Best Accounting Software 2021

QuickBooks Online vs. Xero

Is QuickBooks Online or Xero the better solution for you? This in-depth, feature-by-feature breakdown will help you select the best accounting software for your business.

No matter your business, you need to use accounting software in order to manage and track finances, bill clients, and more. You’ll most likely collaborate with your accountant within this software to make sure that everything is on track for your business.

Most accounting software for small businesses include features like:

  • Payroll
  • Invoicing
  • Expense Tracking
  • Project Management
  • Time Tracking
  • Accounting Reports
  • Bookkeeping Services

This article will break down the main differences between QuickBooks Online and Xero, two of the most popular accounting platforms for small businesses. We’ll give our recommendations of who each software is best for as well as directly compare each product’s pricing, features, usability, and customer service. We’ll also mention any notable strengths and drawbacks that were shared by current customers that we interviewed.

QuickBooks Online & Xero Comparison Summary

QuickBooks Online and Xero are two of the most popular accounting software tools. We tested both tools in-house and they received the two highest ratings in our accounting software category. QuickBooks Online received a SoftwarePundit Analyst rating of 94 and Xero received a rating of 91.

QuickBooks Online was given the highest rating in the accounting category because it has the widest range of features and the most power. Xero is similar to QuickBooks Online, but has a thinner reporting section which does not always load reliably.

Here’s a breakdown of our review criteria and how QuickBooks Online and Xero performed in each category.

CriteriaAnalyst RatingFeaturesUsabilityPricingCustomer Support
QuickBooks Online94108910

QuickBooks Online is the top accounting software for small businesses due to its broad range of features and readily available customer support. The main complaint that customers have is that it’s not user-friendly for the average business owner—the software was built for accountants, and is therefore a bit complicated if you’re not well-versed in accounting. QuickBooks Online pricing starts at $25 per month and goes up to $180 per month, making it one of the most expensive accounting platforms.

Xero is another top option because it offers a similar set of features for a lower cost. Xero pricing begins at $11 per month and tops out at $62 per month. Xero does not offer accounting or bookkeeping services, which QuickBooks Online does, but otherwise the features are relatively equal. Regardless, Xero is a fantastic choice for those who want one of the most powerful accounting software tools for a reasonable price.

Here are a few quick points to summarize who we recommend each platform for:

You'll prefer QuickBooks Online if:

  • You want particularly advanced and customizable financial reports
  • You can pay a premium for a more powerful accounting tool
  • You want live bookkeeping services

Try QuickBooks Online Today

You'll prefer Xero if:

  • You’re a freelancer who’s just starting out with an accounting platform
  • You’d like something powerful but not too expensive
  • You want pre-built integrations with more than 800 applications

Try Xero Today

Table of Contents

Who Should Purchase QuickBooks Online?

QuickBooks Online is an excellent choice for most small businesses, given that it’s the best accounting software on the market. With all features a small business could need for accounting, as well as live bookkeeping services, the tool is a one-stop shop and is the most established accounting platform.

The most notable shortcoming is that users widely report that QuickBooks Online is not user-friendly. While this may not be a problem for your company, as your accountant will likely be doing most of the work within the software, it’s still something to keep in mind. Freelancers in particular might opt for a more user-friendly tool that’s less overwhelming to learn to use.

Customers we interviewed emphasized that they appreciate the power of QuickBooks Online, but had a hard time with usability. May Jiang, a Certified Public Accountant at Offit Advisors, uses QuickBooks Online with all of her clients and notes that it’s the leader in the accounting space by a long stretch. As an accountant, she found the tool better than Zoho Books and emphasizes that if the tool happens to lack anything a small business needs, there are many integrations to plug into the software.

Who Should Purchase Xero?

Xero is a reliable tool for small businesses because it offers a similar set of features in a much more user-friendly package. Customers we spoke to reported that many capabilities take just one step in Xero, where the same action would take two or three steps with QuickBooks Online. While it’s simple and intuitive, it’s still powerful and has pre-built integrations with more than 800 third-party software tools with the Xero Marketplace. This ensures that you’ll always be able to connect with tools that you need, albeit for additional monthly costs.

Overall, we recommend Xero to small businesses of all sizes, from freelancers to more established companies. It’s a fantastic value for the price, as it’s less expensive than QuickBooks Online and fairly similar in price to less powerful alternatives.

QuickBooks Online & Xero Price Comparison

QuickBooks Online is more expensive than Xero, and both tools operate on pricing tiers. QuickBooks Online has four pricing options, while Xero has three to choose from.

QuickBooks Online Pricing Details

The least expensive QuickBooks Online plan is $25 per month and the most expensive is $180 per month. Their Plus Plan, which is $70 per month, is the most popular option.

