Sage Vs Xero: Which Accounting Software Is Best for You?

Before comparing Xero vs Sage it is important to understand the difference between cloud-based accounting software and desktop-based accounting software. Cloud-based would require internet access and you can work from anywhere in the world.  Desktop-based software would require downloading the software before using it. A lot of accounting software including Sage is not compatible with MacBook. Therefore if you are a MacBook or Ipad user the Sage 50 Accounting software is not suitable for you. However, Sage also offers cloud-based software known as Sage One Business Cloud.  Xero is of New Zealand origin and New Zealand based software where is Sage is the UK based software. Xero is one of the fastest-growing and leading cloud-based accounting software in the UK. However, Sage 50 is still a dominating software within the small business community. 

In order for you to manage your business effectively you need to ensure you are recording your business transections correctly, pay your staff members correctly on time and analyse your business performance regular basis. Most of the businesses aim to be cost effective and to understand the correlation between financial impact and business performance. Both of these require business owners to choose a suitable accounting software, and so this blog will compare Xero and Sage to help you choose the right software for your business. Once you set up an accounting software for your business it is difficult to move to another software as it requires a lot of migration skills. 

Sage Vs Xero
Choosing the right accounting software is important for running your business.

The Differences Between Xero And Sage

Financial Information:

Unlike Sage, Xero is cloud-based so financial information can be accessed across any device such as a phone or tablet, ultimately enabling business owners to work from home. However, although Sage 50 offers a cloud-based system, it does require an additional cost and upgraded package.

Back-up:

The software used for Sage is based on desktop so it requires constant back-up for data whereas Xero ensures the safe storage of data on the cloud, ultimately removing the potential risk of data loss due to corrupted hard drives or a stolen computer.

Collaboration with Financial Advisor/Accountant:

Xero enables business owners to collaborate with financial advisors or accountants through cloud tools as financial figures can be shared across easily. Also, even if the business doesn’t have an accountant, Xero offers an extensive advisor directory.

Design Invoices:

Xero enables business owners to tailor their cloud-based system to specific accounting needs, with unlimited amount of users and custom permission level, and Xero enables users to create their own layout for invoices, credit notes and purchase orders.

Payroll Management:

Xero enables businesses to automatically update accounts to be HMRC compliant and submit financial information with a simple touch. Also, the ‘Xero Me’ mobile app enables employees to access their timesheets and pay slips, and enable owners to access detailed payroll reports and payroll history.

Faster Payments:

Xero integration with Stripe and PayPal enables customers to pay quickly, with constant reminders and a secure system with the option to use two factor authentications.

Bank Statements:

Xero has connections with various UK banks such as HSBC, RBS, NatWest and Barclays, meaning that Xero is easily able to reconcile bank statements. Although Sage enables the facility for businesses to connect their bank statement, it’s operated by a third party which requires additional work to input bank details.

Xero Vs Sage
Xero's cloud-based software enables greater accessibility.

Sage and Xero Comparison

Xero’s user-friendly layout and accessibility means that all business owners, regardless of their accounting knowledge, are able to find financial information easily whereas Sage is more complex as it requires the advice of accountants.

Sage has limited access as it only enables integration with Sage related products whereas Xero, being cloud-based, enables users to integrate with several other applications and potentially achieve a cheaper package. Xero has over 800 apps ranging from predicting future cash flow, sales invoices and the ability to connect with a bank statement which Xero will reconcile to create an invoice or payment.

Sage has a range of feedback varying from being positive to negative in terms of long hold times and requiring technological support, whereas Xero has a significant number of resources online, such as videos to support all businesses, with fast responses through email. Xero always ensures improvement of the accounting platform and any update is automatic and free of cost. The platforms also utilises the advice of business owners and professional accountants to make any improvements.

Costs and Pricing Plans: Xero Vs Sage

Sage has 3 Pricing plans:

Sage Accounting Start

Xero has 3 Pricing plans:

Starter Plan

Sage Accounting Standard

Standard Plan

Sage Accounting Plus

Payroll is included for an extra £1.75 per month for each plan.

Premium Plan

With all the plans above, payroll can be added for £5 per month

 

What Businesses are Suitable to Use Sage and Xero?

It is important but difficult to decide whether to purchase Sage or Xero for your business. Because once you implement the accounting software it will be difficult and time consuming to change and migrate your accounting data to other software.  Xero is suitable for small businesses who have limited accounting knowledge as it is cheaper and enables quick access to cash flow statements, whereas Sage is suitable for more complex and established businesses of all sizes.

Overall, being cloud-based makes Xero the recommended software. All businesses are required to be HMRC compliant and Xero has worked with HMRC in helping businesses with the transition of Making Tax Digital, which is an available plan in Xero without any additional cost.

TaxCare Accountants is both Xero certified advisor and Sage certified business partner. We offer Sage and Xero booking and accounting service.  

If you would like tailored advice on which software is ideal for your business needs, contact us on +44 (0)1213681277 or alternatively email info@taxcare.org.uk.

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