Which Is Best: Xero or QuickBooks UK?

summary

• Xero is more intuitive and user-friendly for small businesses and beginners.
• Xero is generally cheaper, with more features in its basic plan, but both offer free trials.
• QuickBooks offers superior customer support, including phone-based support.
  

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Transcript available below.

Embarking on a side hustle can quickly turn from an exciting venture to a daunting task, especially when your annual tax return is due. This is where the right accounting software becomes a game-changer. If you've been researching, you've likely come across two major players in the UK market: Xero and QuickBooks. But which one is the perfect fit for your business needs?

In the upcoming sections, we delve into a detailed comparison of these two accounting software giants. Our analysis covers essential factors like usability, features, and pricing, providing you with clear insights to make an informed choice. Are you leaning towards Xero’s simplicity or QuickBooks' comprehensive features?

Stay tuned as we unravel which software emerges as the top choice for your side hustle. Xero or QuickBooks? Read on to find out!

At first, you may not feel the need for accounting software. However, as you start growing — taking on more clients or selling more products — you’ll find your financial records all over the place. Accounting software is a purpose-made solution that will solve this issue.

With software, you’ll have a comprehensive tool that handles all your accounting needs. You can keep a record of expenses, sales, and revenue. The software also tracks income, generates financial statements, and facilitates the import of bank transactions (a massive time-saver!). With the consolidated data, it’s also much easier to submit your annual tax return and track your growth as a business. All these benefits you can enjoy without spending too much — if you choose the right type of accounting software.

Many accounting firms see Xero and QuickBooks as the Apple and Android of accounting softwares, respectively. Xero feels intuitive, easy to use, and deceptively simple. Xero brings together a sleek design and comprehensive accounting features to create the ultimate accounting tool.

On the other hand, QuickBooks has all the functionalities you need, and there are plenty of customisation options. 

About Xero

In the past, QuickBooks held a firm hold on the UK market. The second option was Sage, another popular accounting software during the 2000s. UK-chartered accountants preferred Sage because QuickBooks was too American, with few integrations for the needs of UK transactions.

Eventually, Xero entered the market and quickly established itself in the country. This software launched in 2006 in New Zealand, showcasing the tagline “Beautiful Business.” Somehow, the developers have brought together the utilitarian process of accounting and aesthetically pleasing interface. The result is a user-friendly yet powerful software that even beginners can confidently use.

Notable Features

Here are a few distinct features of Xero that aren’t found in QuickBooks:

Project Profitability Tracking

You can track how much a project is costing you in real time, which allows you to forecast future profits and compare them to your initial plans.

Multi-currency Support

Compared to QuickBooks, Xero supports more currencies. Thanks to this, it’s much easier to manage transactions for companies that are going multinational. While you may think that such a function is not needed for your side hustle, those who are in dropshipping and other e-commerce businesses will find this feature helpful.

Four Pricing Plans

Unlike QuickBooks, Xero has only four plans: Starter, Standard, Premium, and Ultimate. We recommend the Starter plan for self-employed workers. However, you can go to the next level should your needs increase.

One of the most recognisable accounting software in the world is QuickBooks, a pioneer in this niche. Many large corporations depend on this software, but even small ones like independent contractors and sole traders can enjoy its many benefits.

About QuickBooks

Intuit developed QuickBooks as a comprehensive accounting software, and it’s been around since 1992. QuickBooks is mainly an American software, but it has integrations that make it suitable for other countries, such as here in the UK.

The most well-known benefit of using QuickBooks is how complete the accounting features can be. From payroll management to invoicing, this software has pretty much every tool you could need. For this reason, QuickBooks is popular among large companies that need complete accounting solutions. However, QuickBooks has plans suitable for sole traders, self-employed individuals, and start-ups.

Notable Features

Here are a few features and tools in QuickBooks that are great for side hustles and small businesses.

Income and Expense Tracking

With QuickBooks, you can easily track the flow of income and expenses for your business. The software allows you to categorise the data into tax categories for easier filing once tax season arrives. While monitoring cash flow is a basic feature for accounting software, QuickBooks takes it up a notch by allowing lots of customisation options.

Mobile and Desktop App

QuickBooks has a mobile app that allows you to monitor and process transactions wherever you go. The app takes advantage of the cloud, allowing you to handle your accounting needs wherever you are. QuickBooks also has a desktop app, which is distinct from QuickBooks Online (accessible via your browser).

Five Plans Available

If you're just starting your side hustle, the QuickBooks Self-Employed plan might be a good option, which costs just £5 a month. You can upgrade to the Simple Start or Essentials plans as you grow, giving you access to functionalities like managing and paying bills, manual work hour entry, and running enhanced reports.

Now that you have a general idea of the differences between these two software, it’s time to compare important aspects of each solution to see which is better. In this analysis, we’re going to focus on critiques that mainly affect side hustles or self-employed workers.

Accounting Features Comparison

Both QuickBooks and Xero offer robust accounting features, including double-entry accounting and bank reconciliation. This is crucial for accurate financial tracking and reporting, essential for any side hustle or self-employed business.

Result: TIE

Both platforms excel equally in basic accounting functionalities, making them reliable choices for fundamental financial management.

Unique Features Showdown

QuickBooks, with its industry experience, brings advanced features such as transaction tracking tags and comprehensive tax support. These features, while robust, might be more than what's needed for simpler operations. Xero, though slightly behind, offers valuable capabilities like project tracking and CIS returns, specifically beneficial for UK-based users.

Result: QUICKBOOKS WIN

For those requiring more advanced and diverse functionalities, QuickBooks takes the lead.

Ease of Use Assessment

Ease of use is critical, especially for those new to accounting software. Xero shines here with its intuitive interface and straightforward tools, ideal for novices. QuickBooks, while familiar to accountants, poses a steeper learning curve for new users.

