Last updated on March 10th, 2019 at 11:14 am
Accounting software is an absolute must-have for all companies and entrepreneurs.
Accounting software helps you manage your money effectively and plan for the future.
taking the guesswork and stress out of the process of organizing your finances. While there are many other accounting software options that have often been considered the best options on the market, Xero is quickly proving to be a fierce competitor.
What is Xero?
We highly recommend Xero for an accounting software for small businesses and entrepreneurs. It’s an online accounting software that is based out of New Zealand, and it is designed specifically with small businesses in mind.
So it really addresses those needs. This Xero review will prove that the software is highly affordable and easy to learn for any business looking to get started with accounting.
Xero is quickly expanding its business offerings all over the world. This makes it a very viable option for international businesses who need a variety of currency options.
Xero is currently used by people and companies in over 180 countries and has a passionate following.
Xero Review: What Should You Look For In An Accounting Software?
One of the reasons Xero has become such a fierce competitor in the market for accounting software is because it has many of the features and qualities needed to run an effective small to mid-sized business.
There are many features that you should look for when searching for an accounting software for your company.
Your accounting software will need to be able to handle many different aspects of your company’s finances and transactions, so above all, you’ll need to look for something that is versatile.
- Automatic daily financial calculations. As your business expands, you can’t afford to spend too much of your time on accounting each day. The software should be able to handle automatic calculations for daily transactions.
- Again, although you can create your own invoices without a software, this can be very time-consuming. Your software should have invoice templates that you can use and then easily send out to clients.
- One of the most complicated aspects of running a business is handling the intricacies of taxes that come along with it. A good accounting software can help you automatically calculate your taxes based on your reports, keep track of write-offs, and much more.
- This may not be an absolute essential if you only have a few employees, but if you are starting to hire a full staff and your business is looking to continue to grow, then having payroll options in your software is ideal. Look for features like time tracking, employee invoices and time sheets, and more.
- Multi-device use. It can be very helpful to be able to access the software from anywhere, so look for one that offers mobile or tablet apps. If you use other small business software, you may also want to look for an accounting option that integrates with the other software you use.
- Ease of use and customer service. This is especially important if you don’t already have experience with accounting. It is vital that your accounting software is easy to follow and that there are accessible customer service options if you do run into trouble.
What Xero Has To Offer
We like Xero because it provides a departure from Quickbooks and other accounting software options.
With a huge range of features available and lots of customization, so you can easily arrange the features offered to meet your needs.
It also has a very appealing design, which makes it more enjoyable to use. As a cloud-based solution from New Zealand, it is designed to work well for companies all over the world.
Dashboard: One of the things that makes Xero so appealing as an app is that it has a central dashboard that gives you an overview of all of your finances in a way that is very easy to digest.
It incorporates visual elements to break up the strings of numbers that are often found in accounting apps.
Contact Management: One of the things that is so unique about Xero is that it has extensive contact management features.
You can easily group customers and clients for easier invoicing and promotions, and it makes it easy to send recurring invoices or even send invoices in groups.
Additionally, you can easily use contact management features for marketing purposes. This is because the software allows you to group your contacts in lists for easy communication.
Invoices: Speaking of invoices, Xero makes it very easy to create and send them using their invoice template. You can then schedule recurring invoices, reminders, group invoices, and much more.
In addition to using Xero’s invoice template, users can also upload their own template to fit their businesses’ needs. Both invoices and billing documents are saved as PDFs.
Estimates: Xero offers an estimates template that you can use to send quotes to your customers. It is very easy to convert an estimate into an invoice once you receive the official order from the client.
Accounts Payable: The Accounts Payable function works similarly to the invoices, so you can make note of bills and payments and then set up reminders to make sure that suppliers get paid on time and receive all the necessary documents.
You can also schedule recurring bills, and you can set up draft bills to convert later and save your office tons of time.
Even More Features from Xero
Sales Tax: In many states and countries, sales tax is mandatory.
To make this easier for small businesses, Xero offers an option to add automatic sales taxes to your products and services when you send an invoice.
It calculates the percentage for you and provides guidance to help you set taxes appropriately.
Bank Reconciliation: Xero helps you categorize all of your transactions and can connect with your bank to automate your payment records.
It is fairly simple to set up a live bank feed to automate everything (depending on which bank you use), or things can be done completely manually.
Keep in mind that Xero uses Yodlee to connect with your bank. Many banks work with Yodlee, but some do not, so it is helpful to check and make sure before using this aspect of Xero.
Default Emails: To make communicating with your clients easier and faster, you can set up default emails that you can send with just a click.
