Choosing the Right Accounting Software for Your Small Business, Part 1: QBO vs. Xero

When you’re starting your small business, choosing accounting software is, in a way, very simple: pick software that you’ll use. Even the best software in the world is useless if you get that scary feeling in the pit of your stomach when you think about logging in.  

A solution that suits you and the way you work is key, but so is making sure that you can afford it and that it does what you need it to do. The only person who can make those decisions is you, but to help you along the way, I’ve compiled intel on commonly used accounting software. My sources include my own user experiences, software comparison sites, the software publishers’ websites, Reddit posts and what I’ve heard from my accountant friends and colleagues. 

Let’s compare systems and see where we land, starting with Quickbooks Online vs. Xero. Stay tuned for parts 2 and 3, in which we’ll build on our comparison with Freshbooks and Wave.

Part 1: Quickbooks Online vs. Xero

When you think of accounting systems, the first piece of software that comes to mind is probably Quickbooks. Originally released by Intuit in 1992, Quickbooks pretty much blazed the trail for what small business accounting software would look like 30 years later.  

Here in 2025, Intuit has acquired and integrated a number of Quickbooks-adjacent systems (Mailchimp, Credit Karma and Turbo Tax), in a pattern of growth-through-acquisition and their own product releases that will probably continue as they build out their accounting, tax and business services hub with Quickbooks at the center.

Despite this strong position as a logical choice for accounting departments around the world, Quickbooks might not be the right fit for your freelance or small business. Depending on the kind of work you do, your values and the way you like to use software, you might consider a Quickbooks alternative in the fight for your monthly subscription fee. 

First up, there’s Xero, a close cousin to Quickbooks Online (QBO). Both are cloud-native, which basically means you access the software from a web browser, the system will perform faster than a desktop or managed solution, and it will be easy to share data between apps.

QBO vs. Xero: User Experience

Users of both QBO and Xero note that QBO retains some of the more “old fashioned” navigation and UX of Quickbooks Desktop, while Xero’s look and feel is more up to date, easier to use and offers an overall more pleasant experience. In addition, because there are similarities between the two systems’ designs, those with Quickbooks experience will find it easy to onboard to Xero (I did!). 

Aside from just look and feel, QBO and Xero also approach their solution-building a little differently. For instance, both systems have payroll add-ons, but Xero’s payroll solution is through a partnership with payroll provider Gusto (another open platform), while QBO offers its own, platform-native payroll component. Your preferences around partner vs. native solutions may be influenced by past purchases, but it pays off in the long run to research add-on options for the capabilities you need before committing to a system. 

QBO vs. Xero: Capabilities

Both Xero and QBO offer general accounting, invoice/billing management, vendor management and Inventory capabilities. 

For straight up accounting power, QBO is the winner, particularly for professional accountants and bookkeepers who note that they value the manual control and intervention QBO allows to ensure that things like deferred revenue, complex transactions, partial payments and similarly nuanced entries are correct. Where Xero offers streamlined workflows and easy-to-use tools, QBO allows easier access into the “guts” of the books.

But allowing users into those “guts” may be a positive or a negative, depending on your needs. Many small business owners and freelancers who manage their own books don’t need to see under the hood that often, and prefer the streamlined environment of Xero. Plus, users also report that Xero offers better customer service - so if something does need to be adjusted, it’s easier to get the needed answers.   

QBO vs. Xero: Pricing

Pricing for SaaS solutions is subject to constant change, but as of July 2025, both QBO and Xero are running discount promotions on the first few months of subscription fees and offering a free month trial period. 

Pricing between these two solutions differs in how subscription tiers are structured - Xero has no limit on how many users can be logged into your account; however, certain functions are limited by number of transactions, while some features may only be accessed by a higher tier of subscription. 

QBO, on the other hand, limits the number of users that can access the account, as well as some features that may be accessed by higher subscription tiers. 

Xero’s starter subscription book price is $20 per month, while the equivalent one-user QBO subscription lists $35 per month. 

In the next tier up, Xero lists $47 per month for enhanced features, while QBO includes 5 users and enhanced features for $99. 

QBO vs. Xero: Conclusion

As a professional bookkeeper, I’d most likely recommend Xero over QBO for most small businesses that are just starting out. This is based on the pricing, the number of users that can log in concurrently, and the simplicity of the workflows in Xero. Xero allows for growth and offers everything you need in the very early stages of your business, making it a solid choice for most people. Just make sure that YOU like Xero before deciding to use it! Remember, software is only as useful as you make it, so do the research, but trust your instincts when it comes to finding your ideal system.