QuickBooks vs Xero - Which Is Better?

QuickBooks vs Xero | Accounting Smarts
Charles Hall

Last updated by

Charles Hall


June 10, 2022

QuickBooks and Xero both offer capable systems for the startup and small business customer. The question is: QuickBooks vs Xero – Which is Better?

In our modern era of cloud-based software, it doesn’t get much easier than now to find and implement an accounting system that can do it all. Needs may vary for startup and small business to mid-size and large corporations, but either way you can find cloud-based software that will accommodate any size company.

QuickBooks and Xero both offer capable systems for the startup and small business customer. The question is: QuickBooks vs Xero – Which is Better? The answer is it depends on individual needs as both offer features that can make life easier, but each has subtle differences that might lead you to choose one over the other.

In terms of the basics, each has effective cash management, invoicing, inventory control, general ledger, and reporting features. In addition, they both partner with 3rd party apps that will integrate if you need a feature that is not standard.

Having used both systems in a small business setting here are our observations and a snapshot of how much you should expect to pay for either QuickBooks Online or Xero.

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Table of contents

Price: First things first

Sometimes we don’t care what is in the system until we know we can afford the system, so let’s start by discussing pricing.

Xero.com Pricing

Offers 3 plans which they call Early, Growing and Established. The names are descriptive themselves which might help you decide which option is best purely based on the stage of your business.

Early Growing Established
$9 per month $30 per month $60 per month
- Send 20 invoices/quotes
- Enter 5 bills
- Reconcile bank transactions
- Capture bills and receipts
- Send invoices and quotes
- Enter bills
- Reconcile bank transactions
- Capture bills and receipts
- Send invoices and quotes
- Enter bills
- Reconcile bank transactions
- Capture bills and receipts
- Multi-currency
- Expenses – capture and manage claims
- Projects – track project time and costs

**pricing may change so check xero.com/us/pricing for most recent pricing

This is of course a very simplified view of what they can do. The point is Xero is not going to break the bank even for a startup and offers really everything you could need. You can even try it for 30 days for free and make sure it offers what you need.

QuickBooks Online Pricing

QuickBooks Online also offers 3 standard plans which they have called Simple Start, Plus and Advanced. They offer a 4th plan that will be mentioned below.

Simple Start Plus Advanced
$25 per month $70 per month $150 per month
- Track income & expenses
- Capture & organize receipts
- Invoice & accept payments
- Manage cash flow
- Run general reports
- Track income & expenses
- Capture & organize receipts
- Invoice & accept payments
- Manage cash flow
- Run comprehensive reports
- Manage & pay bills
- Includes 5 users
- Track project profitability
- Track inventory
- Track income & expenses
- Capture & organize receipts
- Invoice & accept payments
- Manage cash flow
- Run comprehensive reports
- Manage & pay bills
- Includes 25 users
- Track project profitability
- Track inventory
- Business analytics & insights
- Batch invoices & expenses
- Customize by role

**pricing may change so check quickbooks.intuit.com/pricing/ for most recent pricing

Again, this is only a simplified view, it is a little more expensive than Xero, but overall, they do offer a little bit more than Xero, but whether the difference is noticeable is how your business would use the system. It should be noted that often QuickBooks Online offers introductory discounts and also a 30-day free trial as well.

Interestingly, QuickBooks online has a very simplified “Freelancer” option for $15 a month tailored to how a freelancer operates.

A little history

Xero is a relative newcomer to the world of accounting and particularly to the US. Founded in New Zealand in 2006 it presents a modern look and user-friendly system. It was built for the web and is fresh and simple and therefore has no baggage to unload from a server style platform. It seems to do well with the popular startup world.

QuickBooks is a known brand in the world of accounting, seeing its beginnings in 1992. Back then they didn’t have the advantage of cloud-based computing so software was different. As times change and technology changes it's hard for old dogs to learn new tricks. QuickBooks might fall into that category but in 2001 they launched QuickBooks Online to tackle the cloud-based movement. They have come a long way and compete well with the likes of Xero, but you may still see lingering things that might remind you of older times.

