Choosing the right accounting software plays a significant role in managing your business’s finances. Accounting software helps you complete bookkeeping tasks, track expenses and revenue, and send invoices to your customers. Two of the best small business accounting software programs are QuickBooks and Xero, which both command strong followings among accountants and business owners.
This article will help you choose between these two popular options by breaking down their key differences. We examined how QuickBooks and Xero compare on several critical criteria, including price, invoicing capabilities, customer service and third-party integrations.
QuickBooks and Xero offer popular software to maintain your business’s books, send invoices and perform other accounting functions. Here is a look at the key differences between the two providers.
Unlimited invoices; email, payment acceptance, customization, recurring and reminders
20 invoices per month; email, payment acceptance, customization, recurring and reminders
Email, chat, phone and online FAQs
Email, chat, phone (partial) and online FAQ
Accounting, invoices, payments, receipt capture, reconcile transactions and message customers
Accounting, invoices, contracts, reconciliation and document scanning
Over 750 third-party apps
Over 1,000 third-party apps
Xero is currently the second-most popular accounting software program in the U.S. and enjoys market-leading status in various countries such as Australia. Similar to its competitors, Xero provides double-entry accounting and comprehensive reporting functionalities. What sets Xero apart is its emphasis on simplifying accounting concepts for individuals who may be unfamiliar with financial jargon. Moreover, Xero’s tiered pricing incorporates a range of features that make it particularly suitable for growing businesses. Learn more in our full review of Xero.
For more than two decades, QuickBooks has maintained its position as the leading provider of small business accounting software. With a market share of over 80 percent in the United States, QuickBooks’s functionalities are well-known to most accountants and bookkeepers. Like its competitors, QuickBooks delivers comprehensive double-entry accounting and reporting features. Additionally, the software comes equipped with diverse tools and invoicing capabilities that have proven valuable to business owners. These attributes combine to make QuickBooks a reliable and versatile choice that suits the needs of many small businesses. Learn more in our full review of QuickBooks.
QuickBooks offers a feature-rich dashboard. Source: Intuit
In this section, we go more in-depth into the differences between QuickBooks and Xero, including how they compare on pricing, invoicing capability, customer service, mobile app features and third-party integrations.
Xero offers three paid plans based on the typical life cycle of a small business.
Through Xero, you can integrate with HR software provider Gusto for $40 per month plus $6 per employee. Xero allows unlimited users on all tiers, whereas QuickBooks starts out with one billable user and maxes out at 25 users on its most expensive plan.
Here is a breakdown of each plan:
20 invoices and five bills per month; estimates, accounts payable, inventory management and access to Hubdoc scanning software
Unlimited invoices, bills and bank transactions
Expense tracking, project management and multiple currencies
QuickBooks offers five paid plans geared toward small and midsize businesses, as well as independent contractors. Like Xero, it does not offer a free tier.
While most business applications (including Xero) have transitioned entirely to cloud-based software, QuickBooks is unique in that it still sells an old-fashioned desktop version. Desktop Pro Plus and Desktop Premiere Plus go for $549 and $799 per year, respectively. Xero does not offer a desktop version of its software.
Additionally, QuickBooks Online offers various bundle deals with other Intuit software products such as QuickBooks Payroll. Business owners interested in both products can likely save money by leveraging a bundle discount. [Read more in our full review of QuickBooks Payroll.]
Here is a breakdown of each plan:
Income and expense tracking, receipt organizing, tax estimating, basic reports and miles tracking
One billable user; cash flow analytics, unlimited invoices, tax deductions, sales tax calculation and 1099 preparation tools
Three users; time tracking and bill pay and management tools
Five users; project management and inventory tracking tools
25 users; one Smart Reporting license, 20 classes, online training, dedicated account team and workflow automation tools
Pricing is never a straightforward comparison, because different accounting software providers emphasize different features. A lot depends on what your business needs. In this case, we give the edge to Xero because its entry-level Early plan includes more features than QuickBooks’ Self-Employed plan at a lower price point. However, QuickBooks’ second-tier Simple Start plan packs more tools than Xero’s second-tier Growing plan.
Another pricing factor to consider is the user limit. QuickBooks limits the number of users on all of its plans, while Xero allows for unlimited users.
QuickBooks offers discounts on accounting software if you bundle with other Intuit products, such as TurboTax and QuickBooks Payroll. Xero offers a payroll add-on in partnership with Gusto.
Xero Invoicing Capabilities
Like several of its competitors, Xero provides tools to customize your invoices with branding elements such as logos. Here are some of its other features:
Xero’s invoices are saved in the cloud, which allows you to make changes without resending. Source: Xero
QuickBooks Invoicing Capabilities
QuickBooks’ invoicing features rank high among the accounting and invoice software that we reviewed:
QuickBooks allows you to invoice customers for partial payments. Source: Intuit
Xero and QuickBooks offer similar invoicing features. In our view, QuickBooks takes the crown on invoicing because it offers more capabilities at a lower price point. Crucially, all of QuickBooks’ plans allow you to send unlimited invoices, while Xero’s Early plan limits you to 20 invoices per month. If you want unlimited invoices with Xero, you need to upgrade to the $37 Growing plan.
QuickBooks allows you to send invoices for partial payments.
Xero Customer Service
QuickBooks Customer Service
Again, QuickBooks and Xero offer similar options for customer service. However, the Trustpilot scores demonstrate that Xero wins on support. Actual users express high levels of satisfaction with Xero’s customer service, while QuickBooks has received poor user feedback. While we appreciate that QuickBooks offers direct phone support, this fact alone isn’t enough to override the number of customers who complain about long hold times and lack of adequate technical solutions.
Xero Mobile App Features
Xero also offers two stand-alone apps — Xero Expenses and Xero Projects — for users on its Established plan. These apps allow you to capture photos for receipts, submit expense reports, track time, and attach billable expenses and time to individual projects.
QuickBooks Mobile App Features
QuickBooks also offers two stand-alone apps — QuickBooks Time and QuickBooks Projects. The Time app is available on the Essentials plan and above, while the Projects app is available for Plus users.
QuickBooks’ feature-packed mobile app allows you to track your business’s finances from a smartphone. Source: Intuit
QuickBooks and Xero both offer great mobile apps for you to run your business from a smartphone. The main apps also garner similar ratings on the Apple and Google app stores. The supplemental apps are where we see some divergence. Xero Expenses and Xero Projects are both available for users on the $70 Established plan. QuickBooks Time and QuickBooks Projects can be accessed on the $55 Essentials plan and the $85 Plus plan, respectively. Overall, we give QuickBooks the edge because the app includes more features on the basic version of its app.
Xero integrates with over 1,000 third-party business applications, including many apps that are popular with small business owners:
QuickBooks integrates with more than 750 third-party business applications, including many well-known productivity apps and e-commerce platforms:
Xero’s compatibility with over 1,000 third-party apps puts it ahead of QuickBooks’ 750 apps, making it the clear winner on integrations. We think that growing startup businesses will find Xero’s ability to sync with other big-name apps particularly useful. While there is some overlap in third-party integrations, both QuickBooks and Xero include some syncing options that the other doesn’t. Make a list of the business productivity apps that you use most often and check for compatibility on the Xero and QuickBooks app stores.
Yes, all QuickBooks plans allow you to invite an accountant.
Smart Reporting, powered by Fathom, provides tools to analyze your business metrics. This feature is included on the Advanced subscription plan.
Hubdoc is included with all Xero plans. This service lets you capture, extract and store data from documents scanned using your smartphone.