MerchantMaverick: Xero VS QuickBooks Online / Winner: XERO

Katherine Miller for MerchantMaverick.com writes: Xero VS QuickBooks Online

VS

Winner: XERO

Overview:

Intuit has dominated the accounting software market for years. Depending where you get your numbers, estimates put the company at 80-90% market share for small business accounting in North America. QuickBooks is a household name, with a reputation for reliability. It’s only relatively recently that the competition has begun to heat up – and it’s happening in the rapidly expanding field of cloud accounting software. Specifically, it’s happening with Xero.

Developed in New Zealand and initially geared toward the Australasian market, Xero now serves 250,000 businesses in more than 100 countries. The company claims it provides “Beautiful Accounting,” focusing on ease of use, solid functionality, and an ambitious development schedule – product updates come out every 3-6 weeks. While QuickBooks Online remains a more popular program (serving 575,000 businesses, according toan article in CPA Practice Advisor), Xero is beginning to look like a serious competitor … especially now that they are venturing into areas in which QuickBooks once had a near-monopoly.

So how do the two programs line up? Let’s take a look.

Web-hosted or Locally Installed:

Both Xero and QuickBooks Online are cloud-based. Both include free mobile apps for iPhone/iPad and Android devices.

Users and Permissions:

Winner: Xero

Xero allows for unlimited users, no matter what your subscription plan. QuickBooks Online allows for 1, 3, or 5 users, depending on the size of your plan. (You can also grant access to up to 2 accountants, who do not count toward your user limit.)

Pricing:

Winner: Tie

Long story short: QuickBooks wins on the low end of the spectrum, the programs are neck-and-neck in the middle, and Xero wins on the high end. If you want to allow clients to pay invoices online, QuickBooks charges higher credit card processing fees across the board.

While it can be hard to determine comparable pricing due to different plan offerings, the following chart should provide a rough idea of how the plans line up:

Plan Type	Xero	QuickBooks Online
Basic	Starter ($9)	Simple Start ($12.95)
Mid-level	Standard ($30)	Essentials ($26.95)
		Plus ($39.95)
With basic payroll, 5 employees	Standard ($30)	Essentials & Payroll ($53.95)
		Plus & Payroll ($66.95)
With full payroll, 10 employees	Premium 10 ($70)	Essentials & Payroll ($73.15)
		Plus & Payroll ($86.15)

If you need the bare minimum, the QuickBooks Online Simple Start option beats out anything Xero has to offer (Xero’s Starter package includes only 5 invoices/month; QuickBooks gives you unlimited invoicing with every subscription). However, above that level, Xero tends to offer more bang for the buck. Nearly all its features are included in its Standard Plan, whereas with QuickBooks you’ll need to upgrade to Plus for job costing, purchase orders, or 1099s.

If you plan to use integrated payroll, Xero is a much better deal … but only if you’re in a country and/or state where the company offers payroll. Currently Xero offers payroll in only 7 U.S. states.

Both programs offer you an opportunity to let your clients pay invoices online. Xero does this through payment processors such as PayPal and Stripe; you can choose whichever you wish. QuickBooks restricts its users to its own service: QuickBooks Payments, which has higher credit card processing fees than most other services (3.4% + $0.25 vs. Paypal’s 2.9% + $0.30).

Ease of Use:

Winner: Xero

Xero is remarkably easy to use. It’s so well designed that I actually find myself smiling when using it … and that’s praise I don’t readily give to accounting software, especially after I’ve been testing it for a few hours. The layout makes sense, navigation is generally efficient, and the knowledge base is comprehensive and well-organized.

QuickBooks Online is laid out quite intuitively, but since the redesign last year, the program has suffered from a lack of efficiency, along with some minor bugs. Navigation sometimes includes unnecessary steps and the knowledge base is extremely limited, consisting of only 24 articles.

Product Features:

Winner: QuickBooks Online

Xero and QuickBooks Online are at the front of the pack when it comes to cloud-based accounting for small businesses and start-ups. However, neither of them is a perfect solution, and in the area of feature selection, QuickBooks edges ahead.

Xero does not have a quick, easy way to send either receipts or quotes. You can use a workaround, but it’s clunky. In addition, Xero does not support inventory from an accounting standpoint; you can keep a list of what’s in stock, but if you sell 40 widgets, Xero will not automatically make the necessary COGS/Asset entries for you. That’s a problem. You can use an add-on, but it costs extra. Inventory support and quotes are both expected later this year, but as of right now, they’re not there.

QBO isn’t perfect either. You can’t manually mark an invoice as sent, which is frustrating if you mail your invoices rather than sending them electronically. Many features which come standard with any version of Xero are only available in the Plus version of QuickBooks (e.g. the expensive one). And some Xero features, such as expense reporting and multiple currencies, aren’t supported at all.

In the end, QuickBooks Online edges ahead in this category … though which program is best for any given company will depend on that company’s needs. [snip].  The article continues @ MerchantMaverick.,com, click here to continue reading...