QuickBooks vs. FreshBooks vs. Xero – 2022 Comparison

QuickBooks vs. FreshBooks vs. Xero - 2022 Comparison

QuickBooks vs. FreshBooks vs. Xero – 2022 Comparison

Welcome to the QuickBooks vs FreshBooks vs Xero – 2022 Comparison.  The right accounting platform can automate many of your daily tasks.  This allows you to see where your business stands financially at a moment’s notice.  Having the right accounting software frees up more of your time, so you can focus on running your business. 

For instance, all 3 of these platforms offer lots of automation.  They all offer the ability to upload vendor bills and to set up automatic importing of bank transactions.  This makes your bookkeeping, invoicing, and expense tracking processes immensely easier. 

So, which is the best online accounting program for you in 2022?  Read on to find out.

Overview:

First, I would like to start by saying if you have fallen down the rabbit hole while comparison shopping between the different online accounting software programs available, you are not alone.  One piece of advice I can give you is to check the dates of the various posts.  Cloud-based accounting software has evolved rapidly, so if you are reading a post from even a year ago, the pros and cons, pricing plans, and other information provided for each program are probably no longer relevant.

Secondly, keep in mind that each of these platforms have useful “add-ons” and apps that can be integrated.  However, these can quickly become very costly. So, take into consideration the integrations you will need, and which integrations are offered by each platform, before making a final decision.

To clarify, all three platforms offer some of the same integrations, such as being able to sync your Stripe, Square, and PayPal account transactions.  Another example is Gusto Payroll, which is available on all 3 platforms (for an additional fee).  On the other hand, other integrations may be specific to one platform, or only available in certain countries.  So, if there are particular integrations you require, check to be sure they are supported by whichever program you choose (see our YouTube videos below for lists of some of the current apps available for each platform).

OK – let’s jump in…

First on the list is QuickBooks – part of the Intuit family of software products (see my note regarding Quicken at the bottom of this post).  Intuit was founded way back in 1983.  That is to say, long before we had ever heard of the Internet (I know – it’s hard to imagine a time before the internet).  Therefore, their original accounting software was the desktop version of QuickBooks.  For the purposes of this blog comparison, however, we will be discussing QuickBooks Online (not the desktop version).

Certainly, the online version has not been around as long as their desktop versions, for obvious reasons, but they have been around longer than most of the other available cloud-based programs.  When they first launched the online version, I would not have recommended it to any of my clients.  However, I have seen it evolve into a very reliable program for small businesses.

QuickBooks is still the most robust of the online, cloud-based accounting software programs, but they are also the most expensive of the three, out of the gate.  They are currently offering 50% off your first three months, so that brings their pricing closer to FreshBooks and Xero initially. 

QuickBooks is an ideal option for businesses that have more complex tracking requirements, such as multiple locations, inventory, or job profitability tracking.

 

QuickBooks Time

In addition, it should be noted that basic time-tracking for billable hours is only available in the Essentials and above plans. For complete time-tracking capabilities (both for payroll and billable hours), you need to have a QuickBooks Time subscription.   

QuickBooks Time (formerly known as TSheets) is included with some QuickBooks payroll plans, and offers lots of great features, such as a time clock, so employees can log in to their own accounts to clock in and out. GPS tracking allows managers to see who’s clocking in and out and where their people are, and the geofencing feature automates location-based reminders to people to clock in and out.

Here are some available QuickBooks Apps:

QuickBooks Pricing Options (*50% off your first three months!):

Simple Start

$12.50*/month  

 Essentials

$25*/month 

Plus

$40*/month

Advanced

$90*/month

Second on the list is FreshBooks – founded in 2003.  FreshBooks has rapidly become a viable competitor to QuickBooks.

They are probably the easiest of the 3 options to set up with a step-by-step walk-through that makes it as easy as possible. 

The interface of both FreshBooks and QuickBooks are similar and are both easy to navigate (check out the YouTube video above for an overview of the dashboards for all 3 platforms). 

FreshBooks is ideal for small,  service-based businesses.  Their job profitability tracking capabilities have improved tremendously over recent months.  As a result, even businesses that need to be able to track job profitability, such as contractors, can now benefit from this platform. 

Time-tracking is included in all plans, but is limited to tracking billable hours (projects).  So, if you are also tracking hours for payroll, you would need to add a payroll integration.

