As a small business owner, managing finances efficiently is crucial for the success of your venture. One of the best ways to streamline your accounting processes is by using online accounting systems for small business. Among the many options available, QuickBooks and Xero are two of the most popular choices. Both offer robust features that can help businesses manage their finances more effectively, but which one is right for you?
In this article, we’ll compare QuickBooks and Xero, two leading online accounting systems for small business, to help you choose the best option based on your unique needs. From pricing to features, ease of use, and customer support, we’ll cover everything you need to know to make an informed decision.
What Are Online Accounting Systems for Small Business?
Before we dive into the comparison between QuickBooks and Xero, it’s important to understand what online accounting systems for small business are and why they are essential.
Online accounting systems are cloud-based software solutions that enable small businesses to handle their financial tasks, such as invoicing, expense tracking, payroll, tax filing, and financial reporting, all in one place. These systems allow you to access your business’s financial data from anywhere, at any time, and often offer real-time updates and automatic backups for added security.
Using online accounting systems for small business can save you time, reduce the risk of errors, and improve your decision-making by giving you a clear view of your financial health.
QuickBooks Overview
What Is QuickBooks?
QuickBooks, developed by Intuit, is one of the most popular and widely-used online accounting systems for small business. It offers a range of tools to help small businesses manage their finances, including invoicing, payroll, tax filing, and financial reporting.
Key Features of QuickBooks
Invoicing and Payments: QuickBooks allows you to create custom invoices, track payments, and even accept online payments directly from invoices.
Expense Tracking: You can track both income and expenses, categorize transactions, and easily monitor your business’s cash flow.
Tax Filing: QuickBooks helps you stay on top of tax deadlines by automatically calculating and filing taxes, ensuring you remain compliant with tax regulations.
Financial Reporting: With QuickBooks, you can generate detailed reports on your business’s financial performance, including profit and loss, balance sheets, and tax summaries.
Mobile App: QuickBooks offers a mobile app that allows you to manage your finances on the go, including scanning receipts and sending invoices.
Integrations: QuickBooks integrates with many third-party apps, including PayPal, Stripe, and Shopify, to streamline your operations.
Pricing of QuickBooks
QuickBooks offers several pricing plans, depending on the features you need. Here’s a breakdown of their pricing:
Simple Start: $25/month for basic features like invoicing, expense tracking, and tax calculations.
Essentials: $50/month, which includes bill management and time tracking.
Plus: $80/month, offering more advanced features like project tracking and inventory management.
Advanced: $180/month, for businesses that require complex reporting, advanced permissions, and dedicated support.
Pros of QuickBooks
Ease of Use: QuickBooks is known for its user-friendly interface and straightforward setup process.
Scalability: QuickBooks offers a range of plans that cater to small businesses of all sizes, making it ideal for growth.
Extensive Integrations: QuickBooks integrates with a wide variety of apps and software, which can help you expand your business operations.
Cons of QuickBooks
Pricing: QuickBooks can be more expensive than some other online accounting systems, especially if you need access to advanced features.
Limited Customization: While QuickBooks offers plenty of templates, there’s limited room for customization compared to some other platforms.
Learning Curve for Advanced Features: Some of the more advanced features can be complex for users who are not familiar with accounting.
Xero Overview
What Is Xero?
Xero is another popular online accounting system for small business, offering a comprehensive range of features that help businesses manage their finances efficiently. It’s known for its intuitive interface and robust accounting features, making it a great choice for small businesses.
Key Features of Xero
Invoicing and Payments: Xero allows you to create professional invoices, set up recurring billing, and accept online payments via multiple payment gateways.
Expense Management: Track your expenses, categorize them, and sync them with your bank account for real-time expense monitoring.
Bank Reconciliation: Xero automatically imports transactions from your bank account, making reconciliation quick and easy.
Payroll Management: Xero offers a payroll feature that helps you manage employee salaries, benefits, and tax withholdings.
Financial Reporting: Xero provides a wide range of financial reports, including profit and loss, balance sheets, and tax summaries.
Mobile App: Xero’s mobile app lets you manage your finances on the go, making it easy to create invoices, track expenses, and reconcile bank transactions from anywhere.
Integrations: Xero offers a vast library of integrations with popular apps like PayPal, Stripe, Shopify, and more.
Pricing of Xero
Xero offers three pricing plans:
Early: $13/month, suitable for businesses with fewer than 20 invoices per month.
Growing: $37/month, ideal for small businesses that require additional features like bulk invoicing and multiple users.
Established: $70/month, offering advanced features like project tracking and multi-currency support.
Pros of Xero
User-Friendly: Xero is easy to navigate and offers a clean, intuitive interface.
Unlimited Users: Unlike QuickBooks, Xero allows unlimited users on all its plans without additional charges.
Global Reach: Xero is ideal for small businesses that operate internationally, as it supports multiple currencies and is available in many countries.
Cons of Xero
Limited Customer Support: Xero offers support through email and chat, but phone support is only available for higher-tier plans.
Higher Price Point for Basic Features: While Xero offers competitive pricing, some businesses may find the Early plan too limited for their needs.
QuickBooks vs Xero: A Detailed Comparison
Now that we’ve covered the basics of QuickBooks and Xero, let’s compare these two online accounting systems for small business based on several important criteria.
1. Ease of Use
Both QuickBooks and Xero offer user-friendly interfaces, but QuickBooks is often seen as more intuitive for beginners. Xero, while also easy to use, offers more customization options, which may require a bit of a learning curve.
2. Pricing
QuickBooks starts at $25/month, but its higher-tier plans can become quite costly.
Xero is slightly more affordable at $13/month for the Early plan, but the features at this level are more limited.
3. Features
QuickBooks offers a wider range of integrations and features, making it more versatile for growing businesses.
Xero excels in international use and unlimited user access, making it ideal for small businesses with teams spread across the globe.
4. Customer Support
QuickBooks has excellent support, with phone support available at all levels.
Xero offers email and chat support, but phone support is limited to higher-tier plans.
Which One Is Right for Your Small Business?
Choosing between QuickBooks and Xero depends on your specific business needs:
If you need robust features, excellent customer support, and are willing to pay a bit more, QuickBooks may be the best choice.
If you’re looking for a more affordable option with unlimited users and international capabilities, Xero might be the better fit.
Both QuickBooks and Xero are excellent online accounting systems for small business, but the right choice will depend on your unique requirements and budget.
Conclusion
Both QuickBooks and Xero are powerful online accounting systems for small business, each with its own set of strengths. While QuickBooks offers a more comprehensive suite of features and greater customer support, Xero stands out with its flexibility, international capabilities, and cost-effectiveness for small businesses.
By carefully considering your needs and budget, you can select the best online accounting system to help manage your finances and take your business to the next level.
