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With over 6.5M paying customers, QuickBooks Online is the market leading accounting software for small and medium size businesses. We think they have an excellent core product with a feature set that is very similar to its largest competitor Xero. We recommend both for most eCommerce businesses. We give the slight edge to QuickBooks over Xero because of its market leading position which gives users of its software downstream benefits (especially for those in the US where QuickBooks is dominant). The benefits to its market leading position manifest in small and large ways. It will be easier to find bookkeepers and accountants who are familiar with QuickBooks, a quick Google search is more likely to yield useful results when you encounter issues, and potential acquirers are more familiar with QuickBooks data. We think these benefits are worth the price premium that QuickBooks charges relative to Xero, and the slightly higher learning curve. We don’t, however, think you can go wrong with either as they are both excellent softwares for eCommerce companies.
QuickBooks was launched in the US way back in 1992 and is now the market leading accounting software for small and medium size businesses. Adding to its goliath reputation is the fact that it’s a subsidiary of Intuit which also owns the tax giant TurboTax and email marketing software Mailchimp. QuickBooks began with a desktop product which still exists, but they shifted nearly all of their focus to their cloud product QuickBooks Online around 2015. It has grown into the market leading accounting software with over 6.5M paying users.
What we like about QuickBooks 👍:
Excellent Core functionality
QuickBooks is a well designed product that will execute on the core functions of accounting and bookkeeping well. We won’t dive into accounting 101 here, but at the very core of accounting sits the General Ledger (GL). This is where your accounting data is aggregated and forms the backbone of your company’s “books”. QuickBooks allows you to easily input data to the GL and reconcile the data once it’s there. It also has strong reporting features where you can create the three core financial statements: balance sheets, income statements, and statements of cash flows as well as other views of your financial data.
Because your accounting software forms the core of your company's books and finances, it’s crucial that the software you choose integrates well with other software. Like Shopify forms the backbone of your eCommerce stack, your accounting software forms the backbone of your financial stack. Like Shopify, QuickBooks relies on third-party integrations that greatly expand the core functionality of the software and make it scalable. QuickBooks excels with its integrations and has over 1,000 apps that it integrates with. It integrates with banks, payroll providers like Gusto, bill pay companies like bill.com, and expense management companies like Expensify. There isn’t a single tool that we recommend in addition to your accounting software that doesn’t integrate with QuickBooks. As the market leader, partners are eager to integrate with QuickBooks.
If your goal is to grow your business, it’s important to choose an accounting software that can scale with it. We think QuickBooks can do that. Because of the integrations mentioned above, it can scale an eCommerce business to $50M in annual sales and beyond. Since switching accounting tools is a painful process, we think it's smart to choose a tool that can scale. Even switching between QuickBooks Desktop and QuickBooks Online which are made by the same company can be painful. So even if software companies market an easy switch between accounting tools - don’t believe it. Each company structures their backend data differently which will make the process of switching time consuming and difficult. QuickBooks has public companies that use its software which we think is testament to its scalability. At some point, it will make sense to switch to a more robust ERP solution like Oracle’s NetSuite or SAP, but we think QuickBooks and its competitor Xero will give you the longest runway on a single tool.
Note on Scalability
While QuickBooks and Xero are the most scalable of the accounting tools in our opinion, we would love to see one or the other build out features that could make them truly enterprise level tools like Shopify has done with Shopify Plus or Klaviyo with Klaviyo One. In order to do this, the companies would need to add permissioning and user access features that would make them more comparable to the NetSuites of the world. Additionally, they would need to add features that would increase the audit trail.
Benefits to being the largest
The main reason we give the slight edge to QuickBooks over Xero (especially for US based companies) is that QuickBooks is the most popular accounting software which will have downstream benefits. To be clear, QuickBooks and Xero are both incredibly popular. They are the number one and two most popular accounting software for SMBs. However, QuickBooks is the larger of the two. As of 2023, QBO has 6.5M paying customers where Xero has 3.75M paying customers. This size advantage creates benefits for QuickBooks users.
For the do-it-yourselfers, there is more content on the internet dedicated to troubleshooting QuickBooks problems. A quick Google search is more likely to yield results for a QuickBooks issue than a Xero issue. There are also more dedicated YouTube channels for QuickBooks where people can learn from accounting experts.
For those looking to hire outside accounting help, there are more accountants that are familiar with QuickBooks. This will let you more easily shop around for bookkeepers. Most accounting firms work with both softwares but some specialize in one to streamline their operations. You will be less likely to be turned down by an accounting firm because they only work with QuickBooks clients. If you’re hiring for internal finance roles, it will also be more likely that your candidates are familiar with QuickBooks.
Finally, if you go to sell your company, there’s a higher likelihood that the acquirer is familiar / comfortable with QuickBooks data. This can speed up the diligence and acquisition process.
A couple of notes: QuickBooks size advantage is most pronounced in the US. In international markets like Australia and the UK, Xero has the advantage. Xero is also growing faster than QBO so at some point QBO will no longer have the advantage. None of the above is binary and only means to us, at the margin, QBO is better.
Additional benefits to QBO
QuickBooks users pointed to their bank feeds being stronger than Xeros. The US banking system has tons of regional banks with unique (bad) technology. Since they are based in the US, QuickBooks has spent time ensuring that their integrations work with all of these regional banks. Xero users might be frustrated that their bank feeds aren't working or stop working especially if they bank with a smaller regional bank.
QuickBooks comes with more transaction tagging options out-of-the-box than Xero. Xero only allows for two active tracking categories whereas QBO supports 40 in their least expensive plan. This makes Xero's data a little bit ‘flatter’, and gives QuickBooks deeper out-of-the-box analysis capabilities.
