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Every business needs a good system for its accounts, from the smallest startup to the biggest multinational − not to mention freelancers.
Two of the most popular choices for accounting software are Xero and QuickBooks Online. Each are comprehensive tools offering most of the essential accounting features that small-to-medium size businesses need. But which is the right choice for your company?
In this guide, we’ll compare Xero and QuickBooks head to head, looking at the pros and cons, features, fees and much more. So let’s get started.
|Integrate Xero or Quickbooks with Wise and start saving time and money today
Xero and QuickBooks Online are both user-friendly, streamlined and cloud-based. They both have an app, and pricing based on a monthly subscription model.
But they also have a few differences, starting with the price. Xero is slightly more expensive than QuickBooks, but it doesn’t have limitations when it comes to users (although the cheaper plan does have some restrictions). You can also cancel anytime with QuickBooks, whereas Xero requires a month’s notice of cancellation.
Comparing features is key when looking for accounting software, as you don’t want to end up paying for functions you don’t need - or find yourself locked out of ‘premium’ features that really could save you time. Another good thing to consider when choosing between QuickBooks and Xero is scalability - how easy is it to upgrade your plan if your business needs change?
Launched in New Zealand in 2006, Xero has become one of the top accounting tools on the market. It has over 2.7 million subscribers¹ across a number of countries, including the UK, Australia and New Zealand.
This all-in-one accounting software is particularly popular with startups and younger business owners, and is known for its clean, uncluttered interface.
Xero’s many features include:
- Payroll, expenses and invoicing all in one place
- Sync with your bank
- Automate invoicing and reporting
- Real-time collaboration with your accountant or employees.
- Many options for customisation, including integration with 800+ third-party apps²
- Add-ons such as Xero Payroll, Xero Expenses and Xero Projects.
The Xero mobile app is for Android and iOS devices is free when you sign up for a subscription. It offers easy access to Xero’s accounting tools on the move, including looking up contacts, sending invoices and reconciling bank transactions.
In the Xero app, you can also:
- Monitor spending
- Convert quotes into invoices in just a few taps
- Set reminders for bills to pay
- Access reports on the move.
First launched in 2001³, QuickBooks Online is a cloud-based accounting service from Intuit with a monthly subscription plan. Over 4.5 million small businesses⁴ use the platform.
QuickBooks bills itself as ‘smart, simply accounting software - with no commitment’⁴. It’s particularly good at helping businesses to streamline repetitive tasks, and manage accounting processes from just their smartphone.
It’s many features include:
- Sending professional invoices in moments
- Upload receipts for business expenses
- Run payroll - including time tracking
- Submit VAT in line with HMRC’s Making Tax Digital rules - including a VAT error checking feature
- Connect with your accountant
- Connect all bank accounts in one place
- Real-time reporting for profit and loss, and cashflow insights.
QuickBooks Online is an offshoot of Intuit’s general desktop-based accounting software QuickBooks.
The Online version has a monthly subscription charge, rather than a hefty upfront fee. It’s also cloud-based and designed for use on the move, so you can access it from your laptop, smartphone or other mobile device.
While searching for accounting software, you might also come across something called QuickBooks Online Essentials. This is a different product than the ordinary accounting software, and it’s specially designed for service-based businesses which invoice for their time. With this tool, you can automate invoices on a recurring schedule, track income and expenses and pay multiple vendors at the same time.
With the QuickBooks app, you can stay on top of all your business finances and accounting from your phone. Available for free on iOS and Android when you’re a QuickBooks Online customer, the app offers instant access to your QuickBooks dashboard, including accounting reports, invoicing and much more.
All your data is automatically backed up to the cloud and synced across all your devices, so any changes made on the move will be updated when you next login in your laptop or desktop. This includes snapping pictures of your receipts and uploading them via your phone.
|Unlimited invoices and bills
|Yes (but not with Starter Plan)
|Yes (but not with Start plan)
|Yes - for extra cost
|Yes - (AutoEntry receipt capture tool free with Standard Plan for 3 months)
|Reconcile bank transactions
|Submit VAT to HMRC
|Yes - for extra cost
|Yes - for extra cost
|Free mobile app
|Yes (with Premium plan)
|Yes (with Plus plan)
|Yes - including free telephone support
|Yes - including live chat and callback from small business accounting experts
A multi-currency account that integrates with the major accounting software is one of the most wanted features for global businesses. It's because they're hard to find. Most high street banks support international payments but they’re often expensive, slow and with limited features and currencies that you can send and receive.
But here’s where Wise Business shines. Both Xero and Quickbooks integrated with Wise which means that you can use your Wise multi-currency account to automate international transactions and sync them to your accounting records.
Through Wise, you can reduce the hefty fees most banks charge on international transactions - it's simply one less thing to worry about and you even can earn a return on the money you hold.
|Xero - monthly cost⁶
|QuickBooks Online - monthly cost⁶
|Sole trader/small business
|Growing small businesses
Xero only has three price plans compared to QuickBooks’ four. It’s most basic ‘Starter’ plan is for sole traders and startups and offers up to 20 invoices/quotes and 5 bill payments a month. The Standard plan doesn’t have an upper limit on invoices and bills, while the most expensive Premium plan lets you manage accounting in multiple currencies.
All three plans have optional add-ons for an extra cost, such as Payroll from an additional £5 a month.
QuickBooks splits its pricing plans into two categories - one for freelancers and sole traders, and another for businesses. If you only have Self Assessment to worry about, you can choose a Self-Employed or Simple Start plan for the very low price of £4-6 a month. Both are limited to just 1 user.
If you pay VAT, work with suppliers or are a growing business, you can take your pick from Essentials (up to 3 users) or Plus (up to 5 users). The features list grows with the monthly subscription cost, and you can bolt-on extra services such as Payroll for a small extra monthly fee.
One of the most important features any accounting tool can offer is integration with your business bank accounts. Ideally, you’ll want all your transactions flowing seamlessly into the software, with regular updates helping you keep on top of your cashflow. Both can integrate seamlessly with Wise Multi-currency account which is specifically handy for sending and receiving international payments.
Xero has automatic bank feeds, which means that all you have to do is make the initial connection between the software and your bank. After that, the data will be updated automatically every business day. There are no manual uploads needed, and you can set up secure, encrypted feeds from any number of different bank accounts.
Plus, you can import up to 12 months of transactions when you first use Xero, so you’re not starting from scratch.
With QuickBooks, you can connect any bank account to the platform provided that the bank is supported under the Open Banking regulations. You can even connect company credit card accounts.
Once connected, QuickBooks bank feeds give you an accurate, real-time view of your cashflow and finances. The platform will download all transactions from the last 90 days, and will also let you import up to 2 years of historical transactions. Data imports are automatic and secure, but you will need to reconfirm the connection occasionally for security purposes.
There’s a lot to think about when comparing and choosing accounting software for your business, and not only the monthly cost. It’s tempting to go for the cheapest plan, but this could mean having to pay extra for the add-on features your business needs.
Hopefully after reading this guide, you should have a better idea of what both Xero and QuickBooks have to offer. The good news is that both platforms let you cancel at short to no notice, so you can test each out before making up your mind.
Sources used for this article:
- Xero About page
- Xero website
- Quickbooks blog post
- Quickbooks website
- Xero Pricing Plans
- Quickbooks pricing
Sources checked on 01-June-2021.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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