Hey, it’s Patti Scharf, CPA and
Co-Founder of Catching Clouds, the leader in e-commerce accounting, and today i’m
going to help you decide between Xero and Quickbooks Online (or some other
alternative method of keeping track of your bookkeeping). Make sure that you stay until the end, especially if you’re an Amazon seller, and I’ll give you some
more tips unique to you. Okay, so let’s get started by talking about
spreadsheets. I know a lot of people start on spreadsheets. I totally get it.
It’s cheap, free in a lot of cases, and it feels like you can just keep track of
everything there. My concern for you is that it’s not really an accounting
system. There’s not a closed loop – like you can’t tell if you’re missing a
transaction or not, and you can tell that if you have a proper accounting system,
so I would discourage you from using spreadsheets for very long if at all. Ok,
the next method is using one of what I would consider “the little guys.” There
are a whole bunch of systems out there: Freshbooks, Kashoo, Wave, Zoho Books. There are other systems that aren’t little but I’m still not recommending, like Sage or
Reckon or MYOB. MYOB and Reckon are, I think, unique to other countries. I don’t
see them in the US, I don’t think I’ve ever seen anybody using them, so that
might not be part of this discussion. But in any case, these other guys – some of them may not have a balance sheet, so that closed system that
I was talking about, they don’t have that. For other ones, my concern is just that
they’re not really a building block. QuickBooks Online and Xero, they allow for
add-ons, and not only do they allow for it, they have hundreds of them. They have
hundreds of systems that integrate with them that helps you do more with less
and helps you have a complete system to keep track of payroll or paying bills or
other things. And I think that’s really great, especially in this growing cloud
accounting economy. The other big thing is that your accountants know how to
work with Xero and QuickBooks Online. I would not
under value that. You really want to make sure that the systems that you’re using
translate well to your accountant who’s helping you out and filing your taxes at
the end of the year and that sort of thing. Now that we’ve narrowed it down to QuickBooks Online and Xero, I want to
help you decide what’s right for you. Now I’m gonna say, this is not a paid
advertisement. I have my own preference. I’m just going to kind of tell you the
history and tell you the things that you should be looking at. I don’t care
which one you choose. But you may care which one you choose if you see an
accountant out there that you’re going to want to be working with. If they
only use one system you may want to look into that one a little bit heavier than
maybe some of the other systems. So let me just back up a little bit and
give you a little bit of history. QuickBooks Online started in some
absurdly early year like I want to say 2002. I tried to look it up but I can’t
find where it says when it actually started so if anybody could tell me down
below… I think it’s 2002. When it started, it was horrible. You guys, like,
no accountants never recommended it ever ever ever to anybody, because it was
just a mess. It didn’t do bank reconciliations; there were a lot of problems. Xero started in 2006 down in New Zealand, and they came to the U.S. in 2012. And I think 2010 to 2012 is when a lot of SaaS
firms started going, “Oh, the cloud is here. We need to get this show on
the road.” And that was because the iPad came out in 2010. So business owners were like, “Hey, how come I can’t see my financials on my iPad. This is ridiculous,”
And they tried like doing hosting in the cloud like an external server where
everybody would log into the same system, and it was expensive and clunky, and
business owners didn’t like logging into that, and they couldn’t log in with their
iPad anyway. So QuickBooks Online and Xero they both went, “Yes. Going to the cloud. Full steam ahead.” Ok, so in 2012 Xero launched in the U.S.
By 2013 QuickBooks Online relaunched their product with a version called
Harmony. In my opinion, I think Intuit who’s the owner of QuickBooks Online, saw Xero and went, “Uh-oh, we need to step up our game, and that’s exactly what they did. So when they started out, QuickBooks Online had just basic functionality that I think is
critical for e-commerce sellers and that is tracking. If you’re selling on more
than one channel, so you’re selling on Amazon and Shopify and eBay, you want to keep track of those sales in different categories and this is what what “classes”
in QuickBooks Online or “tracking” in Xero is for. It lets you have
little mini P&Ls (mini Profit and Loss Statements) on one statement. Ok, Xero, when
it launched, it had it as standard you didn’t have to pay extra for that.
