As HMRC moves to ‘Make Tax Digital‘ in 2026, and online-integration for business becomes more commonplace, it’s worth considering how a digital transition could benefit your finances.
Accurate, dependable, well-organised bookkeeping is fundamental to the success of any business, but can quickly become overwhelming for small business owners and finance employees in SMEs. Cloud-based accounting software Xero and QuickBooks are two of the world’s most popular online solutions, designed to make your life easier and improve your business’s finances.
UWM Accountants offers this comprehensive comparison guide to Xero vs QuickBooks Online, in the hopes that it will guide UK business leaders to the best cloud-based accounting software for their business needs.
What is cloud-based accounting?
The cloud’ is a global network of online servers which host, manage and protect the data, applications, and content of its users. Rather than information being stored physically’ on a computer’s hard-drive, it is stored digitally’ on the cloud.
Cloud-based accounting, therefore, refers to a variety of accounting tools accessible via the internet. When using a cloud-based bookkeeping software like Xero or QuickBooks Online, your information is securely stored in the cloud: a feature which generates several unique benefits.
- Managing your business’s finances is possible whenever and wherever you are in the world, provided you have an internet connection
- Bank statements are updated daily, reflecting your latest actions in your chosen cloud-based accounting software
- Information is recorded and saved in real-time, ensuring that even remote finance teams are always working to an identical copy of your records
Introducing Xero
Xero is the younger of the world’s two most popular cloud-based accounting platforms, and as such looks and feels sleeker. Born out of New Zealand in 2006, Xero aims to provide smooth, accessible and straightforward accounting to its customers, who resoundingly love it. Favoured by start-ups and small business owners, especially in the UK, Xero prioritises the experience of its users.
Introducing QuickBooks Online (QBO)
QuickBooks Online (QBO) has been around for a while longer than Xero, with its roots in the offline version, QuickBooks, launched in 1983 by Intuit. Perhaps owing to this legacy, QBO has the most subscribers of any cloud-based accounting tool, and enjoys an overall market share of 27.87%.
Xero vs QuickBooks: comparing features, UX and use cases for the UK market
Quick Books Online certainly is well-established, especially in North America, but how do its core features hold up when thrown in the ring with the UK’s favourite underdog, Xero?
Features
Both Xero and QuickBooks offer a range of different subscription plans, and similar to the cost of an accountant, the benefits of subscribing to either cloud accounting service far outweigh the costs. Having said this, on average QuickBooks’ plans are a little more expensive. The tiers offered by both range from the smallest packages intended for sole traders not registered for VAT and who need to prepare for Self Assessment to larger packages intended for large companies.
When it comes to features, depending on which cloud accounting subscription level you were to choose you’d be granted access to a different toolbox. The more expensive the subscription, the bigger the box. But the real question is: What features are available through cloud-based accounting? And which platform’s features are better?
Invoicing
Cloud-based accounting allows you to generate invoices, quotes, and purchase orders, which you can then send to clients with a single tap. Both Xero and QuickBooks Online have been commended for their ease of use in this department, but offer slightly different services.
QuickBooks provides businesses with five different invoice templates, and allows for client information to be altered directly within the invoice. QBO invoice payments can also be automated and tracked.
Xero, on the other hand, simplifies the invoice-creation process by offering just one customisable invoice template. Invoices can then be sent and received Xero to Xero’ (i.e. between Xero-users), whilst automatic payment/due date reminders are created to keep you on top of every invoice.
VAT Returns
Neither Xero nor QuickBooks are solely solutions for accounting and bookkeeping, they also offer a range of integrated functions which help to keep your finances futureproof. A particularly handy feature of both cloud-based accounting apps is the ability to submit VAT returns directly to HMRC. Note, however, that whilst this feature is available on all Xero tiers, it only becomes available from the 2nd tier of QuickBooks UK.
Expenses and bills
It can be so easy to lose track of your and your employees’ expenses when managing the day-to-day demands of your business.