This also helps enable multiple users to communicate with clients from the same email address.
Inventory: The app can keep track of any inventory that you need to manage, and you can tag items with their price, code, and more information to ensure that they are included when making purchases.
Financial Reports: This software has a wide range of financial reports to choose from. They are very intuitive to fill out and customize.
They offer everything ranging from income statements and balance sheets to more in-depth budget planning tools.
Payroll: Standard and Premium Xero customers can use the app’s payroll features, which allow employees to track their time, view pay stubs, create their own invoices, and much more.
Although the payroll functions are not yet available everywhere, Xero is working to expand this function in the very near future.
Employer Tax Forms and Guidance: Xero manages your company’s tax information so you can easily fill out W2s and 1099s for your employees.
Expense Claims: When your employees need to report an expense, they can easily do so through this software.
Company administrators can automatically send out reimbursements to employees just by reviewing and clicking on their requests. The expenses are then automatically calculated as part of your finances.
Multi-Currency: As previously mentioned, Xero supports multiple currencies, making it ideal for international companies.
Import/Export: Xero allows you to import and export a huge range of documents, allowing for easier communication between employees and investors.
Xero Accounting Software Review: How Xero Stacks Up
Xero has three tiers of pricing. The starter tier costs $9 per month and offers basic services with some limitations but includes payroll.
The next tier, called standard, costs $30 per month and offers upgraded versions of the starter services with no limitations.
The top tier (the premium 10 Plan) offers the best level of service.
It costs $70 per month, but it offers advanced features that the other two tiers do not offer. It is multi-currency and offers advanced payroll features.
The premium 20 plan includes payroll up to 20 people for $90/month and the Premium 100 plan includes payroll up to 100 people for $180/month.
When considering which price package you are going to use, it is important to take into account the size of your business and the features you will need.
It can be quite difficult for even small businesses to get good use out of the basic package because the features are limited. Investing in the standard or premium tier gets you better quality for your money.
Overall, the pricing works best for mid-sized companies, as many of the features are designed to support this size of company.
Anyway and it is more likely to be within your budget. If you are a freelancers or contractor, you may use the TaxTouch app with the starter plan.
Xero offers unlimited users per business, which gives it great bang for your buck and makes it ideal for mid-sized businesses. It also is a cloud-based software that does not require any downloads, which makes it very easy to access.
The number of users supported is what helps Xero really stand out from other accounting software options. Most other major accounting software programs only support a few users.
Whereas Xero can support your whole company if necessary, with separate logins and the option to restrict access to certain features if necessary.
Automated bank feeds make accounting much simpler and quicker. Xero uses Yodlee for feeds with most banks. Yodlee is a third-party service that connects the bank data to the software, which does add extra time to the setup process for Xero.
Xero was designed to be a global option for small business accounting. Because of this, with most non-US banks, you can set up a direct bank feed to the software.
There are also a few specific banks in the United States that do offer direct feeds. Xero also offers extensive flexibility when it comes to organizing your transactions within your bank feed, allowing you to categorize them into different types.
This is because it allows accountants and financial professionals who are using the software to do mass categorization. Quickbooks and other accounting software options do not offer this same level of flexibility.
Xero allows you to send and track unlimited invoices and bills with the standard and premium tiers. With the starter tier, you can only enter five bills and invoices each month.
Which is a major flaw in the Xero system that we hope is rectified soon. There are some customization options as well to help you make your invoices your own.
Xero’s most unique and arguably most useful feature is that you can create invoice and billing groups to help organize your contacts.
You can pool specific contacts and send the same invoice to each of them as a group just by clicking a group. This makes billing quick and easy, and is ideal for mid-sized businesses that have many similar clients.
Data Importing and Exporting
Xero has tons of options for data importing and exporting, so you can have hard copies of many different data types in a spreadsheet. This is ideal for anyone who regularly needs paper copies of their financial information.
The cost for data importing and exporting with Xero is free, which is not necessarily the case with other types of accounting software on the market.
Xero offers multiple payment processing options, which is great for businesses that have a variety of clients and really need this kind of flexibility. The processing add-ons also provide the best credit card rates when comparing the two software programs.
On top of that, the premium version offers multi-currency features, which are very helpful for businesses that operate in multiple countries. This allows you to not only process payments in multiple currencies, but also to see your finances in different currencies.
Payment processing is one of the things that really sets Xero apart from their competition. They level of choice offered for payment processing with Xero allows a huge range of businesses and clients to use their services.
