Xero vs. QuickBooks Online: Features Comparison, Pros, Cons
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Xero and QuickBooks Online are both powerful accounting software solutions for small businesses. However, when you compare features, QuickBooks Online inches ahead for its stronger feature set, ease of sharing with accountants and customer support.
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. It’s also less expensive than QuickBooks Online and a bit easier to use, thanks to its customizable dashboard and simple layout.
Xero vs. QuickBooks Online at a glance
Xero | QuickBooks Online | |
|---|---|---|
Key features | Has robust reporting tools and report customization options, basic inventory tracking in all plans and a capable mobile app; Early plan limits the number of invoices and bills. | Has robust reporting tools and report customization options, invoicing for an unlimited amount of clients, inventory tracking in higher tier plans, plus a capable mobile app. |
Ease of use | Includes tools that help automate the reconciliation process, along with a global search function; has a simple layout and a customizable dashboard. | Includes tools that help automate the reconciliation process, along with a global search function; however, there is a learning curve. |
Scalability | Can support larger small businesses with dozens of employees; all three plans include an unlimited number of users. | Can support larger small businesses with dozens of employees; highest-tier plan includes 25 users. |
Ease of sharing with accountants | Includes audit trails and easy accountant access; although the product is gaining popularity in the U.S., it’s less popular than some competitors like QuickBooks. | Includes audit trails and easy accountant access; has millions of users so your accountant will likely be familiar with it. |
Integrations | Integrates with more than 1,000 apps. | Integrates with more than 750 apps and offers live, in-house bookkeeping add-on. |
Customer support | Does not provide a phone number to customers but a representative will call you if necessary; no live chat support. | All plans include 24/7 live chat support; phone support is available 5 a.m. to 6 p.m. PST Monday through Friday, and 7 a.m. to 4 p.m. PST Saturday and Sunday. |
Cost | Plans are affordable, starting at $13 per month, but no free plan. | Plans start at $30 per month. |
Advanced features | Includes project tracking tools in most expensive plan; limited transaction tracking tags; lacks industry-specific reports; users with multiple businesses must pay for separate subscriptions. | Includes project tracking tools in most expensive plan; limited transaction tracking tags; lacks industry-specific reports; users with multiple businesses must pay for separate subscriptions. |
Why QuickBooks Online wins
Stronger feature set
No invoice limit
All QuickBooks Online 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 affordable option at $13 per month. Otherwise, you’ll have to bump up your subscription or consider QuickBooks Online plans.
Claiming expenses
QuickBooks Online allows users to claim expenses and match them to photos of receipts in all plans, whereas Xero requires Xero Expenses, an additional feature only included in the highest-tier Established plan. If snapping photos of receipts to claim expenses on the go is a key mobile feature you’d like to have, regardless of plan level, QuickBooks Online might be a better fit.
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 in the Simple Start, Essentials and Plus plans. QuickBooks Online’s Advanced plan allows for unlimited tag groups. 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.
Accountant familiarity
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, though, there’s a better chance your accountant is familiar with QuickBooks Online than Xero. QuickBooks Online is an industry standard with more than 5 million users worldwide. If you count QuickBooks Desktop users, that number rises to 8 million. With more than 3 million users worldwide, Xero is popular but not as ubiquitous as QuickBooks Online.
Customer support
Business owners who prefer working through a hiccup on the phone will favor QuickBooks Online. The company offers phone support Monday through Friday from 5 a.m. to 6 p.m. PT and Saturday to Sunday from 7 a.m. to 4 p.m. PT. Advanced plan subscribers get 24/7 customer support. Xero doesn’t provide customers with a phone number but will call you if you provide your contact info.
When you might choose Xero instead
Unlimited users for a low cost
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 $200 per month. In contrast, all Xero plans offer unlimited users and its highest-tier Established plan is a more affordable $70 per month.
Ease of use
Xero is known for having a simple, sleek layout that could feel more approachable to business owners who are new to accounting basics. And unlike QuickBooks Online, the software lets you customize the dashboard so that you only see the most important information to your business. That could mean reordering panels or hiding them altogether.
Basic inventory tracking in all plans
If you can’t justify the $85-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.
Just keep in mind that unlike the inventory feature in QuickBooks Online’s higher-tier plans, Xero doesn’t let users set up reorder points that flag when stock is running low.
Xero and QuickBooks Online alternatives
Wave Accounting
Pricing: Free.
Wave Accounting is a free accounting solution for very small service-based businesses, contractors, freelancers and consultants. If you can’t justify paying for QuickBooks Online or Xero or they have too many features your business doesn’t need, Wave might be an ideal alternative. It has comparable invoicing features, but lacks an audit trail and doesn’t integrate with third-party apps.
» MORE: Wave vs. QuickBooks Online
Zoho Books
Pricing: Free and up.
With a free plan and paid plans starting at $20 per month, Zoho Books has plans for most budgets. Higher-tier plans include unique features, like workflow rules, on top of tools that help you measure project profitability. Phone support and live chat support are available 24/5 to all paying customers, but third-party integrations are limited compared to QuickBooks Online and Xero.
FreshBooks
Pricing: $17 per month and up.
FreshBooks can be a good option for freelancers and contractors looking for an affordable, simple accounting software. There’s time tracking in all plans and phone support is available from 8 a.m. to 8 p.m. ET. Monday through Friday. The first two plan tiers put a limit on billable clients, but not on invoices.
» MORE: FreshBooks vs. Xero
NerdWallet’s accounting software ratings favor products that are easy to use, have a robust feature set and can grow with your business. Ratings are based on weighted averages of scores in several categories, including scope of features and integrations, customer support and cost, among others. Learn more about how we rate small-business accounting software.
These ratings are meant to provide clarity in the decision-making process, but what’s best for your business will depend on its size, growth trajectory and which features you need most. Simplicity doesn't always translate into ease of use. Less scalable products are typically simpler, but diminished functionality can cause headaches down the road for growing businesses. We encourage you to research and compare multiple accounting software products before choosing one.
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