooks Online’s most popular Plus plan tops out at five users; its highest-tier Advanced plan allows up to 25 users, but that plan is expensive at $180 per month. In contrast, Xero’s highest-tier Established plan is $62 per month, with no cap on the number of users. All things considered, however, user limits shouldn't be a huge deal unless you have a larger business.
If you can’t justify the $80-per-month QuickBooks Online Plus plan, you won't get inventory management, because QuickBooks Online's lower-tier plans don’t come with it. This could be a real shortcoming for small online retail businesses, for instance, that need to keep track of their products and the materials used to make them. All of Xero’s plans come with inventory management so business owners can track what’s in stock and which products are selling.
Fixed asset management
While Xero includes fixed asset management in all plans, QuickBooks Online requires users to either download a third-party add-on or manually set up an asset account. Though both companies suggest users work with an accountant to manage depreciation of assets, Xero does a better job of cutting out the work for you.
Where QuickBooks Online and Xero tie
When you finally decide on accounting software, the hope is that you’ll be comfortable using it. Before making any decisions, it’s worth taking each product for a test drive to check out its dashboard and shortcuts. While both Xero and QuickBooks Online have been rated user-friendly and have a clean look, you might find you prefer one layout over the other.
As a Xero user, when you choose an account and navigate to the Reconcile tab, the page is organized into two columns: “review your bank statement“ and “then match with your transactions in Xero.” An “OK” button in each row gives you the option to confirm each match.
QuickBooks Online takes a different approach, with a long list of transactions in the Reconcile tab. After connecting QuickBooks Online with your bank accounts, check off each transaction that matches up with an expense from that month's bank statement. QuickBooks Online recommends printing out bank statements to make cross-referencing easier.
More differences between Xero and QuickBooks Online
More than 1,000 apps including deep integration with Gusto for payroll.
More than 650 apps including QuickBooks Time, QuickBooks Payroll and Gusto.
Yes. Apple’s App Store gives it 4.5 out of 5 stars based on more than 550 reviews. Google Play gives it 4.5 out of 5 stars based on more than 5,700 reviews.
Yes. Apple’s App Store gives it 4.7 out of 5 stars based on 127,000 reviews. Google Play gives it 4 out of 5 stars based on more than 42,000 reviews.
Established plan only.
Comes with Essentials plan and up.
Established plan only.
New users get free access to all of Xero’s features for 30 days before deciding on a plan.
50% off for the first three months or try out a 30-day free trial.
24/7 online support. No customer support phone number.
Simple Start, Essentials and Plus offer customer support via phone or online chat Monday-Friday from 6 a.m. to 6 p.m. PT and on Saturday from 6 a.m. to 3 p.m. PT. The Advanced plan has 24/7 support.
While Xero connects with multiple lenders, it doesn’t offer its own small-business loans.
Apply for small-business loans directly through QuickBooks Capital.
20 with Early plan; Unlimited with Growing and Established plans.
Unlimited with all plans.
Established plan only.
Plus plan and up.
Established plan only.
Established plan only.
Essentials plan and up.
How QuickBooks Online compares
Read more about how QuickBooks Online stacks up against the competition.