Simple Start Plan
  • $25 per month
  • One user
  • Track income and expenses
  • Manage cash flow
  • Run general reports
Essentials Plan
  • $50 per month
  • Three users
  • Manage and pay bills
  • Track time
Plus Plan
  • $80 per month
  • Five users
  • Track inventory
  • Track project profitability
Advanced Plan
  • $180 per month
  • 25 users
  • Most powerful reports
  • Exclusive premium applications
  • Customized access
  • Dedicated account team
  • Automated workflows

Xero Pricing Details

Xero’s least expensive plan is $11 per month and the most expensive is $62 per month. After testing the tool, we found that the Established Plan—the $62 plan—offers the best value given the wide range of included features like receipt capture and project management. If you’re a freelancer with a narrow range of clients, the Early Plan could work for you as well.

Early Plan
  • $11 per month
  • Send up to 20 invoices
  • Enter five bills
  • Capture receipts and bills with Hubdoc
Growing Plan
  • $32 per month
  • Unlimited invoices and quotes
  • Unlimited bills
Established Plan
  • $62 per month
  • Track projects
  • Claim expenses

QuickBooks Online & Xero Feature Comparison

QuickBooks Online and Xero offer a very similar list of features. While QuickBooks Online’s features tend to be a bit more powerful and extensive, the differences aren’t a dealmaker or dealbreaker. QuickBooks Online does offer more reports, though it depends which plan you pick. You can track projects and track time with both tools.

FeatureQuickBooks OnlineXero
Expense TrackingYesYes
Vendor & Client CRMYesYes
Payroll ServicesYesNo - software only
Project TrackingYesYes
Time TrackingYesYes
Receipt CaptureYesYes - with Hubdoc
Inventory ManagementYesYes
Accounting & Bookkeeping ServicesYesNo
Mobile ApplicationYesYes
Accountant AccessYesYes

Top Features: QuickBooks Online

The top features offered by QuickBooks Online are the extensive reporting capabilities, the dashboard, and the bookkeeping services. QuickBooks Online offers more than 70 reports and there’s a place where you can create and customize your own reports. For a full description of QuickBooks Online, check out our full QuickBooks Online review.


The QuickBooks Online dashboard, as you can see below, includes all the information you need to get a quick overview of your financial transactions. The dashboard is programmed to display your invoices, expenses, bank accounts, profit and loss statement, sales, and time tracking.

QuickBooks Online Dashboard

This dashboard includes key information, but it doesn’t allow you to drill down into every section to take a closer look. While this is a pretty minor inconvenience, it speaks to the application’s slight lack of user-friendliness.


With more than 70 reports generated in-house, QuickBooks Online offers the most reports of any other accounting software. You’ll likely never need to run additional reports that QuickBooks Online doesn’t already offer.

QuickBooks Balance Sheet

Live Bookkeeping Services

Starting at $200 per month, QuickBooks Online will bring your business financials up to date and keep your books accurate. Every bookkeeper is a professional who is certified in using QuickBooks. The bookkeepers work across a variety of industries and during a consultation, QuickBooks Online will try to match you with a bookkeeper who knows your industry well.

Top Features: Xero

Xero’s main value lies in the customizable dashboard and the Xero Marketplace. There are 50 reports and, while we found that reports didn’t generate on demand when we tested the platform, customers have not reported this as a consistent issue. For a more in-depth overview of Xero’s features, check out the full Xero review.


Xero’s dashboard is not quite as visually appealing as the one in QuickBooks Online, but customers can drill down into all sections and customize the dashboard to display their preferred sections at the top. When we inputted new invoices or added information, the dashboard updated immediately to reflect changes.

Xero Dashboard

Xero Marketplace

Xero’s Marketplace has pre-built integrations with over 800 tools across categories like time tracking, project management, and more. The tools are also categorized by industry, which is helpful as tools relevant to your industry are pre-sorted.

Xero Marketplace

Every Xero plan also comes with a Hubdoc integration, which allows customers to capture and upload data without having to enter it manually.


Sending invoices with Xero is quick and easy, and there are some helpful nuances to tracking invoices. Each invoice lists the dates the invoices were created, edited, sent to customers, and viewed by the customer. This makes it extremely easy to track whether clients have successfully received their invoices and can let you know when it’s a good time to follow up for payment.

Xero Invoice List

Bottom Line

QuickBooks Online and Xero are the top two accounting tools for small businesses. QuickBooks Online offers more power and functionality, and accordingly comes at a much higher price. Conversely, Xero is still quite powerful compared with other accounting tools like FreshBooks and Wave, and the pricing is fair.

  • QuickBooks Online is the best accounting tool for most small businesses. However, freelancers might opt for a more user-friendly option like Wave or Xero.
  • Xero will benefit all small businesses, even freelancers, because the tool is more user-friendly than QuickBooks Online.

If you’re interested, visit QuickBooks Online or Xero today to get started.

Katelyn Anderson

Katelyn is a Junior Research Analyst at SoftwarePundit, where she conducts in-depth analyses of technology markets & products and writes software-related content. She graduated summa cum laude with degrees in English and Psychology. Her main areas of interest are content creation, user experience, and search engine optimization. You can connect with Katelyn on LinkedIn.

Katelyn is an expert in several software categories including:

  • Accounting software
  • Integration software
  • Live chat software
  • Vacation rental software
  • Video conferencing software

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