The Comparison: QuickBooks vs Xero – What other reviews don’t say

Honestly, there are many reviews out there on both QuickBooks and Xero and most state the same thing. Both QuickBooks Online and Xero are good options for small to medium businesses. Minor differences in most cases won’t matter.

However, that said, your individual business situation will matter. Here are a few things other reviews won’t tell you because they haven’t actually used the software live.

Display and Layout

QuickBooks Online has a wide view and horizontal display with left side menu navigation. It offers a broad display of graphs and metrics. The time frame for each metric is easily adjusted from a drop down on each chart. Like most systems, once you figure out where everything is the navigation is easy. It’s all there you just have to find it.



Xero keeps it simple with a vertical presentation using only the center part of the screen. Just in a simple comparison of the two screens you see how Xero takes a minimalist approach and tries to give only the basics. Just like on QuickBooks, all the information is there, you just have to find it.

After having used both systems, in terms of display, I give QuickBooks the advantage over Xero for its more useful dashboard. However, I do like the simplicity of Xero.



Honestly, not much to speak of here, both systems had an automated walk thru process which was relatively simple. No advantage one way or another.

What should be mentioned is to be prepared with critical information like a chart of accounts, bank information, credit card information, PayPal information, and answers to questions related to payroll and credit card processing as these are the most likely areas to cause difficulty. Not that they are hard, rather you just need to understand how you will use the services.


The ease at which invoicing can be done is simply amazing. On both QuickBooks and Xero, the invoice feature integrates seamlessly with the payment options. Both integrate a payment button directly on the invoice making it simple for the customer. The entire transaction from invoicing to receipt is all captured in the software.

But this is where separation begins.

Xero seamlessly integrates with credit card or PayPal payment options allowing the customer to choose their method of payment.

QuickBooks Online Payment in the QuickBooks system does not offer PayPal as a payment option. This is an inconvenience for both the company and the customer. We have to bill PayPal customers separately as a work around.

Also note, QuickBooks Online sales support is very vague on the use of PayPal. They assured me it worked; however, once we implemented, we learned otherwise. Don’t get confused with linking a PayPal account. QuickBooks Online will sync with a PayPal account and bring transactions in, but QuickBooks Online will not allow PayPal as a payment option to a customer.

Because of the PayPal issue, I give Xero the advantage over QuickBooks Online.

Expense and bills

Entering paid expenses and bills needing to be paid is relatively painless. Both systems do a good job, it is just a matter of learning how each system works and becoming comfortable.

However, there is one glaring difference between QuickBooks Online and Xero and it affects companies that produce customized products.

For custom companies a sale is made and invoiced just like any company; however, because the product does not exist a purchase order is needed to order the product from an outside supplier.

Xero offers a “COPY” option to copy the customer invoice into a new purchase order and links the invoice to the purchase order.

The copy option significantly reduces the amount of time required to create purchase orders. The linking of the invoice to the purchase order significantly reduces the amount of time it takes to follow-up on invoices or purchase orders that are linked.

The linking helps ensure invoices have matching purchase orders because a simple report can be run. Linking also helps when the purchase order is received and the invoice needs to be found.

QuickBooks Online does offer customized fields and other options to create work arounds, but nothing beats it just working. To be fair, most companies will never experience this issue because they sell a stock product and only use purchase orders on a small basis.

Because of the nonlinking issue, I give Xero the advantage over QuickBooks Online.


No real comment on reporting. Both QuickBooks Online and Xero have sufficient reporting capabilities for small businesses. Each has all the standard reports: Income Statement, Balance Sheet, Aging reports, inventory reports, and more. Each report typically can be customized on a limited basis.

