Invoices, vendor payments, payroll, bank reconciliations, forecast analysis…. It’s probably the least sexy part of your job as an entrepreneur. And that’s coming from an accountant!
But the only thing that can make the month-end processes worse is bad accounting software.
In today’s blog, we’re going to walk through my analysis of Xero vs. QuickBooks Online and give you my (an experienced Chicago Accountant) opinion for which one you should use.
Let’s get to it.
QuickBooks vs. Xero: Which One Should you Use?
We won’t beat around the bush, Xero is hands-down the better accounting software.
Xero was built for the Cloud
Unlike QuickBooks, Xero never had a desktop version. This means that it was designed as a modern accounting software that is extremely cloud-friendly.
What do we mean by cloud-friendly?
It means that the software was built with BASIC BROWSER FUNCTIONALITY and works as you would assume a cloud software program in 2022 would work.
By now, you have used the internet for a variety of tasks, whether it’s a simple Google search, shopping online at Amazon, or posting to your favorite social media account.
Simple things like clicking on a link and opening it in a new Tab, the ability to press the back button and go back to your previous screen, and the ability to open multiple browsers at once are all features of a website we’ve come to expect.
Unfortunately, tasks like these aren’t so simple in QuickBooks. In fact, in many instances they don’t exist.
Talk about frustrating. In fact, that’s the one word we would use to describe many features of QuickBooks: hair pulling frustrating.
Xero was designed for the business owner
Along the same lines, we like Xero because it functions like a business owner would think.
Many accounting software platforms are hard for business owners to learn and use as they are designed, organized, and use language from an accounting point of view.
As opposed to being structured in terms and in language that a business owner would naturally understand.
One example of this is bank reconciliations.
In QuickBooks, bank reconciliations are a part of the Accounting Section in the platform, as technically bank reconciliations are an accounting function. To the QuickBooks developer, this makes sense.
However, a business owner doesn’t think like that.
They simply want to reconcile their bank account, which is why Xero puts this feature in the Bank Account section.
Why would you leave your banking area when you want to do a bank reconciliation?
The answer is you wouldn’t and shouldn’t have to.
This is just one example of how Xero tries to organize and keeps things simple for the average business owner.
Xero speaks to the language of business owners, and makes it easier to navigate to the key functions that business owners will want and need to use.
Xero’s bank reconciliations are easy peasy
Simply put, the process of recording and reconciling your bank transactions is easier and faster in Xero. If you want the full details here, give our youtube video a watch where we go over the details and some screenshots…… but here is a quick overview (bullet points or table?)
- Better layout/format
- Easy to follow color scheme
- Require a name for all transactions (very important)
- 1 step process
|Layout/format||Vertical 2 columns
Easier to read
|Color scheme||Simple 3 Colors: Blue, Green, Black/White||Variety of Green text and/or Green boxes, Black/White|
|Apply name to transaction||Required (very important)||Not required|
|Bank rec process||1 step||2 step, prone to error|
Xero has unlimited users
Need we say more?
Xero has better reporting
Finally, Xero has a better reporting feature.
However, we should clarify that when we say reporting, we mean customized reporting, because QuickBooks actually has many more templated reports out of the box.
If you are looking for out-of-the-box reports, then QuickBooks actually wins out in this area.
However, speaking from an accountant point of view, the standard reports are never all that useful for your business.
Here’s an example.
- QuickBooks Online has one class of Cost of Goods Sold, and one Class of Overhead/Operating Expenses.
- Many businesses, however, have contribution margin, gross margin, selling expenses, operating expenses, etc.
- Xero gives you the ability to take the data that your accounting is capturing, and group and organize it in a way that makes sense for your specific business.
- Xero also allows you to create custom formulas so that instead of looking at food costs as a % of total sales, you can calculate and review food costs as a % of total food sales, etc.
This is a really big deal, and why, in our viewpoint as a top Chicago Accounting Firm, Xero wins the battle vs having the QuickBooks canned reports.
Our Recommendation: QuickBooks vs. Xero
If you haven’t guessed by now, we recommend Xero for your business. In fact, we move all of our accounting firm clients over to Xero as soon as they sign on with us.
And we have a strong feeling that once you try Xero, you’ll never look back.