Xero: An Honest Review

6 days ago
5 min read

I've been a bookkeeper and accountant since 2011. Over the years, I've used countless bookkeeping and accounting packages. Most are still with us. Some have retired to the software graveyard.

Xero, Sage, and QuickBooks are the current top 3 accounting packages and have held their place for several years. I use all 3 products daily, as well as some lesser-known packages.

So, what are my thoughts on Xero as a professional bookkeeper and accountant, and as a business owner? Is Xero better than QuickBooks Online and Sage Accounting? What does Xero do that other packages don't do?

If you can't be bothered to read this post (or watch the video review at the bottom of this page), then let's cut to the chase. Xero is fantastic. For a small business, it will do everything you need. It's very user-friendly and my top choice for bookkeeping and accounting software. If this is good enough for you, here is my link for 90% off Xero (you won't get a better deal). However, if you want more details, which is totally understandable, then continue reading...

Xero. The Basics.

Xero's web-based platform is cloud-based. Meaning your financial accounts can be accessed from any office and on the go. It also means there is no need to use computer memory or to regularly back up data, Xero handles it all.

There is also a handy Xero app, that allows users to perform basic bookkeeping tasks, such as recording expenses, invoicing clients, snapping photos of invoices and receipts, running reports, and reconciling accounts.

The software allows multiple users at no extra cost.

Xero. What can it do?

Xero accounting software has a wide range of features. For most businesses, it will be the only accounting package they need. This is one of the reasons why it is so popular - it's all-singing, all-dancing.

The features include:

Sales Ledger. Manage customer accounts, create statements and sales invoices, email statements and sales invoices, customise invoices, record customer payments, raise sales quotes, credit control features, and much more.

Purchase Ledger. Manage supplier accounts, record supplier payments, raise purchase orders, and much more.

Banking. Recording money in and out of multiple bank accounts, creating banking feeds, importing banking transactions, reconciling bank accounts, and much more.

Receive Payments. Receive card payments from customers.

Tax Returns. Prepare and file tax returns, such as VAT (sales tax) and self-assessment (income tax).

Fixed Asset Register. Record, manage, and track fixed assets.

Payroll. Add employees, manage employee deductions, send reports to tax authorities, create payslips, and much more.

Projects. Add and manage projects, run profitability and expense reports for projects, and much more.

Categories. Track sales and expenses by category, and more.

App Integration. Integrate apps and other software to feed into Xero.

Inventory. Add, manage, and track inventory items, and more.

Multi-Currencies. Invoice, record expenses, and add customers and suppliers in all currencies, including AUD, CAD, EUR, GBP, JPY, and USD.

File Storage. Store files, link documents to transactions, and more.

Question: Is Xero Making Tax Digital (MTD) Compliant?

Answer: Yes. Xero is MTD VAT and MTD Self-Assessment ready. I suggest using the software for both.

Question: Can you have multiple users on Xero?

Answer: Yes. There is no extra cost to add users. You can add unlimited users.

Question: Can I import and export data to and from Xero?

Answer: Yes, the process is relatively simple. The most common imports are banking transactions.

Question: Can I automate my accounts with Xero?

Answer: You can automate many of your business's accounting tasks by using a bank feed and banking rules, and by recurring transactions. However, there will always be an element of manual entry or management.

Question: Which Xero plan should I choose?

Answer: It depends on how complex your business's accounting needs are. For small national businesses, the Grow plan will often suffice. For businesses that deal in foreign currencies and/or need to track projects, the Comprehensive plan is required. There is no penalty for upgrading, so if you're unsure, subscribe to the cheaper plans and upgrade if or when you need to. My 90% off Xero covers all plans.

Xero. How does it compare to QuickBooks Online?

I love QuickBooks Online. I also love Sage. The purpose of this review is not to dis all other accounting packages and big-up Xero. This would be dishonest. I use QuickBooks and Sage daily. Some of my clients prefer those packages. However, many of my clients prefer Xero over QuickBooks. As an accountant, I do too. Here are some of the items I feel are better on Xero than QuickBooks:

Xero is more user-friendly. It's true. The interface is easier to navigate than QuickBooks. The platform also feels crispier and easier on the eyes. When it comes to banking transactions, such as the banking feed, Xero wins. Hands down. The QuickBooks banking transactions page is too complicated and busy.

Xero offers unlimited users. QuickBooks limits the number of users per subscription. If you want more users, you'll need to upgrade. This is not just costly, it's annoying. Xero offers unlimited users, regardless of your subscription. There is no need to pay more to have additional users.

Xero is often quicker and more reliable. This is purely from my experience. I've had more glitches and technical issues with QuickBooks Online than with Xero. Come to think of it, I don't recall ever having a software issue with Xero.

One annoyance. There is one area where Xero fails. That is the bank reconciliation feature. QuickBooks bank rec is much easier to use. Xero doesn't really have a traditional bank reconciliation process. This is my one and only frustration with the software.

Xero. How does it compare to Sage?

Sage used to have a monopoly on accounting software. There were no serious competitors. However, with the rise of cloud-based packages, Sage has had to share its clients with rivals.

I like Sage. For me, it is the original accounting package. But my fond memories of using Sage as an accounting student or new bookkeeper aren't enough to make me sentimental. Xero is better. This is why:

Sage Accounting (the price equivalent of Xero) is too basic. It does not have the same amount of features and sophistication as Xero or QuickBooks. Sage Accounting is very basic. However, if all you need is basic bookkeeping software, then there is nothing to complain about.
Sage 50 is much more extensive. In fact, it is suitable for most medium-sized businesses. However, it comes at a cost. A big one. You'll be paying at least twice as much for Sage 50 than Xero. Ouch!