If you’re a small business looking to streamline your processes and start scaling more quickly, you might have considered moving to a cloud-based accounting system.
This can be a great way to take control of your accounts and not worry about things like storing paper receipts or hunting through bills before tax season.
However, it’s essential to choose the right accounting software. Choose one that’s too complex or has too few features, and you’ll find yourself floundering or frustrated.
And while several names compete for the title of “best accounting software for small businesses,” it comes down to three leading contenders – FreshBooks vs QuickBooks vs Xero.
So, which is the cloud accounting platform for you? Let’s dive in.
FreshBooks vs QuickBooks vs Xero: What do they do?
Let’s start with a quick introduction to each of these cloud accounting stalwarts:
- FreshBooks is a relatively new cloud-based accounting software designed to simplify bookkeeping for freelancers and small businesses.
- QuickBooks is an accounting software with various useful features for small, medium and big businesses.
- Xero is one of the most well-known names in the cloud accounting space, packed with features geared towards the growth of small businesses.
FreshBooks vs QuickBooks vs Xero: How do they compare?
We’ll start by saying that all three cloud accounting solutions contain the basic accounting features you’ll need to get started, from bank reconciliation and invoicing to filing and top-notch data security.
The differences aren’t as much about the number of features available as they are about how each accounting software operates and how easy it is to get things done. In our FreshBooks vs QuickBooks vs Xero comparison, therefore, we’ll be focusing on some significant features:
- Invoicing and payments
- Project management
- Tax support
- Ease of use
- Reporting
- Pricing
Let’s consider each one in turn.
1. Invoicing and payments
These are two of the most critical accounting software features for small businesses. Let’s take a look at how our three contenders measure up:
A. FreshBooks
It helps small businesses create, customise, and send invoices with a few clicks. You can add payment options of your choice, including e-checks, bank transfers and credit cards.
B. QuickBooks
With this software, you get more scope for customisation than with FreshBooks. And if you sign up for the GoPayment option, you also get a mobile card reader, something that’s pretty unique among cloud accounting tools.
The card reader accepts chip and Stripe payments and is compatible with all major browser platforms. QuickBooks is a good option if your small business has a physical store or presence.
C. Xero
With the Xero accounting software for small businesses, you get 15+ invoicing templates that let you personalise your invoices just as you like them. You can add payment options of your choice and set up one-time or recurring payment options as necessary.
You also get access to an invoice approval workflow feature and can integrate it with your inventory management system. The downside is that all these features might initially make the tool overwhelming to handle.
2. Project management
If you’re working as a team, you’ll want accounting software for small businesses that supports collaboration. Let’s see how these three accounting tools stack up:
A. FreshBooks
You get a basic set of project management tools, including project creation and management, the ability to assign team members and a time-tracking tool. It’s ideal for small teams doing only a few projects at a time.
B. QuickBooks
The features here are slightly more comprehensive than for FreshBooks, including the option to track expenses and an integration option with more advanced project tracking tools for more insights.
C. Xero
This tool gives you the most comprehensive project management experience of the three, with extra features like project-specific reporting, budgeting and profitability analysis.
3. Tax support
Taxes are a non-negotiable part of accounting for small businesses! Let’s see how FreshBooks vs QuickBooks vs Xero fare in terms of helping you get your taxes ready in time:
A. FreshBooks
You can set up basic tax calculation features with FreshBooks. Once you include a tax rate based on your location and add it to your invoice, the cloud accounting tool will calculate and detail the tax amount owed. However, you won’t get any tax reporting options with FreshBooks.
B. QuickBooks
This accounting solution lets you accomplish much more with your taxes. You can set up tax rates for auto-calculation on invoices, track tax payments and any liabilities, include multiple types of tax depending on regional requirements and generate detailed tax reports. You can also integrate with external tax filing services.
C. Xero
It offers a wide range of tax calculation features, too. You can add multiple tax types and pull detailed tax reports as necessary. It also supports tax filing integration for a streamlined filing experience.
4. Ease of use
This is perhaps the most important feature for small businesses to consider in the FreshBooks vs QuickBooks vs Xero question. Your time is limited as a business owner, so the simpler your processes are, the better.
A. FreshBooks
It’s designed to provide a straightforward user experience even for novices. It has a clean interface, and it’s easy to set up, thanks to the many walkthroughs the accounting software comes equipped with.
You can easily import important files like receipts and invoices, either as manual uploads or through FreshBooks integrations.
B. QuickBooks
This accounting tool isn’t as easy to use as FreshBooks, but it isn’t as hard as some other options. One advantage it does have is that you can customise the user interface depending on your comfort levels.
