Cloud-based accounting has taken a huge burden off of small business owners and sole traders globally. For one, most entrepreneurs nowadays have to wear multiple hats, particularly, that of business manager and accountant. For another, most entrepreneurs know the hassle of bookkeeping and handling their business accounts. There is a lot of cloud-based accounting software available on the market, but for this article’s intents and purposes, let’s take a look at Xero and FreshBooks.
But first, let’s discuss why cloud-based accounting is the practical way to go for modern-day entrepreneurs.
What is Cloud-Based Accounting?
If you are planning to start a business, or are just in the early stages of one, you would know that being your own boss comes with a lot of responsibilities. One of the most stressful of those responsibilities, aside from making sure your business flourishes, of course, is accounting.
Taxes need to be paid, cash flow needs to be recorded, tracked, and managed, and forecasts, reports, and targets need to be established before they can be met. Paperworks are also included in most of these responsibilities. And let’s face it, not everyone is great at crunching numbers, or has the patience to try and make sense of it.
The easiest way would be to hire someone who knows what their doing, but if you can’t afford to hire one yet, then you’re on your own. That’s why most new accounting software made it easy for new business owners to do their accounting on their own.
But cloud-based accounting software takes the cake. Since the software is in the cloud, you have access to your data from anywhere, as long as your device is connected to the Internet. Information is secured and available 24/7/365, and backups on your data is one less thing to worry about. Plus, most cloud-based software costs around $20 per month–cheaper than most traditional desktop software that mostly only accountants know how to use.
So let’s take a look at the two software: Xero and FreshBooks.
Xero vs FreshBooks
Most accountants and business owners anywhere have heard of Xero. It is one of the most popular names when it comes to accounting software. There have been new names in the industry, and one of those is FreshBooks.
Both software is cloud-based, and they are similar in price, functionality, and over-all user experience. They also both cater to the small business niche. And whether you are checking your accounts on desktop, or iOS or Android handheld devices, both Xero and FreshBooks are supported and fully-functional. Except if you are planning on using a Windows phone, then you might want to look at the market for something else.
Some of the main differences between Xero and FreshBooks:
- Xero costs (starting at) around $9 per month which is more expensive than FreshBooks which starts at $4.50 a month.
- Xero is great for small- to medium-sized businesses. FreshBooks caters more to freelancers and sole traders who need help with the paperwork.
- When it comes to user-friendliness, most users say Xero is easier to use than FreshBooks.
- Xero has great customer support, whereas FreshBooks can be a pain when it comes to dealing with issues on your account, and canceling your subscription.
Overall, both software has their pros and cons. In order to help you decide which one will work best for your business, let’s take a closer look at each of them.
Xero specializes in accounting solutions for small businesses and is the popular choice of retail, e-commerce, high-tech, nonprofit, legal, hospitality, coffee shops, and advertising industries.
Its features include the basics: handling payments, invoicing, and expense tracking. It also offers additional features such as inventory management tools, purchase orders, and bank reconciliation. When you connect your bank accounts to Xero, you can enjoy seamless transactions, reconciliations, and reporting.
It boasts a beautiful, intuitive interface that users find easy to use, and boasts amazing customer support 24/7.
Some of its best features include multiple currency support, full accounting features and tools that includes tax rates, and it integrates with a lot of the leading payment options like Stripe, and PayPal. Plus, it has a secure collaboration option that allows owners to invite employees like a bookkeeper and accountant to view financial records online. Owners can invite an unlimited amount of people to collaborate, with their access controlled by an administrator.
Xero offers three packages: Starter, Standard, and Premium.
- Starter pack starts at $9 per month and is limited to sending five invoices, processing and tracking five bills, and handling 20 transactions per month.
- Standard includes unlimited invoices, billing, and bank transactions, plus payroll for five employees. It costs $30 per month.
- Premium includes Standard’s features, plus payroll for ten employees and multiple-currency support, and costs $70 per month.
Xero offers 30% off on the first 6 months of subscription, and comes with a risk-free 30-day free trial.
FreshBooks is a cloud-based accounting service application designed specifically with the small-business accounting owner in mind. It features an easy-to-use interface and customers rave about how the mobile app makes it easy to manage their business on-the-go.
It is popular among contracting, legal, consulting, personal services, and creative agencies in large part because of its time-tracking feature.
FreshBooks features options for time and expense tracking, online payments, a variety of accounting reports, taxes, and automatic updates.
Users appreciate the guided step-by-step wizard and help boxes that appear when you perform tasks like adding a new customer or creating a new invoice.
Some of FreshBooks best features include its easy to use interface, and the ability to do everything on-the-go with its mobile features. Time-tracking has also been mentioned, and it offers a wide variety of integrations and add-ons. For those who want it, FreshBooks also offer snail mail invoicing aside from online invoicing. Estimates are also easily converted into invoices once projects are complete.
They offer three pre-packaged plans: Lite, Plus, and Premium, and offers a customized plan.
- Lite starts at $4.50 per month and includes unlimited invoicing to 5 clients, tracking expenses, sending unlimited estimates, and receiving payments via credit card and bank transfers. You can also track sales tax and see reports anytime, anywhere.
- Plus starts at $7.50 per month and you can accommodate up to 50 clients, plus set up recurrent billing and client retainers, run business reports, and invite an accountant.
- Premium costs $15 per month and allows you to accommodate 500 clients, automatically send late payment notices and bill late fees, send unlimited estimates and proposals, track your payables, run financial and accounting reports, and more.
Their custom plans allows you to accommodate more than 500 clients, as well as offer additional features not available on the three plans. All you need to do is request a demo from them. And all plans come with a 30-day free trial.
You can check out Xero’s and FreshBooks’ websites to see more about their features. Since both come with a 30-day free trial, you can check out which one works better for your business at no risk to you at all.