Xero and QBO make it easy to record, approve, and manage expenses: for example, by taking photos of your receipts and allowing the app to categorise and pull key details from them for you.
Similarly helpful features include an in-app mileage tracker available as a surplus subscription in Xero, and as standard in QuickBooks and a team expenses management tool, to help you track and manage your employees’ costs available as part of the Xero expenses package, but still in Beta-testing by QBO.
Bank reconciliation
Accounting on the cloud ensures you have access to the latest information at your fingertips. Both Xero and QuickBooks offer daily bank-feed reconciliation, showing you the most up-to-date version of your finances. You can link bank accounts with ease to either app, as well as upload historic transactions: up to 12 months on Xero, up to 24 on QBO.
Reporting
Accurate documentation is a key part of good accounting, not only to ensure HMRC compliance, but also so that you can reflect on the financial health of your business and plan accordingly. Both QBO and Xero offer a reporting feature. Xero’s reports can be customised to a greater degree, but generating them can take some time to get used to; whereas QuickBooks reports are more straightforward but less detailed.
Payroll
Payroll paying your employees and managing deductions (such as tax contributions) directly through the app is an add-on available on both Xero and QuickBooks. Though a little more expensive via Xero, its payroll feature comes with many more gadgets. With Xero Payroll you can send timesheets to your employees, whilst they can request holiday days and check their payslips via the app.
Verdict: It’s a tie between Xero and QuickBooks. Whilst QBO has a slightly broader portfolio of features, Xero’s are more accessible and customisable.
Reviews
It’s clear that the two titans of cloud-based accounting and bookkeeping offer exceptional services. It’s also evident that in the Xero vs QuickBooks debate, there’s not much separating them: their pros and cons effectively balance out.
However, when it comes to customer reviews, there is one clear winner. Xero’s average customer review trumps QuickBooks by a half-star. Across a range of fields, including ease of use, customer support, and benefit to business, Xero consistently scores higher than its American cousin.
Verdict: Xero for the win!
User experience (UX) and interface (UI)
Where Xero really starts to pull away from the pack is with regards to the experience of its users (UX), and the quality of its interface (UI). QuickBooks may be more mature and a little more experienced as a piece of accounting software, but when it comes down to how easy, enjoyable and accessible the software actually is, Xero takes the trophy.
Verdict: Xero’s focus on delivering an exceptional user experience via a smooth, easy-to-use and understandable interface make it the champion in this category, too.
Using Xero vs QuickBooks as a small-medium UK business
The good news as a UK-based business, whether micro (freelancer, for example) or macro (a medium-size company), is that both Xero and QuickBooks can help you run your business better. There are, however, two main advantages to using Xero.
Firstly, Xero is the customer favourite, largely owing to how fresh and modern it feels to use, and how easy it is to navigate as a first-time business owner or digital-accounting newbie.
Secondly, since Xero is the preferred cloud-based bookkeeping tool here in the UK, you’re more likely to find that accountancy firms in Scotland, England, Wales and Northern Ireland are better-versed in Xero vs QuickBooks.
UWM, for example, is a Xero Gold Partner, meaning that we are experts in Xero’s software, intimately acquainted with its score of highly-useful features, and thus trained to help businesses across the country save both time and money by making the switch to cloud accounting.
Conclusion: Is Xero better than QuickBooks?
The answer to which is better Xero or QuickBooks depends on your budget, requirements, and familiarity with digital accounting. For UK businesses, Xero is the favourite both among business owners and accountants.
And speaking of accountants, whilst both cloud-based packages are powerful business tools which make quality accounting accessible to anyone, it may greatly benefit you to use your chosen application whilst working in tandem with a trusted accountant.
UWM, for example, is a Leeds-based firm which has been assisting businesses across the country since 1978. If you’d like to learn more about cloud accounting, or are ready to start saving time, stress, and money with Xero, don’t hesitate to contact UWM today.