If you’re new to cloud accounting, you can hide some more complex features and then turn them back on once you’re more accustomed to the layout. The setup doesn’t take too long, either.
C. Xero
In the FreshBooks vs QuickBooks vs Xero debate, Xero definitely comes first regarding “ease of use.” But that’s because its USP is how comprehensive it is. Xero can give you pretty much any accounting software feature you want. Importing files is easy, thanks to the vast number of Excel import templates you get.
5. Reporting ability
Pulling up financial reports as needed is vital to small business accounting. Again, all three tools let you do this – it all comes down to the extent of the functionality.
A. FreshBooks
Out of the three, FreshBooks is probably the most basic in its reporting ability. You get graphs for revenue streams, outstanding revenue, spending, unbilled time and total profit.
However, as a small business, these give you all the essential insights you need, and they’re definitely easy to interpret and customise for specific periods.
In downloadable reports, you get tax summary, profit/loss, invoice details, accounts payable and receivable, expense reports, payments collected and time entry details.
B. QuickBooks
It wins out on the reporting front in the FreshBooks vs QuickBooks vs Xero debate. You get 80+ built-in reports, giving you a wide range of flexibility regarding what data you see and how it’s presented. If you’re looking to regularly track how your finances are doing, QuickBooks is the one.
C. Xero
Xero’s downloadable reports aren’t as comprehensive as QuickBooks’s. However, with the Xero dashboard, you get real-time insights into your financial data that you simply won’t get with QuickBooks or FreshBooks. You can get a bird’s-eye view of things or drill down on specific points as necessary.
6. Pricing
Last but not least – which is the most affordable among FreshBooks vs QuickBooks vs Xero? While we certainly believe that high-quality cloud accounting tools are worth the money, a small business must ensure its budget is being used on the right things.
Let’s take a look at their pricing plans.
A. FreshBooks
You get three tiers in FreshBooks pricing: Lite, Plus and Premium. The Lite plan costs £15 a month and is ideal for small businesses with up to five billable clients. With the Plus plan (£25 per month), you can add up to 50 clients and track your expenses and hours worked.
With the Premium plan (£35 per month), you get role-based permissions and the ability to see how work is being assigned, in addition to up to 500 clients per month. You can try FreshBooks for free for 30 days.
B. QuickBooks
You get five QuickBooks pricing plans, namely Simple Start (£14 per month), Essentials (£28 per month), Plus (£38 per month), Advanced (£90 per month) and Self-Employed. The last one is a unique one specially designed for freelancers and self-employed individuals.
For £10 a month, you can send invoices, track your expenses and mileage and manage your taxes. The other four plans are all for businesses, with the more expensive ones offering more users and features. You can try QuickBooks for free for 30 days.
C. Xero
You have four Xero pricing plans: Starter, Standard, Premium, and Ultimate. The Starter plan costs £15 a month and includes basic features like invoicing, expenses and bank reconciliation. You can send 20 invoices and enter five bills only with this plan.
The Standard plan costs £30 a month and covers everything the first plan covers. However, this plan has no restrictions on sending invoices or entering bills. The Premium and Ultimate plans cost £42 and £55 per month, respectively.
Xero provides add-on features such as payroll, expense management, project tracking, CIS returns submission, and Analytics Plus, which can be purchased separately, regardless of the pricing plan chosen.
If you’re uncertain about the benefits of using Xero software, you can try it for free for 30 days.
NB. All pricing shown excludes VAT. Special introductory pricing may be available and there are discounts if you take an annual package with FreshBooks and QuickBooks.
FreshBooks vs QuickBooks vs Xero: Which do you choose?
As you can see, there’s no single winner regarding the FreshBooks vs QuickBooks vs Xero debate for small business accounting. While some might appreciate Xero’s robust features, others might prefer the simple, user-friendly experience that FreshBooks gives accounting novices.
Choosing among them will depend on which features you’re prioritising, how many users you’ll be giving access to, and your monthly budget.
We’d recommend signing up for a free trial of all three so you can make an informed choice. In addition, talk to other business owners in your space to see what’s worked for them. If you’d like to speak to someone hands-on with this accounting software, get in touch with us.
We are ACCA-qualified Xero and QB-certified and our cloud accountants can help your business get on a cloud tool of your choice. Need guidance on using it? No problem. Want us to look after your accounts? We got you there, too!
We are savvy with different cloud-based platforms, so our clients always have a real-time view of their financial data, helping them make critical business decisions. Contact us today to find out more.