QuickBooks also allows you to create unlimited invoices on all of their plans. Xero caps out at 20 invoices per month with their Early plan, and scales up to the 1,000 invoices with their Established plan. So if you’re a business that generates a lot of invoices, you should choose QuickBooks.
We heard mixed reviews on both companies' support. Some people loved it and others thought it was the worst support ever. We think it’s a tie when it comes to support, but we do note that QuickBooks is the only company that offers live phone support [tip for Xero users: leave your phone number in your email and let them know that you’d like to be contacted via phone - this typically results in a phone call with support].
What we don't like about QuickBooks 👎:
For those who are going to be using the software themselves and have not hired a professional bookkeeper, there will be more of a learning curve with QuickBooks. We don’t think it’s hard to learn QuickBooks and there are a lot of good resources online to get you up to speed, but that is something to consider when comparing the two options. You don’t need to be an expert accountant in order to use the software but some familiarity with basic accounting principles is helpful.
QuickBooks is more expensive than Xero. If price is your number one concern, then you should choose Xero over QuickBooks. QuickBooks has also increased prices over the years and is likely to do so in the future whereas Xero’s prices have held more steady.
Some might be tempted to use the self-employed version of QuickBooks to save money. We don’t recommend this for eCommerce businesses. QuickBooks self-employed is designed for freelancers and won’t be able to scale with your eCommerce business like the regular version of QuickBooks will. The data is also structured in a way that will make switching from one to the other burdensome.
This also applies to QuickBooks Desktop which people might be tempted to choose to save money. Some users find it more powerful than QBO, but it’s not Intuit's priority and new features are not being added (“It’s being reluctantly maintained, not improved” says one accountant). Additionally, it won't provide the apps and plugins that QBO has and won’t scale as well with your business. Also switching between Desktop and QBO will be cumbersome. We recommend avoiding that and starting on QBO.
The switching issue doesn’t apply to upgrading from versions within QuickBooks Online from Simple Start, to Essentials, to Plus and Advanced as the same data structure is used throughout and upgrades (and downgrades) are straightforward.
There are additional smaller things which we don’t like about QuickBooks. They have pop ups that push additional Intuit software. These can be easily dismissed but are annoying in a software in which you’ve paid good money for. Additionally, they seem to push additional products in the Intuit ecosystem more heavily than Xero does with products in their ecosystem. There are also a limited number of seats unlike Xero which has unlimited seats. Generally the number of seats are fine for each level of service but an unlimited seat model like Xero would be better.
Broadly, QBO gives you more freedom in making changes to your books (e..g, making journal entries against certain accounts). Accountants who know what they’re doing appreciate this flexibility, but it also gives more latitude for novice bookkeepers to make mistakes. It’s a double edged sword. For this reason, we found more accountants that received QBO users whose books were in bad shape than Xero users.
QuickBooks pricing 💰:
QuickBooks Online has four pricing plans. The Simple Start plan is $30 per month and includes everything you need to begin managing your books. The Essentials plan is $60 per month and allows you to connect up to three sales channels (vs only one in Simple Start) and add up to 3 users (vs one in Simple Start). The Plus plan is $90 per month and adds inventory management capabilities and supports up to 5 users. The Advanced plan is $200 per month and supports up to 25 users, allows for batch invoices and expenses, and grants access to workflow automation tools.
QuickBooks is an accounting software designed for small and medium size businesses.
How is QuickBooks different from Xero?
At their core both QuickBooks and Xero are very similar. When people argue about their differences they typically fall at the margins of both products. Xero has a cleaner UX that will be less overwhelming for new users and is less expensive than QuickBooks Online. QuickBooks has more users (especially in the US) which will have downstream benefits like making it easier to find bookkeepers and online resources for help.
Why is QuickBooks better than Excel?
QuickBooks has many advantages over excel:
Pre-built integrations with over 700 apps that you would have to build manually in Excel.
Much better audit trail than Excel, so you can track who is making changes to your books.
Many more checks to prevent you from accidentally making a mistake in your books.
Pre-built reporting tools to make sense of your financial data.
Excel is okay to launch your eCommerce business, but we recommend switching to a proper accounting tool once your business scales beyond around $100k in annual revenue.
Can QuickBooks import Xero?
Yes, QuickBooks can import Xero data, but we don’t typically recommend it. QuickBooks and Xero structure their data differently, and the import from Xero will require time and effort. Typically accountants will charge a couple of thousand dollars to assist the transition from one to the other.
Do I need a bookkeeper if I use QuickBooks?
You don’t NEED a bookkeeper since QuickBooks is easy enough for most users to learn, but we typically recommend one so that you can focus on product and marketing while someone else spends time keeping your books up to date.
Is QuickBooks good for eCommerce?
Yes, QuickBooks and Xero are our recommended accounting softwares for eCommerce companies. They can scale with your business from zero to $50M plus in revenue. You will eventually want to switch to a more robust ERP system like NetSuite or SAP, but QuickBooks and Xero will give your eCommerce business the longest runway until you need to switch.
Does QuickBooks work with Shopify?
Yes, QuickBooks has a Shopify integration. Some users complain about the integration and use an additional integration tool like A2X to aggregate data across sales channels, but we think the out-of-the-box integration is fine for most small Shopify brands.
Is QuickBooks ISO 27001 certified?
Yes, QuickBooks is formally ISO 27001 certified.
Is QuickBooks SOC 2 compliant?
Yes, QuickBooks is SOC 2 compliant.
Is QuickBooks PCI compliant?
Yes, QuickBooks is compliant with PCI DSS v3.
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