Cloud Accounting Comparison

Unless you already have an Enterprise Resource Planning (ERP) system like Dynamics, Netsuite, Oracle, or SAP, it’s safe to say that you’re probably using QuickBooks.

As a bookkeeping solution, Intuit’s QuickBooks has always excelled by making things user-friendly for the business while still providing all of the traditional information your accountant may need.

The only problem with QuickBooks, traditionally, was that you also had to be an IT guy and/or an accountant just to set it up and keep it running. Either that, or you had to pay someone from one or both of those professions do it for you!

Then came the cloud: Now QuickBooks offers an online option, and keeping the books has never been easier, but this brave new world of cloud computing has given room for competitors, and one in particular, Xero, is giving Intuit a run for their money. Below, I will offer some comparisons.

Do please note: although both products also offer payroll services for varying price levels, these will not be discussed here. Of the two, QBO is the best option for payroll in the US, but I would always recommend you leave payroll to a focused payroll service.

QuickBooks Online (QBO)

First up, the big dog. Intuit’s QuickBooks is number one for a reason. All the things you love about QuickBooks are now available online.


The biggest culture change for most people moving to QBO is usually the web interface, and the fact that you can’t have more than one QuickBooks “tab” or window open at the same time. So quickly swapping from one section to another isn’t always quite as fast as before.

Features & Pricing

Intuit offers three basic pricing tiers for QBO: “Simple Start”, “Essentials”, and “Plus”. For the purposes of this comparison, we’re looking at the “Essentials” tier, which is priced at $26.95 per month, and allows 3 people access (and up to two outside accountants).

“Essentials” includes all the basics of bookkeeping from the “Simple Start” package (income and expense, invoicing, quoting, bank transaction tracking, and robust reporting) as well as the ability to pay bills, manage vendors, and set up recurring invoices.

All tiers routinely go on sale, so keep a look out.

Final Thoughts

Unless you have a compelling cause to keep your accounting software hosted on-premises (maybe you have other legacy programs that sync with your server-based system), there’s little reason for a loyal QuickBooks customer not to take the leap online.


Hailing from New Zealand with offices in their homeland, Australia, UK, and the US, Xero was founded in 2006.


Xero is a full-fledged double-entry accounting solution much like QBO. Xero offers all of the standard features you would expect (with a few glaring omissions I will highlight below), however where Xero really shines is its dashboard and basic data analytics. This gives a business manager a much greater view over the performance of their company. Also, the user interface and basic terminology on the front-end allows you to delegate some bookkeeping to non-accountant types. For instance, you don’t need to understand debits and credits. Instead, this information can be presented as “Spend Money” and “Receive Money”.

Features & Pricing

Xero starts at $9, but to compare it with QBO, we need to go in to the second pricing tier at $30 per month. For this, you get unlimited quoting, invoicing, and vendor management/billing. You can also give an unlimited number of people access to your Xero account. A few strikes against Xero, if these things are necessary for you: There is no Purchase Order, Sales Orders, or Inventory management native to Xero, for these things you will have to look to Xero’s app market place, or for other third party solutions. Xero also does not natively support 1099 options. Though, while 1099 is more of a vendor management issue, I would actually lump this with payroll as something you should be handling separately anyhow.

Final Thoughts

Xero is a great option for a company without a lot of accounting complexity. Xero is also the best option for any company with a team of decision makers who need to share and collaborate around financial information. With its unlimited user accounts, slick interface, and ease of use, everyone can pitch in.

The growing app market place and open API mean that any gap in service will be quickly filled with a third party solution.


Cloud Apps, or “Software-as-a-Service” will continue to grow. You’ve already seen the concept take-over in the areas of customer resource management, talent management, and payroll. The question, really, is whether incumbent players such as Intuit are going to be able to keep up.

Quickbooks has made some great strides with its online offering. Recent updates to the user interface and the opening of their API (so that third party apps can be made more easily) show that Intuit is taking the competition seriously, but will it be enough to stop the erosion of their market share?

Honorable Mentions


Wave has one really big thing going for it, it’s totally free. That’s right, free. It’s like, only for business. Wave can do pretty much everything Xero and QBO can do, but it’s really only designed for companies with 9 or fewer employees. Like Xero, Wave does not have PO support, and its Accounts Payable functions are very light. However, for the price, it can’t be topped.


Freshbooks was the first big online competitor to QBO, in my opinion. The company focuses mainly on small business owners and freelancers who are looking for a solution to track time, log expenses, quote, and invoice. If that sounds like you, Freshbooks might be the way to go.