Most ecommerce merchants are familiar with QuickBooks and QuickBooks Online. Xero, a hosted accounting platform for small companies, is less known. As a CPA for small-to-midsized ecommerce businesses, I favor Xero, for the reasons set forth in this report.
Xero: Product Overview
Xero was constructed to be an online accounting solution. It Isn’t a streamed down version of desktop applications
QuickBooks desktop offers small-to-midsize businesses with the majority of the accounting software needs. However, it needs to be installed onto a hard disk and its cost increases for several users. Additionally, it requires a server for multiple users. And to discuss info with a CPA, a merchant must grant access to the host or swap downloaded files. Additionally, QuickBooks compels you to upgrade its software every couple of years.
All three products — QuickBooks desktop, QuickBooks Online, and Xero — have similar purposes, as follows.
- Bank synchronization
- Bank reconciliation
- Accounts payable
- Accounts receivable
- Bill management
- Financial reporting
- Cashflow quick opinions
- Document sharing
Why I Prefer Xero into QuickBooks Online
If you insist that your accounting software be installed onto a hard drive, then go with QuickBooks desktop. But if you would like to benefit from technology, put money into an internet solution. The best alternative, in my opinion, is Xero.
Bank reconciliation made easy. The simplicity of reconciling bank accounts is the principal difference between Xero and Quick Books Online. The truth of your bank account(s) is quite important. Money going out and in needs to be recorded in a timely way.
Both products allow its users to sync bank accounts and download bank transactions. This permits you to match previously recorded transactions with the bank transaction with the click of a button.
However, Xero is better three regions.
- Easy dashboard accessibility. When you log into Xero, you instantly go to your dashboard where your bank and credit card accounts are recorded. Under every account is a blue tab that lets you reconcile x amount of bank transactions. With this reminder, you’re more likely to reconcile a few transactions daily rather than copious transactions at month end.
- Matching transactions. If transactions can not be matched, Xero provides its best recommendations. QuickBooks Online has more of a search engine for matching transactions.
- “Share” tab. On the bank reconciliation screen in Xero, there’s a”Discuss” tab for all downloaded bank transactions. If you aren’t certain how to classify something, type a query here and save it. You may then alert your accountant or bookkeeper, and he can tell you how it needs to be classified. It’s a lot easier to do it right the first time rather than fixing later.
Another item which makes reconciling simple is bank rules.
Bank rules. Bank rules specify the way the bank transaction will be listed. By way of instance, you may create a bank rule for Staples, the office supply retailer, and all transactions that have this description will be categorized as office expense. Xero has had this role for quite a long time. QuickBooks Online integrated bank rules only annually. It is but one of several cases of QuickBooks Online playing catch up to Xero.
Here’s a video describing how bank reconciliations operate in Xero.
Access and collaboration. Business owners should devote the vast majority of their time raising revenue, not becoming frustrated and being unsure of their financials. Online accounting systems such as Xero permit you to get your accounting documents from anywhere at anytime. All you need is Internet access.
If you do your accounting, your accountant may now get your data in real time. If you outsource your accounting to an accountant, the two of you can see the identical information at precisely the exact same time.
In any event, getting your accounting system online allows for faster and easier communication. Financial decisions and negotiations happen sooner because data is shared quicker because of the ease of availability.
Add-ons. No accounting system is ideal, in my own experience. Every company is different and has its own accounting requirements. To help companies create the ideal accounting system, Xero and QuickBooks Online have add-ons, which can be third party extensions which increase functionality.
Xero claims, on its website, 350 and add-ons. QuickBooks Online does not state the amount of add-ons. It is almost certainly much smaller than Xero.
Popular ecommerce add-ons for Xero are Stitch Labs (inventory management), Shopify, PayPal, and Magento.
Xero’s marketplace comprises 350 add-ons.
Files. As a CPA providing outsourced accounting services,”Documents” is my favourite Xero function. Each Xero account has a special email address to send digital documents for storage and for attaching to transactions. If you don’t need to email a document, just drag and drop into Documents or attach it to a bank transaction.
From Documents, you can attach a bill to an accounts payable transaction or a receipt into a bank transaction. Xero Files permits you to maintain all accounting documents in 1 location and attach documents to specific transactions for simple reference.
For people who outsource their accounting, you do not have to email or scan copious records at month end. As you collect files, email them to Xero Files. In case you have credit or debit card receipts, have a photo of them with your telephone and email them to Xero files.
Prices and consumers. Xero’s monthly cost is dependent upon the version. The”Starter” plan is $9 a month. The”Standard” plan, which includes unlimited transactions and deductions for up to five employees, is the hottest, at $30 a month. The”Premium” plan, allowing for a number of currencies and deductions for up to ten workers, is $70 a month. All of Xero’s prices include many users. To put it differently, you do not have t additional cost to add users.
For QuickBooks Online, there’s the”Simple Start” plan, at $12.95 a month for a single user. “Essentials” is $26.95 a month for three users. The”Plus” program is $39.95 a month for up to five users.
Attempt Both Options
For my CPA firm, we believe Xero is a far better solution. But try each choice before choosing. Both provide free 30-day trials.
Enter a couple of test entries to test each item — not a complete month’s transactions, just enter a couple of test entries. Create some fake invoices, bills, and checks. After doing so in each item, you must have an understanding of every one, to make an educated option.
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