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There are three popular accounting softwares for small businesses: QuickBooks Online, Xero and Wave. Each are unique in their own way and can be essential to your business… so which one is best for you and your business? Let’s compare 6 categories:

1. User-Friendliness and Accessibility

• QuickBooks Online (QBO):
  • QBO offers a modern, user-friendly interface with extensive tutorials, making it approachable for beginners. It’s web-based, meaning it’s accessible from anywhere, and has a mobile app that syncs seamlessly with the desktop version.
  • From a bookkeeper’s perspective, QBO provides detailed functionalities that allow deeper customization. The QuickBooks ProAdvisor program also provides a certification for bookkeepers, which can aid in collaboration and enhance efficiency.
• Xero:
  • Xero’s interface is known for its clean, intuitive design, making it easy to navigate. Xero’s dashboard is customizable, which is beneficial for both business owners and bookkeepers to track the most relevant financial metrics.
  • Bookkeepers often find Xero’s layout logical, with the workflow streamlined, especially for managing cash flow and reconciling transactions. Xero offers the Xero Advisor program, adding a level of professionalism for bookkeepers collaborating with business owners.
• Wave:
  • Wave is simple and relatively easy to learn, and it is also web-based, allowing users to access their accounts from any location. However, it lacks a mobile app for accounting, which can be limiting.
  • For bookkeepers, Wave is functional but lacks the in-depth customization options available in QBO and Xero.

2. Collaboration and Multi-User Support

• QuickBooks Online:
  • QBO shines in collaboration, allowing business owners to invite bookkeepers and control access levels for each user. Multiple users can access the account simultaneously, making collaboration seamless.
  • The Audit Log feature is particularly useful for bookkeepers, allowing them to track every action taken in the system, which helps to address any errors or discrepancies efficiently.
• Xero:
  • Xero also supports multi-user access, with a simple process for adding bookkeepers and setting permission levels.
  • The “Activity” feed allows both business owners and bookkeepers to track who made which changes, although it isn’t as granular as QBO’s Audit Log. It supports unlimited users, which can be a major advantage for small teams.
• Wave:
  • Wave allows business owners to invite collaborators, like accountants or bookkeepers, with restricted access; however, it doesn’t have the same depth of multi-user support as QBO and Xero.
  • Wave’s simplicity makes it best suited for very small teams where heavy collaboration isn’t as critical.

3. Features and Functionality

• QuickBooks Online:
  • QBO is very comprehensive, with features that suit both small and growing businesses. For business owners, it provides strong expense tracking, invoicing, and reporting tools. The built-in payroll option is a bonus for those needing payroll integration.
  • For bookkeepers, QBO offers extensive bank reconciliation, customizable reports, and the ability to handle complex accounting needs such as project accounting, which is great for more complex businesses.
• Xero:
  • Xero includes most core accounting features, such as invoicing, inventory tracking, and bill payments. Xero’s reporting is robust and customizable, although not as granular as QBO’s reports.
  • For bookkeepers, Xero offers automated bank feeds and simple reconciliation. Its inventory management, although basic, is ideal for service-oriented small businesses that don’t need complex inventory functions.
• Wave:
  • Wave covers most basic accounting needs (invoicing, receipt scanning, expense tracking) but lacks some advanced features like inventory management and advanced reporting.
  • For bookkeepers, it provides minimal customization, and Wave Payroll (available only in the U.S. and Canada) is an additional paid service.

4. Integrations and Automation

• QuickBooks Online:
  • QBO has a vast marketplace of third-party integrations, making it adaptable for almost any industry. It integrates with over 650 applications, including popular tools like PayPal, Shopify, and Square.
  • For bookkeepers, this means that data entry is minimized and that the software can be tailored to meet the specific needs of different clients.
• Xero:
  • Xero also has a comprehensive app marketplace with over 800 integrations, making it highly flexible for diverse business types.
  • The automated bank feed connections are a significant time-saver for bookkeepers, and Xero’s machine learning tool, “Xero Suggest,” helps automate transaction categorization.
• Wave:
  • Wave has limited integration options compared to QBO and Xero, focusing on essential integrations like PayPal and Stripe. It offers limited automation, making it more manual-intensive for bookkeepers managing multiple clients.

5. Cost-Effectiveness

• QuickBooks Online:
  • QBO has multiple pricing tiers ranging from basic to advanced features, suitable for both freelancers and small to medium-sized businesses. However, as needs grow, costs can add up, which may be a drawback for smaller business owners on a budget.
  • For bookkeepers, QBO’s ProAdvisor program often provides discounts and perks, which can offset costs.
• Xero:
  • Xero’s pricing is competitive, with three main tiers, and all plans support unlimited users. It’s slightly more affordable than QBO but offers fewer built-in tools, like payroll.
  • For bookkeepers, Xero’s affordable, scalable pricing model is attractive when working with small businesses aiming for growth.
• Wave:
  • Wave’s core features are free, making it a very budget-friendly option for freelancers or small businesses.
  • However, its lack of advanced features makes it less scalable, and bookkeepers working with clients aiming to expand may eventually need to migrate to more feature-rich software.

6. Customer Support and Resources

• QuickBooks Online:
  • QBO offers extensive resources, including live chat, phone support, and a comprehensive online help center. The QuickBooks Community and ProAdvisor program support bookkeepers who specialize in QBO.
• Xero:
  • Xero’s support includes 24/7 email support and access to an extensive library of tutorials. However, phone support is limited.
  • The Xero Advisor program provides resources for bookkeepers, helping them troubleshoot and deepen their expertise.
• Wave:
  • Wave offers email-based support and a help center, but response times can be slower due to the lack of a paid support structure. Its online community is active, but bookkeepers requiring faster support may find it limiting.

Summary

• QuickBooks Online is excellent for those needing highly customizable and feature-rich software with robust support, making it ideal for both business owners and bookkeepers in medium-sized or growing businesses.
• Xero is also a strong choice, especially for those preferring a streamlined experience with easy collaboration and a variety of integrations. Its affordability and unlimited users make it appealing for small teams.
• Wave is most suitable for very small businesses or freelancers, thanks to its free core features, but may fall short for businesses requiring in-depth reporting, scalability, or advanced accounting functions.

Ultimately, QBO and Xero both offer extensive features for collaboration and scalability, with QBO leaning towards advanced customization and Xero providing a more straightforward, adaptable interface. Wave’s free platform is ideal for those needing only essential functionality with minimal costs.