What is lacking in both systems is true customized reports. This is not surprising as customized reporting is often a big difference between small business software and mid to large companies.

There are many apps you can integrate that will give more customized reporting, but I suggest you hold off on paying for an ap until you really know you need it.

I do feel QuickBooks Online gives more custom field options, and has a few more customization options on their reports so I give QuickBooks Online the advantage over Xero.


As mentioned above, there are literally hundreds of apps that will integrate with both QuickBooks Online and Xero. It’s hard to critique integration so I will just offer a suggestion. Before you invest in one or the other, understand what functionality is missing and which app solves your problem. Then research to make sure the desired app integrates.

But, go a step further and read the reviews. There are hundreds of apps, but it doesn’t mean they are all good, or that they all integrate seamlessly.

Since apps are a case by case basis, I give QuickBooks Online and Xero a draw. They both work.


Scalability is a challenging feature to rank because we have never experienced maxing out either QuickBooks Online or Xero. We actually scaled back from a completely different software (NetSuite) to QuickBooks Online.

That said, one significant factor in our software decision was scalability.

Xero advertises a limit on monthly transaction volume of around 2000 sales orders, 2000 purchase orders and 4000 bank lines per month. Once reached, performance may deteriorate.

Our feeling was we may push the limit and a performance slow down was not a desirable outcome. After talking to Xero, the key word was “may” – it's not certain whether it will or will not deteriorate.

But it left a question mark in our minds strong enough that it was a big factor in choosing QuickBooks Online.

Scalability is subjective and requires you to really understand your business and your growth potential and how much time growth may actually take. Looking back after the fact, and considering our business, I think scalability should not have been so heavily weighted.

I think both can handle growth so if you are just starting out, I don’t think it really matters. If you are a developing company that is growing fast then possibly you should be considering a midsize accounting software like NetSuite.

I give QuickBooks Online and Xero a draw. I think they both will handle the volume you need equally well until you are ready for the midsize level software.

An Accountants View

If you use an accountant for your business, I suggest you ask their opinion. Most will have experience with QuickBooks as it has been around for a long time. Many may have no experience with Xero. But their advice matters since they most likely use the software on your behalf.

I’m an accountant, so my next critique comes from an accountant point of view. QuickBooks Online and Xero are both flawed in one aspect, they do not allow processing of orders under the accrual basis of accounting – FOR CUSTOM PRODUCT BUSINESS.

This may not make any sense, and that’s ok, but to some it will mean something.

Neither QuickBooks Online or Xero offer a Sales Order option. Each order is invoiced and recorded as a sale the minute it is invoiced. This is no problem if you sell off the shelf because the sale and the shipment of the product is essentially simultaneous or at least within a day or two. Thus, sales and costs are matched.

For a custom business in which a product has to be made and then shipped, the revenue recognition should be delayed until the product cost is incurred. In our business that is two weeks later. So, you can see under QuickBooks Online and Xero the revenue is recognized the day the invoice is made and the cost then is recognized 2-3 weeks later. Revenue and Costs don’t match.

A sales order/purchase order system handles this. The sales order is like an invoice, except it doesn’t reflect revenue yet. Once the produce is made and shipped then the sales order is converted into an invoice thus recognizing the revenue and the cost at the same time.

However, QuickBooks Online and Xero do not have sales order capability. So, if you operate a custom business and you operate under the accrual basis of accounting neither software may be right for you. The unfortunate thing is to get into a software that handles a sales order system you will pay significantly more money.

Based on this flaw in both software, I give QuickBooks Online and Xero a draw.

Final thoughts

Hope this review was beneficial and gave you an alternative look at why you should choose one software over the other. The message should be clear, the decision should be based far more on how the software will integrate into your business processes than any one feature a software may or may not have.

My Decision

If I had the decision to do it over again, I would choose Xero over QuickBooks Online. The PayPal issue and invoice/purchase order linking far outweigh any of the other issues at least for my business.