Result: XERO WIN

Xero's user-friendly design makes it a more accessible choice for beginners and small businesses.

Pricing Strategy Analysis

In the pricing arena, QuickBooks offers an initially more affordable plan, but with limitations and lack of readiness for the Making Tax Digital initiative. Xero’s plans, though starting at a higher price point, offer more comprehensive features from the get-go, representing better overall value.

Result: XERO WIN

For cost-effectiveness and feature-rich plans, Xero provides more value, particularly for small businesses needing comprehensive functionalities without a high price tag.

Customer Support Evaluation

Excellent customer support can be a deciding factor. QuickBooks offers superior support with a dedicated hotline and 24/7 assistance for higher-tier plans, a significant advantage for businesses needing constant support. Xero, while commendable in service, lacks an easily accessible hotline, relying more on email communication.

Result: QUICKBOOKS WIN

QuickBooks leads with its more accessible and comprehensive customer support options.

Overall Score: Xero 3 Points vs QuickBooks 3 Points

Despite the tie in overall points, the decision between Xero and QuickBooks should be based on individual business needs. For those prioritising ease of use and value for money, Xero stands out. Conversely, businesses needing advanced features and robust customer support might find QuickBooks more aligned with their requirements.

One of our most important recommendations is working with a qualified accountant, especially if you have big plans to eventually grow your side hustle. Accountants are not just number crunchers; they can be pivotal in shaping the financial strategy of your growing business. Here’s why an accountant is essential and how to find one specialised in Xero or QuickBooks.

Why Work with an Accountant?

Expert Guidance: An accountant can offer expert advice on financial planning, tax strategy, and business growth. They stay abreast of the latest tax laws and can help you navigate complex financial scenarios.

Time-Saving: Keeping your books in order takes time - time that could be spent growing your business. An accountant frees you up to focus on what you do best.

Software Training: Many accountants offer training on accounting software like QuickBooks and Xero. This training ensures you’re using all the features of your chosen software effectively.

Financial Health Monitoring: Regular check-ins with an accountant can help you monitor the financial health of your side hustle, identifying potential issues before they become serious problems.

Planning for Growth: As your side hustle grows, an accountant can help with budgeting, forecasting, and financing strategies to scale your business.

How to Find a Xero or QuickBooks Accountant

Both Xero and QuickBooks offer resources to find certified accountants experienced in their respective software.

Find a Xero Accountant:

Xero has a ‘Find an advisor’ feature on their website, where you can search for certified Xero accountants in your area. These professionals are well-versed in Xero’s capabilities and can provide tailored advice and training. Visit Xero's advisor directory to start your search.

Find a QuickBooks Accountant:

QuickBooks also offers a ‘Find a ProAdvisor’ service. ProAdvisors are certified by QuickBooks and can offer expert advice, training, and support. They can help you maximise the software’s benefits for your business needs. Start looking for a QuickBooks ProAdvisor on their website.

Working with a professional accountant who understands your chosen accounting software can be a game-changer for your business. They not only help in setting up and managing your accounts but can also offer strategic advice to grow and streamline your side hustle.

In this comparison, both Xero and QuickBooks have earned three points. However, we judge Xero as the better option for self-employed workers and sole contractors. While QuickBooks has all the features and customisation options, it gets too complicated for people who aren’t familiar with accounting and is more suitable for bigger businesses with more accounting demands.

On the other hand, Xero feels and works like it’s made for people who have little accounting experience. Even then, the software has plenty of powerful tools (and more app integrations) that make it as functional and effective as QuickBooks — all at more cost-effective rates.

So, if you want a recommendation for the best accounting software, we suggest using Xero.

As you ponder the choice between QuickBooks and Xero for your side hustle, you might be wondering about the broader picture: the real need for accounting software in your business. Choosing the right software is crucial, but understanding why you need one in the first place is equally important. Don't miss our next article, "Do You Need to Use Accounting Software?" where we delve deeper into the benefits and essentials of using accounting software for your business. From streamlining your financial processes to preparing for tax season with ease, this comprehensive guide will provide you with valuable insights to make informed decisions for the financial health of your venture. Stay ahead in managing your business finances by exploring the advantages of adopting the right accounting tools.

DO YOU NEED TO USE ACCOUNTING SOFTWARE?

🎧 Listen Now: Sidehustles.co.uk One-Minute Podcast

Which is Best: Xero or QuickBooks UK?

Welcome to the Sidehustles.co.uk One Minute Podcast. In the next 60 seconds, we're sharing a real-world insight from our network of seasoned side hustlers. This quick tip is designed to offer you practical advice that you can apply immediately in your side hustle journey.

Today, we're looking at Which is Best: Xero or QuickBooks UK? When it comes to choosing accounting software, it's not just about the features and pricing. One critical aspect often overlooked is user-friendliness, especially for those who are just starting out or have limited accounting experience. Our comparison of QuickBooks and Xero reveals that while QuickBooks offers a wide range of advanced features, it can be quite complex for beginners. On the other hand, Xero stands out for its intuitive and straightforward interface, making it a more suitable choice for small businesses and those new to accounting software. This insight can be a game-changer in how you manage your business finances, saving you not only time but also potential frustration. Always consider the ease of use when selecting software tools for your business. It can make a significant difference in your day-to-day operations and overall efficiency.

That's your one-minute real-world insight. Stay tuned for more!

https://quickbooks.intuit.com/uk/

https://quickbooks.intuit.com/uk/pricing/

https://www.xero.com/uk/

https://www.xero.com/uk/pricing-plans/

https://www.xero.com/uk/support/phone-support/

https://www.hubspot.com/comparisons/xero-vs-quickbooks

https://www.forbes.com/advisor/business/software/xero-vs-quickbooks/