QuickBooks vs. Xero: What’s the difference?

Omar Visram
QuickBooks vs. Xero: What’s the difference?
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Xero and QuickBooks Online are two of the most popular and powerful accounting software solutions for small business owners. But while both can help you manage complex processes like billing, invoicing financial reporting, and tax management, each is better suited to different types of companies.

In this one-to-one comparison, we’ll look at the difference between QuickBooks and Xero so you can figure out which might work best for your business.

Introducing QuickBooks Online

QuickBooks Online (QBO) is cloud-based accounting software that streamlines many of the repetitive tasks involved in managing bills, invoices, and business projects. 

With enhanced bookkeeping functionality that includes inventory management and expense tracking by class or location, QBO offers an established plan to meet most business needs.

With QBO, you can:

  • Track income, expenses, sales, sales tax, and mileage
  • Capture and organize receipts
  • Invoice (includes progress billing) and accept payments
  • Send estimates, run reports, and maximize tax deductions

At Enkel, we often recommend QBO to our nonprofit clients because using its class functions to allocate revenues and expenses to different programs simplifies fund accounting.

Introducing Xero

Xero is versatile, user-friendly accounting software that also bundles core business functions into each plan, including invoicing, bank reconciliations, and bookkeeping. 

Xero’s full range of accounting tools and functionality lets you:

  • Enter bills, and send quotes and invoices
  • Reconcile (and bulk-reconcile) transactions
  • Manage multiple currencies
  • Upgrade to Analytics Plus for advanced insights

By allowing you to capture bills and receipts via Hubdoc, scan files using email or mobile apps, and store documents online, Xero also provides real-time views of cash flow reports.

Seven Key differences between QuickBooks and Xero

1. Plans and pricing


QBO offers four plans (EasyStart, Essentials, Plus, and Advanced) to accommodate different-sized businesses. Starting at $11/month, its EasyStart plan provides basic accounting features suitable for most simple startups. 

Pricier plans, meanwhile, range from $22-$70/month and include features like:

  • Time tracking
  • Multi-user access and multicurrency support
  • Bill, payment, budget, and project management

QBO also offers add-ons like payroll and QuickBooks Payments for payment processing.


Xero offers three plans (Starter, Standard, and Premium) ranging from $17/month for the basic Starter plan to $54/month.

  • On the downside, the Starter plan limits the number of monthly transactions you can process
  • On the upside, it doesn’t limit the number of users you can add

Xero also offers paid add-ons like expense reporting and project tracking with all its plans. 

2. Transaction creation

Both platforms let you set up and map products and services to your chart of accounts.


With no draft functionality, you’ll need all your information at hand when recording and posting transactions in QBO. 


With Xero, you can save transactions as drafts, and then finish creating or editing them later. That means different users can complete or post each transaction.

3. Tax reporting

Both platforms let you calculate, track, and manage sales tax, then run reports showing tax amounts owing. 


Because QBO tracks different taxes in separate ledger accounts, you can use your balance sheet to see amounts owing to each tax authority. 

QBO also lets you define which province(s) you need to track tax for, then shows only those tax rates. It automatically posts adjusting transactions to record your tax filings. 


A notable difference between QuickBooks and Xero is that Xero combines different taxes in one ledger account. This means that you’ll need separate reports to see amounts owing to each tax authority when using Xero to track your taxes. 

You must also remove rates you don’t need from Xero’s list of provincial tax rates—and manually record adjusting entries to reflect your tax filings.

4. Bank feed matching and reconciliations

Both platforms make it easy to reconcile bank feed transactions by matching them to transactions in your accounting software. 


Simply connect QBO to your bank account feed and check off transactions that match items in that month's bank statement (printing out your statements makes cross-referencing easier). Note that QBO's bank feed matching is limited when it comes to foreign currency transactions. 


Simply choose a bank account, navigate to Xero’s Reconcile tab, review the two columns (your bank statement vs your Xero transactions) and click the OK button in each row to confirm a match. You can also add comments to transactions to flag them for other users before posting.

5. Report customization

Both platforms include pre-set options for common financial reports like balance sheets, income statements, A/P, A/R, sales tax, and general ledger reports.


QuickBooks Online offers more pre-set reports than Xero, but they’re less customizable.


Xero lets you customize reports by grouping accounts, adding formulas, and modifying formats. It also lets you create report drafts you can edit later.

6. Multicurrency

Depending on the plan, both platforms can automatically apply exchange rates and post transactions in foreign currencies.


With QBO, currency is set at the contact (customer or supplier) level—so if you deal with a single contact in multiple currencies, you’ll need to set each one up separately. You must also manually revalue currencies at the end of each reporting period. 


With Xero, currency is set at the transaction level—so a single contact can support transactions in multiple currencies. Xero also automatically revalues currencies whenever a report is run, using the report dates.

7. Mileage and time tracking


QBO includes mileage tracking in all its plans, and time tracking in all but its EasyStart plan.


With Xero, you’ll need the paid Expenses add-on to track mileage and the paid Projects add-on to track time.

Bottom line

While both are cloud-accounting leaders, the main difference between QuickBooks and Xero lies in their unique strengths and limitations.

Whereas QBO excels in areas like class functionality and tax tracking, for example, Xero shines when it comes to customizable reports and multicurrency transactions. 

When comparing Xero and QBO for customer support, you’ll find Xero provides 24/7 online support only while QBO provides phone and chat support during specific hours only (plus 24/7 support on its Advanced plan).

At Enkel, we help clients choose the right accounting software—and integrate the most suitable applications—to ensure a streamlined accounting process. If you’re looking for a cloud accounting solution for your small business, Enkel can help!

How We Select and Evaluate Our Software Recommendations

We thoroughly research and test the apps we include in our regular workflow for Client bookkeeping services. After deciding on criteria for evaluating the software and then researching the app itself, we tested the app, noting its strengths and weaknesses. We then work with the app for at least a few weeks before deciding whether to recommend it to our readers. We use the software as it was designed for its intended tasks. For a detailed walk-through of how we select and evaluate software, please see the details of our process.

Enkel receives no consideration or compensation from software publishers for featuring their software in our blog articles.

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