In my opinion, one area where FreshBooks is lacking compared to QuickBooks and Xero is managing fixed assets (fixed assets are a business’s equipment, vehicles, and other depreciable property).  If your business would like to efficiently track your fixed assets, I would recommend either QuickBooks or Xero. 

However, most of the time, a simple journal entry will suffice for tracking fixed assets, so a dedicated fixed asset manager may not be necessary.

Here are some available FreshBooks Apps:

FreshBooks Pricing:

One Important Note for FreshBooks pricing: You typically receive a 30-day free trial through their website (as you will see on other FreshBooks reviews).   However, if you go through my partner link, you can receive a 90-day trial.  That is 3 times longer – for FREE!

Lite

$15/month

 
5 Billable Clients
 
  • Send unlimited invoices to up to 5 clients
  • Track unlimited expenses
  • Send unlimited estimates
  • Get paid with credit cards and bank transfers
  • Track sales tax & see reports
  • Access anywhere on iOS and Android
ADD-ONS
Essentials

$25/month

 
50 Billable Clients
TOP FEATURES
  • Send unlimited invoices to up to 50 clients
  • Automatically track expenses
  • Capture receipt data automatically 
  • Send unlimited estimates and proposals
  • Get paid with credit cards and bank transfers
  • Set up recurring billing and client retainers
  • Run business health reports
  • Double-entry accounting reports
  • Invite your accountant
  • Access anywhere on iOS and Android
  • Mobile mileage tracking
ADD-ONS
Premium

$50/month

 
Unlimited Billable Clients
TOP FEATURES
  • Send unlimited invoices to an unlimited amount of clients
  • Track Bills, Bill Payments & Vendors with Accounts Payable
  • Customize email templates with dynamic fields
  • Track project profitability
  • Customize email signatures
  • Automatically track expenses
  • Capture bills and receipt data automatically 
  • Send unlimited estimates and proposals
  • Automatically send late payment reminders and bill late fees
  • Get paid with credit cards and bank transfers
  • Set up recurring billing and client retainers
  • Get paid with checkout links
  • Run business health reports
  • Invite your accountant
  • Run financial and accounting reports
  • Access anywhere on iOS and Android
  • Mobile mileage tracking
Select

Custom Pricing

 
Unlimited Billable Clients and Specialized Features
TOP FEATURES
  • Send unlimited invoices to an unlimited amount of clients
  • Access to lower credit card transaction rates and capped ACH fees 
  • Start with 2 team member accounts
  • Get a dedicated account manager
  • Set up your account with custom onboarding services
  • Get help migrating from other software
  • Remove FreshBooks branding from client emails
  • Contact us with a dedicated support number
  • Get paid with credit cards, bank transfers, and checkout links
  • Set up recurring billing, subscriptions, and client retainers
  • Securely accept credit cards over the phone
  • Automatically track expenses
  • Invite your accountant
  • Automatically send late payment reminders and bill late fees
  • Run business health reports
  • Run financial and accounting reports
  • Access anywhere on iOS and Android
ADD-ONS

Last, but not least, is Xero – the newcomer of the group, founded in 2006 in New Zealand.

As with FreshBooks, they have improved rapidly.  They also offer profitability tracking, but if you are tracking job profitability, I would still recommend FreshBooks or QuickBooks.

Xero would be ideal for a self-employed individual or independent contractor. They do not have quite as many features as QuickBooks and FreshBooks, but they are also the cheapest option for the starter packages. 

Their interface is entirely different from FreshBooks and QuickBooks.  In my opinion, it is not quite as user-friendly as the other two.  However, this is coming from an accountant’s standpoint.  I do have clients who have not used the other platforms and find the Xero navigation simple, so it really is a matter of personal preference. 

Similarly (to FreshBooks), time-tracking is included, but is limited to tracking billable hours (projects).  If you are also tracking hours for payroll, you would need to add a payroll integration, such as Gusto.

Here are some available Xero Apps:

Xero Pricing*:

Early

$12/month

Good for new businesses and the self-employed.

  • Send quotes and 20 invoices
  • Enter 5 bills
  • Reconcile bank transactions
  • Capture bills and receipts with Hubdoc
  • Short-term cash flow and business snapshot
  • Can’t Bulk reconcile transactions
  • Cannot Use multiple currencies
  • Can’t Track projects
  • Cannot Claim expenses

Optional add-on

Gusto Payroll

Growing

$34/month

Good for growing small businesses.

