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Xero vs QuickBooks Online

Xero and QuickBooks Online are two of the most popular accounting software platforms. Here's our comparison of their pros and cons to help you decide between them.

Overview

A cloud accounting tool is one of the most powerful contributors to the day-to-day running of a company. With a system like Xero or QuickBooks Online, you can enjoy a crystal-clear view of your accounting, maximize tax deductions, and even stay on top of projects and time tracking.
In terms of the accounting features that most businesses need, Xero and QuickBooks Online are both comprehensive tools that tick most boxes. But their approaches are different, and they each have different pros and cons.
Both Xero and QuickBooks Online are optimized for small to mid-sized businesses, so large enterprises with more complex requirements may struggle to tick all of their boxes. But for most small businesses, agencies, retail stores, and startups, there’s a lot to love about both systems.

Here’s our verdict of when to choose Xero versus QuickBooks, alongside a comparison of cost, feature sets, accountant preferences, reporting, and ease of use.

About Xero

Xero was founded in 2006 in New Zealand and has since consolidated its reputation as one of the top accounting tools on the market. Its tagline is "Beautiful business", which is the main thing you need to know about Xero: it manages to make accounting sleek and enjoyable. Xero is incredibly user-friendly, simple and powerful, and is designed to help their customers do better in their own businesses via their accounting tools.

Xero has a strong value proposition to compete with QuickBooks Online: its customers love it. Xero consistently gets stronger average reviews than QBO despite a lower quantity of them. With its younger brand image and focus on clean usability, Xero also tends to be more popular in the startup world than QuickBooks.

About QuickBooks Online

QuickBooks Online, the market-leading accounting software from Intuit, offers “Smarter business tools for the world’s hardest workers”. With their cloud-based system, businesses can streamline many of their repetitive tasks and processes by managing bills and invoices, tracking projects, and even tracking miles automatically with a smartphone.

QuickBooks claim on their website that 98% of customers say that their solution helps them run their business more easily, and we can see why: there’s a reason that QBO has built such a solid reputation.

QuickBooks has been in the market for longer than Xero, is very well-developed, and is generally loved by accountants - especially in the US market, which QBO has dominated. QuickBooks has an estimated 80% market share in the US. QBO claims that customers find on average $3,534 in tax savings per year.

 

What’s the difference between QuickBooks and QuickBooks Online?

QuickBooks is Intuit’s general accounting software, while QuickBooks Online (QBO) is specifically the cloud-based service. For QBO, you pay a monthly subscription rather than an upfront fee, and you get all the patches and software updates from Intuit. In this article, we'll mostly refer to QuickBooks Online, which is what we think you’ll likely opt for instead of Intuit’s desktop version of QuickBooks.

QuickBooks Online is rated 4.2 out of 5 on Capterra by 3520 users, while Xero has an average of 4.3 from 1880 users.

Feature comparison of Xero vs. QuickBooks Online

Summary: when to choose Xero vs QuickBooks Online

Both QuickBooks and Xero are excellent accounting systems for small businesses, and customer reviews reflect how well the software providers understand their audiences.
Here's a quick summary of when to choose QuickBooks Online versus Xero, based on where the two systems excel:

When to choose QuickBooks Online

  • You want a lot of value at a low price point
  • You want advanced reporting
  • You're in the US

 

 

When to choose Xero

  • You have a growing startup
  • You love minimalist user experiences
  • You're outside of North America