In a relatively short amount of time, cloud computing has changed many aspects of our lives for the better. This is definitely true in our personal lives, but especially in our professional ones as a large number of cloud-based accounting solutions have come along to simplify the financial aspect of one's business.
Because the cloud makes it possible to access your information from any device, in any location, at any time, keeping track of money coming in and out of a business has never been more straightforward. At the same time, with so many different software options available out there, how do you know which one to pick?
These days, two of the most popular platforms are undoubtedly QuickBooks Online and Xero. Both have their fair share of advantages, along with millions of satisfied users around the world between them. But which one is right for your organization? The answer to that question requires you to keep a few key things in mind.
QuickBooks Online and Xero: Breaking Things Down
Perhaps one of the biggest differences between QuickBooks Online and Xero ultimately comes down to one straightforward (yet critical) feature: bank feeds.
Both options have totally acceptable bank feed systems. However, they each have their own unique interfaces and workflows. The two software choices operate very similarly in terms of some functions like reconciliation, but things get slightly more complicated the deeper you go.
With adding new accounts, for example, QuickBooks Online lets you do this right from the main online banking drop-down menu. Xero, on the other hand, requires you to return to the chart of your accounts, add the account, THEN return to the "Account" screen to add any transactions from an online banking source. It absolutely allows you to arrive at the same result — albeit in a slightly more complicated way.
One of the biggest areas where the two programs differ comes down to collecting payments — something that is always a priority of any small business owner out there. QuickBooks Online wins in this area, as it has payment links and is naturally integrated into a variety of different payment processing services via its sophisticated invoicing system. Payment processing with Xero is definitely possible — it's just that you have to also sign up for an account with a third-party provider like PayPal or Stripe.
Which Accounting Software Is Right for Your Business?
When we asked a group of tax professionals to weigh in on the age-old topic of QuickBooks Online versus Xero for small business applications, one thing became abundantly clear fairly quickly: there truly is no "one-size-fits-all" approach to this decision.
"As accountants with certifications and extensive experience on both QuickBooks Online and Xero, we advise clients that either platform will perform equally well at the basics of capturing and tracking expenses, sending invoices, collecting payments, and generating reports," said Gene Austin of Tax Strategies Group.
This advice came with a fairly significant caveat, however: "Having said that, Xero will provide unlimited users at no additional cost while QuickBooks’ fees increase based on the number of assigned users," he said. "Also, Xero allows accountants serving new clients with no prior accounting system — or one that requires extensive clean-up — to more effectively import and categorize hundreds or even thousands of transactions."
Teszra Cody, EA of One On One Tax and Financial Group, LLC had similar opinions, saying that "my advice is to first analyze your needs, your budget and the type of support system you want. These two platforms have many similarities, but they also have plenty of differences."
Cody continued, saying that "knowing what you need and what you want BEFORE making the purchase is the best way to get the most from your product."
But it was perhaps Joshua Standley, EA, ABA of DKK Accounting who summed things up the best, saying that "the best software is going to be the one you dedicate the time to understanding and using properly."
He elaborated on that, indicating that "if you're unwilling to take the time to use the software, I recommend hiring a professional to help or handle your books. As the old saying goes, 'garbage in, garbage out.'"
As always, you're not looking for what is considered to be objectively the "best" platform by all because everyone has their own unique definition of what the "best" really means. Instead, you're looking for the right platform for you and your business specifically. Our experts agreed that in this particular case, that could really be QuickBooks Online or Xero depending on your needs.
Provided that you're willing to consider things from that perspective prior to making your decision, you really can't go wrong with either option.
About Lee Reams II
I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.
