I feel like a broken record saying this, but the top small business cloud accounting software solutions are 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?
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.
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.
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).
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.
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.
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.
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.
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.
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.
Finally, I had to go to company settings to enable multi-currency.
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.