QuickBooks Online, I think it was only in the Plus version, and so if you wanted
that, it was almost twice as much to pay for QuickBooks Online versus Xero. Now another challenge with an e-commerce seller, a lot of them want multi-currency
because they’ve got lots of stuff going on on all over the place; they’re paying
for stuff in China and whatever. That was standard in the premium version for Xero, so if you paid for the premium version, you could get that for $70 a month. For
QuickBooks Online – didn’t exist. Didn’t exist at all. So you really didn’t have a
choice when it came to that. Ok then when you hit 2014, my favorite tool of all
time, A2X, came into the world, and they began integrating with Xero. Now what A2X does, if you haven’t seen one of my other videos, it pulls the information
from Amazon and summarizes it and posts it into Xero so that you don’t have
to pull your hair out trying to figure out what fees and things and whatever. I
have a whole other video – go watch that one. But suffice it to say that it’s amazing, and I think that these three factors
are what made Xero the no-brainer choice for online sellers for years. Then in
late 2015, QuickBooks Online released their version
of multi-currency. Now keep in mind when Xero built multi-currency, it was
embedded in the program from day one. It was built as part of its core
functionality. QuickBooks Online… has been through a few different iterations, and I
kind of feel like you know a lot of it is like spit and glue, kind of kluging
things together which is one of the challenges I have with it, but it’s there,
and it works, and it’s also cheaper, quite a bit cheaper, than the premium
version in Xero. And then A2X integrated with
QuickBooks Online, so now here we are in 2018, and all the features that are
really kind of critical in my opinion for e-commerce sellers, Amazon sellers in
particular, it’s now kind of an even playing field. So which one is right for
you? I think different things that you need to look at. One thing is obviously
going to be price. Which is the most cost effective price for you? Both of these
tools, they’ll have free trials and discounts, and you know, you sign up and
you get four months for cheaper or whatever it is. So definitely look
into that but keep in mind what it’s going to be after you get past that
trial period. Something else you want to take into consideration is support.
Xero only has email support where you email them if you have an issue but we
have never in all of our years of using them had any problem with that. We just
say, “Hey, call me back,” and they call you back within like five minutes so that is
not a problem. And, we almost never have to contact
support because the system just works, and I think that is huge. QuickBooks Online?
Actually I haven’t heard lately about how their support is. Maybe if somebody has
more experience to see if it’s improved over the years, you could leave a comment down below, but I know historically that they were
infamous for just keeping you on hold for hours, and you know, not solving your
problems, and things like that. And one of the things I really like about Xero is
you don’t have the problems to need support in the first place anyway.
The next thing you want to look at is what features do you care about? If you
don’t care about multi-currency, then it may be more cost effective to use Xero.
So, you know, just just take a look at that sort of thing. And another thing that is honestly like probably the biggest factor is which
system do you like using better? If you have a long history with QuickBooks
Online and you hate it, try Xero. If you’ve used Xero and you hate it, go to
QuickBooks Online. You just want to have the right fit for you. I know a
lot of people who are huge fans of QuickBooks Online. Quickbooks Online
drives me crazy. And vice versa. You you have to find the right fit for you. I
do think that Xero is a lot more user friendly, especially for non accountants.
I think that QuickBooks Online is kind of busy and hard to understand in some
ways whereas Xero is nice and clean and easy to navigate and all that. Something
else that I think should be taken into consideration is the API. I’ve heard
from lots and lots of developers who try to integrate with QuickBooks Online and
they’re just pulling their hair out whereas Xero is much more
straightforward and clean to integrate with. But at the same time, I’ve seen
other tools that integrate seamlessly with QuickBooks Online and then they’re
super clunky with Xero. I would recommend you setup a free trial, test out each of
them see which one speaks to you, and then just go for that one, but I wouldn’t
be concerned about making the wrong choice, because I think both of them are
totally viable options for you. Ok, so now you’ve got some details on
Xero and QuickBooks Online. If you’re an Amazon seller, or
even if you’re not, go check out my blog post on QuickBooks Online vs Xero. It will give you more information about the comparison between the two. If you liked
this video, please make sure you like it, comment, subscribe, tell all your friends,
and I’ll catch you next time.