QuickBooks Online vs. Xero: Which Is Better?

Most ecommerce merchants are familiar with QuickBooks and QuickBooks Online. Xero, a hosted accounting platform for small businesses, is less known. As a CPA for small-to-midsized ecommerce companies, I prefer Xero, for the reasons set forth in this article.

Xero: Product Overview

Xero was built to be an Internet accounting solution. It is not a streamed down version of desktop software

QuickBooks Online has always felt, to me, like a downsized version of QuickBooks desktop. While the online version has improved, it is not as user friendly as it should be.

QuickBooks desktop provides small-to-midsize businesses with most of their accounting software needs. However, it has to be installed on a hard drive and its cost increases for multiple users. It also requires a server for multiple users. And to share information with a CPA, a merchant must grant access to the server or exchange downloaded files. In addition, QuickBooks forces you to update its software every few years.

All three products — QuickBooks desktop, QuickBooks Online, and Xero — have similar functions, as follows.

  • Bank synchronization
  • Bank reconciliation
  • Accounts payable
  • Accounts receivable
  • Inventory
  • Invoicing
  • Bill management
  • Payroll
  • Financial reporting
  • Cashflow quick views
  • Multi-currency
  • Document sharing
  • Quotes

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Jennifer Morrow