For the day to day running of a business, a cloud accounting tool is one of the most powerful platforms you can use. A system like Xero or QuickBooks is perfect if you want to maximise tax deductions, save time and get a full view of your accounting.
Xero and QuickBooks are both comprehensive tools that tick most boxes in terms of accounting features that most businesses need. Their full capabilities however do vary and you’ll likely have a preference of one over the other.
Designed with functionality optimised for small to mid-sized businesses in mind, a large enterprise may hit limitations when it comes to more complex requirements. Though there’s plenty to love about both systems for small businesses, start-ups and agencies to name a few. So, we’ve compiled an overview of the pros and cons of these two cloud-based accounting platforms.
Digital for VAT
Both QuickBooks and Xero software has been through HMRC’s recognition process. Using approved software will allow you to submit VAT Returns directly to HMRC without needing to visit HMRC’s website. In addition to being able to check what you owe, submit and view returns, Xero allows you to also view VAT payment history.
To get the most from your accounting software product, you will need to invest time into learning the basics of accounting. Understanding what you’re doing and why you need to do it is essential when it comes to managing the accounting for your business. Xero and QuickBooks have clean interfaces and simplified dashboards which are easy to navigate, although the information on them can be overwhelming if you’re not au fait with accounting terminology.
When you do decide on accounting software, you should be completely comfortable using it. Before making any decisions, it’s worth trying each product out to check it’s right for you, both Xero and QuickBooks offer free trials so we suggest making the most of them. While they both have been rated user-friendly and have a clean look, you might find you prefer one layout over the other.
With either platform you'll get good features for processing invoices and quotes. Both offer ‘pay enabled’ invoices where customers can click to pay directly from the invoice – helping you get paid faster.
Xero is great for making it easy to create invoices and preview them before sending.
QuickBooks is great for making it easy to edit customer details directly within the invoice.
Expenses and Billing
Both Xero and QuickBooks have excellent mobile apps, making it easy, fast and paperless to claim expenses.
Xero allows you to monitor employee spending and makes it simple to categorize money in and out with its chart of accounts.
QuickBooks also keeps managing simple with the ability to track mileage included in the first plan tier, though we do advise checking that what you need to track on the whole is included in the plan you’re considering.
Growth and Scalability
As mentioned earlier, QuickBooks is a great low-cost choice for freelancers and small businesses, while Xero is popular with growing businesses and start-ups.
If you are a small business so are going in at an entry level package you’ll be less restricted by bills and invoices on QuickBooks ,although the document capabilities of Xero in this area are flawless.
If you’re a growing business and need unlimited users Xero is the better choice, even on the higher tier plan QuickBooks is limited to 5 – though their reporting suite and customisable dashboard is fantastic.
Larger businesses and enterprise-level companies with greater needs for transparency, capability and insights might need a slightly more advanced accounting system like Sage as it will likely be better suited.
Benefits of Both
QuickBooks and Xero are both top notch accounting systems for sole traders and small to medium sized businesses, their customer reviews reflect how well the software providers understand their customers.
When to choose QuickBooks
You want a lot of value at a low price point - For those small businesses that want all of the key features of accounting software at a budget, QuickBooks is a great choice.
You want advanced reporting- QuickBooks has an excellent reporting suite, especially if you can afford to stretch to the high tier plan with enhanced reports and project profitability. It also edges ahead of Xero with its depth and level of customisation for dashboards, including budgeting, forecasting, and profitability analysis.
When to choose Xero
You have a growing business - Xero is one of your best options. It's a joy to use, affordable, and accountants love it. Xero scales beautifully, both in depth of functionality and user experience.
You love minimalist user experiences - It feels more modern and more user-friendly. Many users find Xero more enjoyable to use and love its easy-to-use and sleek interface.
Finally, before you decide consider the following factors…
- Do you have any experience in one over the other?
- Could budgets affect your decision?
- Which does your accountant recommend? They will have a preference themselves. (we prefer Xero)
- Will it integrate with your other systems e.g. Your CRM, ecommerce platform, email marketing tool, POS?
If you’re unsure of which cloud accounting software to use, speak to us. We’ve helped advise hundreds of local businesses choose the right platform for them.
Even better than that, we can manage it for you. We can run bookkeeping, payroll, manage expenses, calculate tax and much more, taking away the stress of going digital.
Whether you need help to set-up your plan or just want some friendly advice on which to go with, give us a call as an official partner of Xero, QuickBooks, Sage and KashFlow we’d be happy to talk you through your options.
Speak to us today on 01322 555 442 or email firstname.lastname@example.org
The information and data in this article was correct at the time of publishing and every attempt is made to ensure its accuracy. However, it may now be out of date or superseded. Blue Rocket Accounting makes no representation or warranty of any kind regarding the content of this article and accept no responsibility or liability for any decisions made by the reader based on the information and/or data shown here.