Cloud-based accounting is an essential business software in terms of simplicity, flexibility, and remote work. The search for the right cloud-based accounting software for your business is not an easy task due to the extensive amount of software available in the market today.
In this blog, we analyse two popular cloud-based accounting software in the world – Xero and QuickBooks. As cloud-based platforms, each software is known for their flexibility, easy use, and robust features. With a summary of the features of both Xero and QuickBooks, we hope to help make the decision regarding which software is most suitable for your business less cloudy.
Costs and Plans
Xero Accounting Software
As a New Zealand based company, Xero offers three plans for customers to sign up to: Starter (£10/month), Standard (£24/month) and Premium (£30/month), all of which allow for unlimited users within a company to access the software once they have signed up.
All of these plans allow businesses to:
- Connect your bank to import
- View and match transactions
- Submitting VAT to HMRC to Making Tax Digital
- Automatic CIS calculations and reports
- Capturing bills and receipts
- Providing cashflow tools.
The Starter plan is restricted to sending 20 invoices and quotes, and entering 5 bills, whereas this is unlimited on both the Standard and Premium plans. Upgrading to the Premium plan will allow businesses to handle multiple currencies when using the software.
If you wish to use extra features, such as payroll, CIS contractor and project management, these come as ‘optional extras’ on all of these plans at an extra cost. See www.xero.com/uk/pricing for more detail.
QuickBooks Accounting Software
QuickBooks was developed by Intuit, an American financial software company. As with Xero, QuickBooks offers three plans: Simple Start (£12/month), Essential (£20/month) and Plus (£30/month).
The features provided by the Simple Start plan include:
- Making Tax Digital for VAT submissions
- SmartScan error checker for VAT
- Unlimited pay-enabled invoicing
- Multiple bank and credit card connections
- Income and expense management
- Cash flow planner
- Mileage tracking
- Stored receipts and CIS calculations.
By upgrading to the Essentials plan, businesses can have up to 3 users accessing the account; it also supports multi-currencies and allows for bills and payments management. The Plus plan upgrades accounts so that up to 5 users can access the account and it includes features such as stock management, employee time tracking, project profitability tracking and budgeting. Payroll can also be bought as an add-on at an extra expense.
Comparisons Between Xero and QuickBooks
Ease of Use
In the post-pandemic business world, cloud-based accounting would be the ideal solution in terms of simplicity, flexibility and remote work. Both software have received recognition for their user-friendly services. QuickBooks has a simple layout and offers a swift overview of expenses, invoices, sales, bank account balances, and profit and loss. Similarly, Xero has an equally user-friendly dashboard that represents the simplistic nature of its platform.
One noted benefit of Xero over QuickBooks is that it permits customers to use more features without paying an extra fee. Xero offers features which are integrated in the Starter plan which require an additional payment in QuickBooks, and it seamlessly integrates payment networks for paying invoices through external networks such as PayPal and Stripe. Additionally, Xero incorporates new features and updates every 3-6 weeks whereas QuickBooks have infrequent updates to their service.
When comparing the actual use of both software, you will find that QuickBooks offers customers with video tutorials on their website explaining how to use and navigate around the software. QuickBooks have been praised for the way they assist customers with understanding how to use the software, whereas users of Xero will have to search for tutorials on external services such as YouTube.
One feature provided by Xero that is highly valued by businesses is that it offers over 700 integrations with its system, including an integration with Zapier which connects Xero to additional add-ons. On the other hand, QuickBooks offers over 590 integrations, but this also includes 25 different payment processing options.
You may have heard of Fathom, a financial analysis and management reporting tool which helps to investigate business trends, profitability, cashflow and growth. This tool is seamlessly integrated with Xero on all of the plans they provide, and it is built-in with QuickBooks through the Plus plan. By utilising Fathom on these software, you can turn your accounting data into accounting intelligence, creating insightful analytics, reports and dashboards.
With Xero, businesses are provided with single invoice templates and have the option to customise their templates. The software creates automated payment reminders and allows Xero to Xero – sending and receiving invoices to and from Xero users. Users have commended this software for its easy process of creating and previewing invoices before sending them.
Conversely, QuickBooks offers five invoice templates but also allows attachments to the invoices, invoice tracking, auto-scheduling of invoices and sending invoice reminders to late payments. QuickBooks has received positive reviews for making it easy to update client details directly into the invoice rather than having to navigate to their contact record within the system.
Should your business require it, QuickBooks offers the option for multilingual invoicing in English, Spanish, Portuguese, French, Italian and Chinese. QuickBooks has more thank 2 million subscribers all around the world.
Expenses, Bills and Reporting
In terms of keeping track of expenses on a cloud-based accounting system, Xero makes it simple to categorise money in and out with its chart of accounts. However, according to IT service management company, PieSync, it can time some time to get your head around this system. They also review Xero as being clumsier with their reports despite offering more customisation in places.
Contrarily, QuickBooks has the advantage being on the market longer, affording the company with a greater understanding of their client needs and evolving to their customer habits. PieSync commended QuickBooks for keeping the management of expenses and bills simple; this software has built expense functionality into all of its plans, rather than as an add-on as with Xero, leading to some small cost saving if you own a small business.
Xero or QuickBooks Accounts for Payroll and Pension and RTI
Both Xero and QuickBooks are offering HMRC compliant payroll and pension features integrated with the accounting software. QuickBooks has two options to choose from: Standard and Advanced cloud based payroll. The monthly subscription starts from £4 per month, however QuickBooks’ payroll advanced license starts from £8 per month.
Xero payroll contains a lot more functions than QuickBooks as you can send timesheets, request holiday/leave, and check your payslips using the XeroMe App. The Xero payroll price starts from £5 for 5 employees.
Both Xero and QuickBooks payroll offer pension assessment, auto-enrolment and automated NEST pension upload. However, both software do not offer all of the features as Sage 50 Payroll.
Which Accounting Software Should You Use?
Cloud-based accounting is the future of post-pandemic business world. When it comes to cloud-based accounting both Xero and QuickBooks are the market leader. The answer to whether you should incorporate Xero or QuickBooks into your business ultimately depends on the size of your business and what you need the accounting software for. For small and VAT registered businesses, we recommend QuickBooks as the most beneficial as you can use a SmartScan error checker for VAT return.
Xero caters to mid-market companies with 51 – 1,000 employees and the pricing is most suited for small to medium sized businesses as it offers an unlimited number of users to utilise the software within all of their plans, allowing for greater team accessibility. If you require payroll and pension for your employees then we would recommend Xero software.
It is important to take time when choosing a right accounting software because once you set up the software it can be difficult to change your accounting platform. Tax Care Accountants is both a Xero and QuickBooks certified advisor pro; We offer free advice on choosing the right accountancy software for your business. Please feel free to contact us today.