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.