  • Send invoices and quotes
  • Enter bills
  • Reconcile bank transactions
  • Capture bills and receipts with Hubdoc
  • Bulk reconcile transactions
  • Short-term cash flow and business snapshot
  • Cannot Use multiple currencies
  • Can’t Track projects
  • Cannot Claim expenses

Optional add-on

Gusto Payroll

Established

$65/month

Good for established businesses.

  • Send invoices and quotes
  • Enter bills
  • Reconcile bank transactions
  • Capture bills and receipts with Hubdoc
  • Bulk reconcile transactions
  • Use multiple currencies
  • Track projects
  • Claim expenses
  • View in-depth analytics

Optional add-on

Gusto Payroll
* Important Note: There are two additional Price Plans for Xero. One is the Ledger Plan at $3 per month, and the other is the Cashbook Plan at $7 per month. These plans are ideal for smaller businesses, independent contractors, or self-employed individuals. All cashbook and ledger plans include bank reconciliation, fixed asset management, budget tools, and financial statements. These plans can only be purchased through a Xero Partner (an accountant or bookkeeper). The author of this blog, Kimberley Dole, is an Enrolled Agent and a partner with Xero. If you would like more information on the Xero Partner Plans, you can reach Kim at kimberley@doleaccountingservices.com

 

Pro's and Con's:

Pro's

Con's

QuickBooks

Ideal for small and mid-size businesses

More robust reporting

App Integrations

QuickBooks Time is more robust than the time-tracking in the other platforms

Fixed Asset Manager

QuickBooks Payroll (FreshBooks and Xero would both require outside payroll, such as Gusto)

More expensive

More Complex

Some Bank Connections need to be reset regularly

Need to have a paid QuickBooks Time account subscription to track time efficiently.  Basic time tracking is available in Essentials and above plans

Inventory tracking only available in Plus and above plans

FreshBooks

Ideal for small service-based businesses

Easy setup

Top-notch customer service

App Integrations

Time-tracking included in all plans (but, job-profitibility only available in Premium or above plans)

Lots of helpful walk-throughs for those DIY’ers

 

 

$10/per month per user additional fee (so, if you choose the Essentials Plan, and you have 3 users, your monthly bill will be more than QuickBooks Essentials after their 3-month discount)

You can only have 5 clients in the Lite Version and 50 clients in the Plus version

Tracking Inventory requires an add-on integration

No fixed asset manager

Job profitability tracking only available in Premium and above plans

Xero

Ideal for self-employed individuals or independent contractors

Easy setup

HubDoc included in all pricing plans for capturing bill and expense data

Time-Tracking included

App Integrations

Fixed Asset Manager

Reconciliation of bank accounts is not as user-friendly

Some Bank connections need to be reset regularly

Tracking Inventory requires an add-on integration

Only 20 Invoices/Quotes and  5 bills per month in the Early Plan

Cannot track projects in the Early and Growing Plans

You cannot Claim Expenses in the Early and Growing Plans (“Claim Expenses” is Xero’s term for their expense management tools, which allows you to capture costs to submit and reimburse expense claims)

Note: This blog post is a comparison between QuickBooks, FreshBooks, and Xero, but since I also get asked a lot about Quicken (also an Intuit product, like QuickBooks), I thought it was worth mentioning as well.  The main difference is this – Quicken is specifically designed to track your personal finances (bank accounts, credit cards, investment accounts, loans, etc.), while QuickBooks, FreshBooks, and Xero are designed to track income and expenses for businesses (including independent contractors, side hustlers, and self-employed individuals).  So, if you are looking to track your business income and expenses, Quicken is not the right option.

In Conclusion

So, which do you choose – QuickBooks, FreshBooks, or Xero?  It really boils down to your specific needs.  Overall, in my opinion, QuickBooks is still the top dog.  However, FreshBooks is a not-too-distant second, and with how quickly they have been evolving, they may surpass QuickBooks soon.  

To sum up, if you are still undecided, click on the link for the one you would like to try, and take advantage of the free trial.  Determine which platform you like the most, and choose the plan that best suits your current needs. 

If you need assistance, I am always available to answer any questions you might have.  You can reach me directly at kimberley@doleaccountingservices.com.  Or, click on one of the links, fill in your name and email address to be added to our newsletter, and you can respond to our welcome email. 

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