QuickBooks Online vs. Xero: Which Software Is Better for Your Business in 2023?

QuickBooks and Xero are two of the best accounting software options with a range of plans and packages that can work for freelancers, small businesses and large enterprises alike. We researched both tools extensively to help you determine the best one for your company. In this article, we list their core features, pricing, pros and cons, as well as the type of company each bookkeeping tool is suitable for.

Jump to:

• Overview of QuickBooks Online and Xero
• QuickBooks Online vs. Xero: Comparison table
• QuickBooks Online vs. Xero: Pricing
• QuickBooks Online vs. Xero: Feature comparison
• QuickBooks Online pros and cons
• Xero pros and cons
• Methodology
• Should your organization use Quickbooks Online or Xero?

Overview of QuickBooks Online and Xero

QuickBooks Online is an accounting software tool developed and marketed by Intuit. Its products are intended to help businesses of all sizes, from small and midsize businesses to corporations and enterprises. The cloud-based QuickBooks Online lets business owners manage accounting, accept online payments, manage and pay bills, and much more.

For more information, read our in-depth QuickBooks review.

Xero is an online accounting software tool that can work nicely for large businesses but that mainly targets small and midsize businesses. It helps businesses track expenses, manage invoicing, automate payments and manage inventory. It also provides access to a wide range of add-on applications from partners and third-party developers, including payroll, customer relationship management and point-of-sale solutions.

For more information, read our in-depth Xero review.

QuickBooks vs. Xero: Comparison table

To help you determine how both tools stack up, here is a head-to-head comparison chart featuring pricing and other capabilities.

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QuickBooks Online vs. Xero: Pricing

Both QuickBooks and Xero offer tiered pricing, and the best plan for you is one that includes the features you need. Both platforms offer a 30-day free trial to enable new customers to try it out before making a purchase decision. However, you should know that QuickBooks Online lets new customers choose between a 30-day free trial or 50% off for three months. You can’t opt into both.

QuickBooks pricing

QuickBooks pricing varies depending on your country. The rates below are for United States customers only:

• Simple Start: $30 per month.
• Essential: $55 per month.
• Plus: $85 per month.
• Advanced: $200 per month.

Again, if you opt out of the free trial, you’ll get 50% off the base fee for your first three months of service.

Intuit also offers a cloud-based payroll product called QuickBooks Online Payroll. While you won’t get a discount by bundling QuickBooks’ accounting and payroll software, it’s simpler to buy and pay for both plans at once if you plan to pay employees with QuickBooks Payroll.

QuickBooks Online Payroll has three main plans with the following monthly fees:

• Payroll Core: $45 per month, plus $5 per employee per month.
• Payroll Premium: $75 per month, plus $8 per employee per month.
• Payroll Elite: $125 per month, plus $5 per employee per month.

As with QuickBooks Online, QuickBooks Payroll users can sign up for 50% off their payroll plan’s base price for the first three months. (Note that the 50% discount applies to the base fee only, not the per-employee fee.)

Xero pricing

Like QuickBooks, Xero’s pricing depends on your location. The rates below are for U.S. buyers:

• Early: $13 per month.
• Growing: $37 per month.
• Established: $70 per month

While Xero doesn’t offer its own U.S.-based payroll plan, it syncs seamlessly with the payroll provider Gusto, as well as other popular payroll services like ADP and Paychex. Integrating Xero with Gusto ensures that your general ledger will update automatically whenever you process payroll.

You can learn more about how QuickBooks Payroll compares to Gusto in our QuickBooks vs. Gusto comparison piece.

QuickBooks Online vs. Xero: Feature comparison

Overall accounting features

Winner: QuickBooks Online

For the record, Xero has an outstanding set of accounting features. All of its plans, from the cheapest to the most expensive, include inventory management, automatic bank reconciliation, income tracking, receipt scanning, purchase orders, true double-entry accounting and many more.

However, few competitors (Xero included) come close to offering as many bookkeeping and accounting features as Intuit QuickBooks Online. With QuickBooks Online’s most basic plan, Simple Start, small businesses can take advantage of the following crucial features:

• Unlimited expense and income tracking.
• User-friendly accounting reports (specifically tailored toward non-accountants).
• 1099 contractor management.
• Tax deduction optimization, including automatic expense categorization.
• Unlimited custom invoicing.
• Cash-flow tracking and forecasting.
• Integration with one sales channel (for instance, one Etsy account or Amazon store).
• Easy estimate-to-invoice conversion and online payment acceptance.

QuickBooks Online’s more expensive plans add enterprise-friendly accounting features like employee expense tracking and reimbursement, comprehensive billing management, thorough workflow automations, custom permissions and more.

