Accounting, Bookkeeping, and QuickBooks Tips for Small Businesses

Xero Review

Xero Logo

This weeks online accounting software review is on Xero. Currently, Xero is my favorite cloud based accounting software. Xero is pretty, offers graphs and charts for the visual types, a dashboard that’s filled with quick access to the accounts and reports you need to see every day, Xero is easy to use, and saves a lot of time with their automatic bank imports. Xero was founded in 2006 in New Zealand. They are growing rapidly and have teams located throughout the world, including the US.

Cost: $19/month – $39/month, Free Trial

What I Love:

  • Xero offers daily bank feeds, which is a huge time saver. You can connect your bank account with Xero for automatic downloads of your daily cash transactions.
  • Xero offers the ability to create bank rules for your imported transactions. It takes a while to create the bank rules, but once they’re in place it’s a huge time saving feature. Once a bank rule is saved, Xero will remember how to code those transactions in the future, so you don’t have to.
  • The bank reconciliation feature on Xero is pretty handy as well. Once your bank transactions are imported into Xero (either manually or via the automatic daily bank feeds), users can code and match your imported bank transactions. The cool thing is as you code and match your transactions, Xero reconciles them. Saving that extra step is a huge time saver.
  • The financial reporting in Xero is decent. The reports they offer are the most important and useful ones for small business owners. I love that they not only does Xero offer an Income Statement (Profit & Loss Statement), but they also offer a Balance Sheet. You can also run aged receivable reports, payable reports, sales reports, ledger balances, etc. All of the reports can be exported to an Excel spreadsheet, meaning you can play with your numbers even more!
  • Not only is Xero pretty but it also offers a dashboard you can customize with charts, graphs, and reports. The dashboard gives you a quick glimpse at the numbers that are most important to you, the entrepreneur.
  • The Help feature is extremely useful. You can click on “help” from anywhere in Xero and help topics relating to that page will appear. The tutorials are helpful, very detailed, and will walk you through step-by-step how to use the accounting program.
  • Working and reporting in Multi-currency in Xero is a breeze.
  • It offers a basic inventory tracking system, for small businesses. When your business requires a more robust inventory tracking system, there are several add-on’s to help Xero grow with your business.
  • The payroll system is limited, but you can still keep track of your employees wages, taxes due, and taxes paid through the pay run feature. Xero integrates with ADP, for those that want an all-in-one payroll solution.
  • Another great feature is the ability to track categories in Xero. Although it’s limited to 2 categories, I believe the subcategories is unlimited. So you can track income and expense by department, region, store, property, etc.
  • Xero can also automatically calculate the depreciation on your fixed assets. No more waiting around for depreciation schedules from your accountant.
  • There is a huge number of add-on’s that integrate with Xero. These add-on’s allow the system to grow with your business and add custom features that your business needs. Some examples are WorkFlowMax (job management solution), Vend (cloud based point-of-sale system), Shoeboxed (receipt management), FreshBooks (billing system), (payables solution), etc.
  • I love they offer unlimited users at no extra cost.
  • Another great tool for entrepreneurs is their personal finance system.
  • Like any other cloud based tool, I love the ability to check my numbers while on the go. I can access Xero from my iPad, iPhone, Android, laptop, and anywhere I have internet access.

Here are a few Xero screenshots, so you can see what I’m raving about.

Xero Dashboard Screenshot –

Xero Dashboard Screenshot

Xero Bank Reconciliation Screenshot –

Xero Screenshot Bank Reconciliation

My Wish List:

  • Xero does not accept online payments from customers. However, Xero does play nice with FreshBooks and, so this minor detail can be avoided by using some of their add-on’s and integration partners.
  • I give Xero props for having a pay run section, allowing small business owners to keep payroll info in one place. However, the pay run is very basic. I would love the ability to have the payroll taxes and net paychecks payable post to a payroll liability account – payroll taxes payable & payroll payable. This makes it a lot easier for small business owners to see where their money is going and when cash is leaving their bank account. Currently all payroll payable transactions entered in the pay run are reported in the general accounts payable account.
  • I’ve found it to be painfully hard to correct mistakes. Typically you have to void the entire transaction and then redo it. This is a huge hassle if all you need to do is change a date, an account, or a check number.
  • You can only use check numbers once. Not a huge deal, but I ran into troubles with this when I accidentaly recorded an incorrect check number and needed to fix it. This could pose a problem if your office check numbers are the same as your payroll check numbers. You can not enter letters with check numbers either.
  • The starting chart of accounts is very basic. For a system designed for small businesses, I would love to see a handful of “custom” chart of accounts for various industries. I think it would make it much easier to set up for an entrepreneur.
  • Xero does not offer the ability to print 1099’s. You can export the information into other programs, but this will still be a hassle in January.
  • Xero is still working out kinks with its PayPal integration. Xero has been known to drop a handful of PayPal transactions, creating headaches for accountants and business owners alike. If you have a large volume of PayPal transactions, Xero might not be the best automatic download accounting solution for your business.

Overall, I’ve been really happy with Xero. It offers a lot of the same functionality as QuickBooks, but in a cloud based environment. Xero is continuing to grow and is always adding new features to their system. They do a great job of listening to their users. I’m sure over the next few years Xero will continue to be a favorite online bookkeeping system for entrepreneurs, small business owners, mid-sized business owners, and accountants.


Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle Edwards, CPA is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and Virtual CFO solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


  1. August 22    

    Fair and in-depth review, Michelle.

    Xero has already made huge waves in the market, and I look forward to its future development. I love how it’s making me think different about what an accounting system should be.

    • August 22    

      Thanks for reading Barrett! Yes, it definitely has forced me to rethink bookkeeping & accounting systems. After using Xero, I find myself getting frustrated working with some of the older accounting systems on the market. Xero saves so much time & energy!

  2. August 22    

    Thanks for the review Michelle. The re-thinking that you and Barrett mention is music to our ears – we don’t want Xero to be different just for the sake of a point of difference, we want turn old processes on their head when new technology and work environments and expectations mean this would make more sense.
    As to your Wish List Michelle, great to see that detail – thank you! Your comments are not a surprise because we’re working on many of them :) Correcting mistakes has been up for debate a bit in our community – some say everything should be voided or reversed to keep an audit trail, others say editing should be wide open! On invoice and cash transactions you are free to edit (as long as no payments applied), expense claim editing needs some work and check transactions can be edited if the check has been voided (again to keep a trace on check numbers).
    Thanks again for your review and feedback. If you want to raise any of your items for further discussion or input from other Xero partners and users, feel free to post on our Business Community.

    • August 24    

      Hi Catherine,

      I definitely see the benefits to having to void a transaction for audit purposes. I would just love to be able to use a check number more than once, or add a “v” to the end of the voided check, or “a” for the new adjusted/corrected check. If not, I’m sure I’ll come up with a system that works. :) Thanks for the tip about the Business Community. I’ll have to check it out.

      You guys are awesome. Thanks for bringing some smart innovation to the world of accounting! I love what you’re doing and am excited to see where your product goes in the future.


  3. August 22    

    Great list of features Michelle :)

    I would love to hear your thoughts on a comparison between Xero and Saasu.

    • August 24    

      Hi Aaron,

      Thanks for reading. Saasu is on my list. I sat through a demo a few months back and it looks like a cool piece of accounting software. Check back or I’ll try to remember to email you when I get a chance to play around with it.


  4. January 17    

    wow this is one of the more detailed reviews I have read on Xero. Its a very well structured post. Really like the use of the screen shots by the way and i definitely agree that Xero looks pretty making it a user friendly tool to use.

    • January 17    

      Hi Stuart,

      Thanks for reading and for the kind comment! I appreciate it. :) Yes, Xero is very user-friendly from both the client and the accountant end. They have some great tools in place to make write-up and accounting services easier for us accountants! Let me know if you give it a try, I’d be curious to hear your thoughts.

  5. Kael Montas Kael Montas
    February 20    

    Wow! Nice post!

  6. Dianne Dianne
    February 5    

    I have used other accounting software, as well as Quickbooks. I have found Quickbooks to be the most user friendly of all. