This piece compares three popular bookkeeping software solutions—Intuit’s QuickBooks Online, Xero, and Wave Accounting—and explains the appropriate platform for specific business scenarios.
We’ll go over the following:
This article compares three popular bookkeeping software solutions—Intuit’s QuickBooks Online, Xero, and Wave Accounting—and explains the appropriate platform for specific business scenarios.
We’ll go over the following:
- Important Features
- Compatibility
- Usability
- Scalability
- Price
As you can see, each platform has substantial differences – no platform is appropriate for every case.
Appropriate software does not guarantee good books. Countick has a team of skilled bookkeepers who use proprietary tools to automate the most error-prone areas of bookkeeping. Try Countick Now if you wish to keep better records.
Important Characteristics
The significant elements you require will differ depending on your company’s systems and processes.
As an example:
- Wave is ideal for billing and subscriptions.
- Xero provides robust inventory and sales tax capabilities.
- Overall, QuickBooks has the most robust accounting software.
Read more: The 14 Must Have Startup Tools In 2023
Invoicing
All three platforms can generate, manage, and send invoices.
QuickBooks has the most user-friendly and sophisticated invoicing options. Custom invoices, recurring invoice templates, matching payments, and batch invoicing (on the advanced plan) are all possible. These features are a huge time saver for a rapidly expanding business.
Wave’s invoicing features are likewise outstanding. Estimates can even be converted into invoices and sent in any currency. They are, however, the only platform that levies a 1% fee on all bills. This might not seem like much, but if you send out a lot of invoices, it adds up quickly. For instance, 1% of a bill for $50,000 is $500, which is a considerable number.
While there is no invoicing price with Xero, their features are the most basic. It may be challenging to use if you need to send a large number of invoices or make several adjustments.
Subscription
Wave should be seriously considered if receiving recurring payments or setting up subscriptions is critical to your business strategy. While QuickBooks has this feature, Wave’s subscription payments are actually more robust. Timezone controls, adjustable scheduling, automatic receipts, and bespoke messages are among them.
Inventory
QuickBooks and Xero are both excellent for e-commerce enterprises with fewer than ten thousand SKUs. You may track products and costs, receive alerts when inventory is low, create custom inventory reports, manage vendors, and make purchase orders.
They are also compatible with Amazon, Shopify, and Etsy. An enterprise solution is most likely required if you have an extensive product library with tens or hundreds of thousands of active SKUs.
You should not utilize Wave if you run an e-commerce or physical product firm. The platform is intended for service organizations and has limited inventory management capabilities.
Tax On Sales
Xero and QuickBooks, like inventory, are your best options for sales tax setting and reporting.
Xero’s setup is user-friendly for someone who is doing it themselves and configuring their automated and manual sales tax configurations, as well as filing tax return.
QuickBooks’ sales tax tools are more sophisticated; nevertheless, if you are not a tax professional or have prior knowledge of their program, you may find it difficult to quickly produce and retrieve your sales tax data because it is not easy for beginners.
Reporting
QuickBooks is by far the finest option of the three for the most complete and configurable reporting. You can generate vendor, project, and class reports, as well as construct custom reports and view visual business insights and performance trends.
They also feature “smart reporting by Fathom,” which includes machine learning, on their advanced plan. The main disadvantage is that learning how to use their rich reporting features takes some effort.
While Xero’s reporting capabilities are more limited, they are more visually appealing and easy to use. You can easily view profit and loss statements, balance sheets, inventory tracking, etc.
Wave’s reporting options are also simple to use, although they fall short in terms of sales tax, inventory, and employee data. This could be useful for freelancers, solopreneurs, and small enterprises with only a few staff. Wave’s solution will not fulfill the needs of larger organizations or even startups.
Payroll
QuickBooks has a few add-on packages from which to choose. Their self-service payroll solution is $18 per month plus $4 per employee. While QuickBooks provides advice and documentation, you must organize and file your own W2 and payroll taxes. In addition, they provide a full-service managed Payroll solution for $40 per month plus $4 per employee each month.
Furthermore, if you engage many 1099 contractors, their advanced plan includes 1099 vendor management, which includes contractor payments and filing 1099s for tax purposes.
Wave provides the most affordable managed payroll solution, with a monthly base charge of $20 to $35 for every active employee and $6 per independent contractor. They’ll transfer tax payments automatically and complete documentation with your state tax authority and the IRS.
It is, however, limited to six states. If your company isn’t registered in these six states, your only alternative is to use their self-service payroll, which costs $20 per month plus $4 for every active employee and $4 per independent contractor paid. This is more than the self-service option in QuickBooks, and you must pay for and file the papers yourself.
Xero does not have an in-house payroll solution. Instead, they link with Gusto, a full-service payroll solution that costs $39 per month plus $6 per person every month.
You May Also Like to Read: Managing Your Payroll Tax Obligations A Practical Guide for Business Owners
Compatibility
All three platforms accept Visa, Mastercard, Discover, and AMEX credit cards, as well as bank account payments (ACH) and PayPal.
Payment Acceptance
Xero also supports ApplePay, AndroidPay, and Square.
Keep in mind that Wave charges a credit card processing fee of 2.9% + 30 cents for each transaction. They pay in two business days.
Popular Integrations
All three online accounting platforms are compatible with Google Apps, Zapier, Excel, HubSpot, and numerous time-tracking, expense-tracking, and project-management applications.
Furthermore, iOS and Android mobile apps are available for all three platforms.
Utilization Ease
Another factor to consider is the learning curve and overall platform user interface.
Wave is the simplest to learn and use. You can also have an unlimited number of guest contributors. This may be your ideal option if you’re a freelancer or solopreneur with simple financial demands.
Xero is also user-friendly and simple to use. This could be useful for a new or small business, as well as for DIYers who don’t have a strong accounting background.
QuickBooks has the steepest learning curve, and it may take you a few days to become used to all of the functions. What it lacks in usability, it makes up for in options for getting help with it.
There are numerous free and paid training courses available online, as well as a robust infrastructure of specialists that can assist you in making the most of the platform.
Helpful Resource: How To Avoid Making Financial Mistakes as a Startup
Customer Service
According to Capterra user reviews, all three platforms have 4 out of 5 ratings for customer service.
Xero’s phone and email support appear to be the most responsive. Both Wave and QuickBooks received multiple complaints concerning poor responses or extended phone support hold times.
Scalability
Because system migration is a major issue, you should select the best accounting software that will work as your company grows.
QuickBooks is unquestionably the most scalable solution. For starters, they are the only one of the three that accepts accrual accounting. QuickBooks features the most reliable software and professional infrastructure. QuickBooks is well-known among accountants, bookkeepers, and financial consultants.
Furthermore, if you change accountants or add new software, the likelihood of that working well with your QuickBooks setup is high.
Xero is the second-best option. They are building a growing professional infrastructure of companies and solutions that integrate with their platform.
One of the most significant disadvantages is that Xero is the most challenging platform to leave if you ever want to transfer to another bookkeeping software due to how their data is formatted.
While Wave does provide Wave+, which includes in-house accountants and bookkeepers, it is the least flexible option. Because their feature set and reporting capabilities are the most limited, you’ll likely outgrow them as soon as you hire more than a few people.
Price
Your budget is the final factor to consider when selecting small business accounting software. It’s worth mentioning that all three platforms’ price plans feature add-ons and extra costs on top of their base rates.
For example, if you add on other features, such as payroll services, a $9-per-month subscription could end up costing you $75 per month. Pricing is more complicated than we can describe here because it depends on your cloud accounting and individual business demands. Here’s an overview of the Price for each platform.
Wave
Wave appears to have the most appealing platform. All of their basic features are free to use. However, they charge a 2.9% + $0.30 fee for credit cards and 1% for bank payments to process the payment.
This strategy is ideal for solopreneurs, freelancers, and startups. However, as your company expands, you may end up paying far more in payment processing fees than you would with a Xero or QuickBooks Online subscription plan.
Xero
The monthly fees for Xero range from $9 to $60. However, their most basic plan has relatively limited features. Many firms will be forced to upgrade to the $60-per-month plan. At that price, you should upgrade to the QuickBooks Essentials Plan, which has improved features of reporting and the ability to manage all 1099 contracts.
QuickBooks
QuickBooks pricing can be perplexing at first glance. Their advertised prices allow you to start at discounted prices (big, black numbers in the screenshot below) for three months before switching to regular prices (small, grey numbers in the screenshot below). For the purposes of this essay, we’ve taken non-promotional pricing into account.
While QuickBooks is the most expensive of the three, with monthly fees starting at $20, it is also the most powerful and scalable platform. With just $70 per month, you receive more functionality than Wave and Xero’s most expensive subscriptions.
Conclusion
Before selecting an accounting solution, we recommend that small business owners conduct due diligence and consider key factors such as cash flow, tax setup, transaction volume, inventory specifications, multi-currency support, bank reconciliation, payroll needs, reporting, and a CPA’s recommendation.
Wave is an economical, DIY option if you are a freelancer, solopreneur, or self-employed professional with simple bookkeeping needs.
Xero works excellently for some small enterprises, startups, and e-commerce businesses, but it is not perfect for scaling.
QuickBooks Online is best for most firms, especially if you already have numerous employees, have a growth mindset, or desire QuickBooks’s enhanced feature set.
Appropriate software does not guarantee good books. Countick has a team of skilled bookkeepers who use proprietary tools to automate the most error-prone areas of bookkeeping.
Try Countick if you wish to keep better records.