Inventory management

Winner: Xero

Accounting software with inventory management capability helps businesses track and manage their inventory levels, orders, sales and deliveries, which includes controlling the amount of product in stock, reordering stock when necessary and organizing the storage of products. Both QuickBooks and Xero support inventory management (Figure A).

However, Xero includes inventory management with every plan, including its $13 per month Early plan. Although QuickBooks Online syncs with some third-party inventory management apps, it only includes built-in inventory tracking with its two most expensive plans (the $85 a month Plus plan and $200 a month Advanced plan).

With QuickBooks’ inventory tracking tool, users can create purchase orders and manage vendors. It also allows businesses to track product inventory with three levels of location tracking (for instance, row, shelf, bin; section, area, pallet) as well as the cost of goods.

SEE: Discover how FreshBooks and QuickBooks Online compare.

With Xero inventory management (Figure B), users can track up to 4,000 finished items, inventory levels, set reorder points and monitor stock on hand. Although Xero’s inventory management isn’t as robust as that of QuickBooks, it’s still a powerful tool for managing business inventory.

Figure B

Even better, inventory management is available at no additional charge with every Xero plan, which is why we declared Xero the winner for this particular category.

Customer support

Winner: Xero

Customer support is an important factor to consider when shopping for the best payroll software or accounting tool. Companies with efficient customer support provide technical support, product training, an extensive knowledge base and help users troubleshoot and resolve issues in the shortest possible time.

For this category, we rank Xero first due to its free 24/7 online customer support across all its plans. QuickBooks’ support is available Monday through Friday, 6 a.m. to 6 p.m. Pacific time and Saturdays, 6 a.m. to 3 p.m. PST. QuickBooks’ customers with issues may have to wait for business hours to get a resolution.

Payroll capability

Winner: Tie

Both platforms offer payroll capabilities, but they differ in how they’re implemented. QuickBooks (Figure C) has a core payroll function built into its system, while Xero requires users to integrate with Gusto to handle payroll.

Those looking for an all-in-one accounting and payroll system may find QuickBooks a suitable choice. However, QuickBooks Payroll’s pricing can be more expensive than Gusto’s (depending on the plan you choose and how many employees you have), and it takes a little more time to set up. Gusto’s basic plan also has more payroll and HR features than QuickBooks’, including health benefits, workers’ compensation administration, commuter benefits and more.

Xero’s payroll (Figure D) is an affordable option because the Gusto pricing plan starts at $40 per month plus $6 per month per person. QuickBooks Payroll’s starting price after your first three months is $45 per month plus $5 per employee per month.

QuickBooks pros and cons

QuickBooks Online accounting software is a popular choice for small and mid-sized businesses,  but it has drawbacks. Here are some of the pros and cons of using QuickBooks.

Pros

• Popular and widely used by accounting and bookkeeping services.
• Tracks expenses, creates invoices and manages payroll.
• 30-day free trial or 50% off for the first three months.
• Extensive integration capability (700+ third-party apps).
• Expansive tools for small, midsize and large businesses as well as corporations and enterprises.

Cons

• Higher starting price than Xero and most other competitors, such as FreshBooks.
• Limited to 25 users.
• Learning curve for new users.
• Limited customer support.

Xero pros and cons

While it has numerous advantages, there are a few drawbacks to consider before deciding if Xero is the right choice for your business.

Pros

• 24/7 online support.
• Moderately priced and affordable compared to QuickBooks.
• 30-day free trial.
• All plans support unlimited users.
• Integrates with popular accounting, payroll and ecommerce systems.

Cons

• Multi-currency and expenses tracking features are only available for the Established plan.
• Steep learning curve.
• Email support only (no option for phone support).

Methodology

We evaluated the features, pricing and customer support offered by both QuickBooks and Xero. We also set up trial accounts to get hands-on experience with both products and determine their user-friendliness for ourselves. In addition, we gathered data about user reviews from third-party sites to learn about customers’ experience using both tools — what each tool does well, what limitations it has and what its users say should be improved.

Should your organization use Quickbooks or Xero?

The best solution for your organization is the one that meets your business-specific needs.

Choose QuickBooks if:

• You own a small or midsize business and are planning to continue expanding.
• You need feature-rich accounting software with built-in payroll.
• You need to track inventory and project profitability, manage bills and generate invoices.
• You have between 1 and 25 users.

Choose Xero if:

• You’re a freelancer or own a small or midsize business.
• You want an unlimited number of users to access your accounting tool.
• You need streamlined invoicing.
• You want to integrate with many third-party applications.

Of course, the best solution for you depends on your organization’s custom needs and preferences. We recommend trying both tools for free for 30 days before settling for one. If neither tool meets your needs, we welcome you to explore our comprehensive reviews of the best payroll software for small businesses or our top-rated payroll software for enterprises.

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