Cloud Accounting QuickBooks Xero

QuickBooks Online vs. Xero Speed Test

Written by Greg Lam

I feel like a broken record saying this, but the top small business cloud accounting software solutions areQuickbooks Online and XeroQuickbooks Online and Xero becoming more and more similar feature-wise. Three years ago the differences were a lot more noticeable. With many features becoming standard, what separates the two at the top, QuickBooks Online and Xero?

Speed?

I didn’t know, so I did some testing to find out.

Greg Lam will be presenting the sessions, Cloud Accounting Face Off and Setting Up a Paperless Accounting Flow, at Accountex 2016.

In my next article, I’ll be comparing QuickBooks Online and Xero in regard to their banking and reconciliations functionality.

Methodology

In order to start from the same point, I created two new, free trial accounts, did a quick setup, and uploaded all transactions via .QBO files. In order to make the transaction entering and reconciliation as fair a test as possible, I entered the invoices and bills for those types of transactions in advance.

After that, I reconciled the transactions without setting up defaults or rules (as you’ll see, for round 2 I changed this up a slight bit). Once the reconciliations were finished, I verified that the transactions were entered correctly.

Setup

The speed to set up was very comparable in both. For a speedy setup, I used the default chart of accounts, set up a tax, added two bank accounts and one credit card account, added the opening balances for those accounts, and enabled multi-currency.

Xero was more guided and easier if you knew what you wanted to do (i.e., you have more experience).

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QuickBooks Online had very basic questions to get you started, but required more searching around to get to all the settings that a regular business would need in order to get started.

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I knew what to expect and where to go in both systems, so the time it took was very comparable and I wouldn’t say either system won.

I do like the conversion balances functionality that is offered in Xero.

Conversion Balances

In QuickBooks Online, I like how they customize the chart of accounts based on your answers to the setup wizard. I’m thinking for new businesses not initially using an accountant rather than for accountants or bookkeepers setting up a business.

Customize chart of accounts

Also, the sales taxes were a breeze to set up (for my Canadian test).

I think accounting professionals would like the setup process with Xero better, as it’s more comprehensive, but provided you know QuickBooks Online, it’s not difficult to go and enter your setup data without the use of a guide like Xero’s.

QuickBooks Online

I split the setup into two portions. QuickBooks Online has an easy wizard-like setup, where you give general information about your business, including what industry you’re in and what functions you are most interested in (like invoicing, payroll, sales taxes, expenses). This was fairly quick to do.

Quickbooks online wizzard

The second portion was not part of the official QuickBooks Online setup, but was needed nonetheless. I went to the Banking page to add bank accounts, but because I was starting off by uploading bank account data rather than connecting to a bank, I had to go to the chart of accounts. After that I went to sales taxes to add those, which was very easy thanks to QuickBooks Online already knowing the sales taxes used in Canada.

QuickBooks online set up

Finally, I had to go to company settings to enable multi-currency.

Xero

Xero has a step-by-step process that goes through all your core setup options. I skipped a few, like adding more details for invoices. For someone in the know, it’s a great guide. If you’re a newbie looking to get going with the least amount of pain, some of the questions may be above your head. Probably the most intimidating would be the conversion balances screen. I should mention though, that you can leave most details blank and continue on your way, since you can later go to the Settings page and enter more data.


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About the author

Greg Lam

Greg Lam is a passionate small business guy who loves technology and automation. He holds a BBA from Simon Fraser University, Canada. He's a Certified QuickBooks ProAdvisor, Certified Xero Partner, and Kashoo MVP. His business interests are focused on online accounting and how it can be used to streamline and automate a company’s accounting processes. He currently lives in Tokyo, Japan.

Greg operates the Small Biz Doer website, an "Entrepreneur's Guide to Small Biz Bookkeeping." He is the author of Online Accounting Software: Finding the Right Match, published by The Sleeter Group.

Connect with Greg on Twitter, Google Plus, YouTube, LinkedIn, or Facebook.

1 Comment

  • Great article, Greg!

    You found that (in your opinion) Xero’s setup was more comprehensive and probably preferable to accountants, opposed to QuickBooks Online’s setup that was more wizard-like. I think that reflects the direction that the two companies have been taking.

    Intuit talks about “small business accounting made easy”, and for years has been touting their product as one that can be used (set up in this case) by any businessperson.

    Xero claims that, on a worldwide basis, 89% of their customers are connected (through Xero) to an advisor (the figure is lower in the US). They seem to work harder to get an accounting professional involved. Also, world wide, the majority of their new customers come through accounting partner referrals. That would imply that setup is done more often by the accounting professional, for Xero

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