We get asked all the time, which accounting software is better for my business, Quickbooks Online or Xero?
If you’re new in the business world, it might be hard to decide which software is better for you. So here’s a short overview of QuickBooks Online and Xero.
Key Aspects to Consider
While looking at various accounting software it is important to consider some of the following aspects and features that you will need to be successful as a small or medium sized business:
1. Track Income and Expenses
All businesses need to keep track of sales and expenses. A proper accounting software must do this in an organized fashion. An accounting software should give you an overview of your business scorecard.
2. Capture Receipts
Proper documentation is required to report to the IRS. Accounting software should ensure your receipts are kept organized and documented with the transaction.
3. Invoice and Estimates
Estimates and invoicing is critical for sales and cash flow. Having one system that can monitor expenses and even help sales will save business owners time and energy. If you’re still running your invoice on a spreadsheet or pdf, it’s time to ditch the old ways and put everything in one umbrella.
4. Inventory
Keep track of your beginning and ending inventory on a daily or monthly basis!
5. Bank Reconciliation
It is important for a monthly reconciliation to ensure your books match up to your bank balance.
6. Advance Accounting Reports
The main reports you’ll need include: a Balance Sheet, Profit and Loss, and Cash Flow Statement.
7. Manage Billing
Manage your accounts payable within the same software as your expenses, invoicing, and reporting.
8. Track sales and Sales Tax
If you are in the retail industry and or reseller, it is a requirement to track sales tax and file on a monthly basis. This report is important for monthly Sales Tax filing.
9. Manage 1099 Contractors
New small business owners hire contractors to grow their business. It is highly suggested that you file a Form 1096 and issue a Form 1099.
Offerings
We have reviewed both accounting softwares including through online sources and gathered the below comparison. Each category is rated on a scale of 1 to 5, 1 being the highest or most ideal setup and 5 being the lowest or least ideal setup:
| Features | QuickBooks Online | Xero |
|---|---|---|
| Sized for Small/Medium Businesses | Score: 1 Ideal for organizations up to 50 people and $50 million in | Score: 1 Ideal for organizations up to 50 people and $50 million in |
| Pricing | Score: 1 Smallest package starting at $10 per month. Limited by the number of users on the system | Score: 1 Smallest package starting at $9 per month. Limited by the number of transactions and invoices |
| Invoicing | Score: 1 The system can invoice adequately and the platform even has the capability to upgrade to include a point of sale system | Score: 2 Invoicing can be customized to distinct templates and be setup for approval through different departments |
| Cloud Based | Score: 1 Can be accessed or logged into from anywhere | Score: 1 Can be accessed or logged into from anywhere |
| Expenses | Score: 1 Also includes a mobile app with a dashboard | Score: 1 Also includes a mobile app with a dashboard |
| Integrations and Upgrades | Score: 2 Can integrate with TurboTax and has the ability to add on payroll and some other integrations | Score: 1 Easy switching or adding your current data and books. It can also add features to help with project management, taxes, and payroll |
| Final Scores: | 1.2 | 1.2 |
Conclusion
In summary, Quickbooks Online and Xero are both great accounting softwares for small and medium sized businesses. Depending on your needs, each has its merits and drawbacks, If you are looking for something that has more customization and your business doesn’t have many transactions (25 or less per month), XERO is likely your best bet. However, if you have more transactions or want a point of sale system within your platform then Quickbooks will likely be a better option.
Explore either option today by contacting 365 BOOKSPRO to better understand how either software can help grow your business!
Reviews and information collected from internal data and online sources (SoftwareAdvice.com, Zapier, and Fundera).
