Both Xero and QuickBooks Online are solid choices for a small business, and the better pick often depends on where you are and who does your books. In the UK, Xero is widely used by accountants and both work with Making Tax Digital. In the US, QuickBooks Online is the most common choice among accountants and bookkeepers.
If you're asking which one is better, my short verdict is this: pick the one your accountant knows best. Both do the everyday jobs well. They send invoices, pull in bank transactions, track expenses and produce the reports you need at year end. The differences that matter most for a small business are less about features and more about where you're based and who you'll be working with.
So I've split this by country first, then compared the features side by side.
If you're in the UK
Xero has a strong following in the UK. Many accountancy practices use it as their main platform, which means your accountant can log in, see your books and fix things without you exporting anything. QuickBooks Online is also widely used in the UK, so you'll find plenty of accountants who support both.
- Making Tax Digital for VAT. If you're VAT registered, HMRC requires you to keep digital records and submit VAT returns through compatible software. Xero and QuickBooks Online are both recognised by HMRC for this. Check HMRC's current list of recognised software and confirm with your accountant how your returns will be filed.
- Making Tax Digital for Income Tax. This is being phased in for some sole traders and landlords from April 2026. Whether it applies to you depends on your income, so ask your accountant, and check which plan of either product supports it.
- Accountant familiarity. Ask your accountant which one they prefer. If they use Xero for most clients, you'll usually get faster help and fewer surprises.
- Bank feeds. Both connect to the major UK banks and many newer business accounts, so transactions flow in automatically. Check your bank is supported before you sign up.
- Payroll. Xero offers payroll in the UK, and QuickBooks offers its own payroll option. Check which plans include it and whether it covers pensions auto-enrolment the way you need.
If you're in the US
In the US, QuickBooks Online is the most common choice among accountants and bookkeepers. That matters more than any single feature. If your bookkeeper, tax preparer or CPA already works in QuickBooks, they can step into your books on day one, and hiring help later is easier because so many people know it.
- Accountant and bookkeeper support. QuickBooks is the default for many US firms. Xero has a following too, but you'll have a wider choice of bookkeepers with QuickBooks.
- Sales tax. Both can help you track sales tax. Rules vary by state, so check with your accountant how it should be set up for where you sell.
- Payroll. QuickBooks offers its own payroll add-on. Xero in the US works with third-party payroll providers such as Gusto. Check which suits your setup.
- Bank feeds. Both connect to most US banks and credit cards.
If you're a freelancer and invoicing is the main thing you need, you may not need full accounting software yet. My guide to the best invoicing software for freelancers and small businesses covers simpler options.
Xero vs QuickBooks feature by feature
| Feature | Xero | QuickBooks Online |
|---|---|---|
| Invoicing | Branded invoices, quotes, repeating invoices and online payments | Branded invoices, estimates, recurring invoices and online payments |
| Bank feeds | Automatic feeds from most UK and US banks | Automatic feeds from most US and UK banks |
| Multi-currency | Available on higher plans | Available on certain plans |
| Payroll | Built-in UK payroll on some plans; US payroll through partners such as Gusto | Its own payroll add-on |
| App integrations | Large Xero App Store | Large QuickBooks App Store |
| Users | Known for including unlimited users on its plans | User limits depend on the plan |
| Accountant access | Free access for your accountant | Free access for your accountant |
Plans, limits and what's included change often, so check the current plans on each provider's website rather than relying on any comparison, including this one.
Make accounting or invoicing software? See how to get it featured on this list.
Questions to ask your accountant before you choose
- Which software do you use with most of your clients, and why?
- Will you need access to my books, and does the software I choose change how you work with me?
- Does the plan I'm looking at cover Making Tax Digital, sales tax or anything else I'm required to do?
- Do I need payroll now or in the next year, and which option works best for that?
- Do I deal in more than one currency, and do I need multi-currency on my plan?
- Which apps should I connect, such as my payment provider, ecommerce platform or expenses app?
- Who should set up my chart of accounts so it matches how you'll do my year-end accounts?
- If I switch later, how much work is involved and what history will come across?
Good software also helps with cash flow. Both let you send automatic reminders for unpaid invoices, and I've shared more ideas on how to prevent late payments.
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Switching from one to the other
People switch in both directions, usually because they've changed accountant or outgrown a plan. It's doable, but plan it rather than rushing it.
- Pick a clean start date. The start of a new financial year or VAT quarter is ideal, because it keeps the records tidy.
- Use a conversion service if you can. There are services that move your data between the two, and your accountant may know a good one. Ask what history moves across and what doesn't.
- Export everything first. Download your reports, contacts, invoices and transaction history from the old system before you close it.
- Reconnect bank feeds and apps. Set up your bank feeds, payment providers and other apps again in the new system and check they're pulling in the right data.
- Run both for a short overlap. Keep read-only access to the old system until your accountant has signed off the first period in the new one.
Want a wider view before you decide? See my roundup of the best accounting software tools.
Frequently asked questions
Is Xero or QuickBooks better for UK small businesses?
Both work well in the UK and both are recognised by HMRC for Making Tax Digital for VAT. Xero is common with UK accountants, so ask yours which they prefer before you choose.
Is QuickBooks or Xero better in the US?
QuickBooks Online is the most common choice with US accountants and bookkeepers, which makes it easier to find help. Xero also works in the US, with payroll through partners such as Gusto.
Can I switch from QuickBooks to Xero?
Yes. Conversion services can move your data, and you can export reports and history yourself. Pick a clean start date and ask your accountant to help you plan the move.
Do I need an accountant to use Xero or QuickBooks?
You don't need one to use the software, but it's wise to have an accountant check your setup and your tax obligations. They can also tell you which product they support best.