Guidance and Customer Service
Xero really shines when it comes to customer service. Throughout the software, there’s tons of instructions in the form of text boxes and videos, which are great for beginners.
Additionally, there’s a search bar that allows you to find the answers to anything you may be confused about.
Xero also offers an online help center for customers who are struggling or need to troubleshoot. They also offer free online live chat with your subscription, so you can talk to a representative whenever you need to.
Representatives are also available via phone or email. Generally, Xero is known for having very fast response times to queries and troubleshooting issues from customers.
Design/Ease of Use
One of the best things about Xero is its beautiful design. It was designed specifically to be an aesthetically pleasing accounting software, and it really shows.
The dashboard is very clean and simple, with tabs that make it easy to navigate. Graphs are also displayed on the dashboard, which make it easy to monitor your businesses’ progress.
A few of the more obscure features in Xero can be somewhat difficult to find, which may be a bit intimidating for those who haven’t used an accounting software before.
However, the help features are very good, which generally make up for this problem. Xero is a cloud-based accounting software, which means that all data is stored online and not on your computer.
Cloud-based softwares allow for greater accessibility for customers, and your data remains backed up if your computer is compromised as well.
This also means that setup time is minimized and you can get started using the program quickly and easily.
Xero offers inventory management services that allow you to tag items by their name, item code, and price, and then can help you track how much you sell. The tracked items make it easy to manage your finances overall.
The inventory feature of Xero helps make organizing your company’s data much easier than if you were to do it manually.
Many accounting software programs don’t offer this feature, so it really gives Xero an edge over competitors, especially for mid-sized businesses that might struggle to track their inventory manually.
Xero is slowly unrolling payroll management features in all 50 states. Although not all locations have payroll management, the ones that do offer an easy way to track your payroll and your finances at the same time.
Payroll is included for up to 5 users for the Standard Plan and up to 10 users for the Premium plan at no additional cost.
The Xero payroll features allow employees to track their hours and request time off, and also manages employee taxes.
It automatically generates employee report, which makes the process of managing business taxes much easier.
The payroll feature is incredibly intuitive, and we can’t wait to see them continue to expand this feature to full functionality throughout the world.
Overall, payroll is a great feature to have no matter what accounting service you choose to use. It is especially helpful for mid to large sized businesses that have multiple employee paychecks to manage and track.
Pros and Possible Limitations of Xero
Xero is a great software that has many pros and cons. Evaluating these can help you decide if it is the right software for your business.
Xero is very aesthetically appealing. It looks nice on your computer and is very easy to navigate.
It provides tons of visual features that help you evaluate the current status of your business.
Xero is a cloud software, which means that it runs through the internet, so it doesn’t take up room on your computer.
Xero has a lot of flexibility with contact management and invoicing. You can easily send groups of invoices to your contacts or create groups of bills. This makes managing your finances much faster and easier to do.
Xero was designed with many different countries in mind, and offers multi-currency options for premium users.
Xero has very easy import and export features for your financial data. You can easily convert large amounts of data into a hard copy spreadsheet for meetings or proposals. You can also import your existing financial reports into the software.
Xero has amazing customer service. The software comes with 24/7 access to live chat, as well as email and software support.
It also has a comprehensive help center and tons of informative text and video sprinkled throughout the software to help you better understand finance management.
Xero offers a simple and intuitive payroll add on that is relatively inexpensive. This helps you manage your employees’ salaries and taxes, as well as gives them the autonomy to track their hours with the corresponding smartphone app.
Xero allows you unlimited user access, which is a huge plus if you need to have multiple employees work on the financial software.
Xero offers many different user settings and customization options for a more personalized experience.
Xero is slightly more expensive than Quickbooks and some other accounting software options, which may be a turnoff for some businesses that are just starting out.
However, Xero offers more features built-in, whereas Quickbooks has many features listed as add-ons.
While the payroll feature is very easy to use, it is not available in every state yet, and in some states it only has limited functionality.
With many banks, you are required to use Yodlee to manage automated bank transactions, which is a turnoff for some.
The setup process for Xero can be extensive, requiring quite a bit of detailed financial input. The starter tier for Xero only offers five invoices and five bills per month, which is somewhat limited, even for the smallest of businesses.
Our Choice for Small Business Accounting Software: Xero
Although Xero, Quickbooks, and other accounting programs offer many similar features and are quite comparable in many ways, we prefer Xero because it offers unique features that make managing your businesses’ finances much easier.
The innovative design of Xero works well for any small to medium-sized business, and it can grow with you as your company continues to succeed.
The WiseSmallBusiness Team is full of industry experts and successful business owners willing to contribute important business articles.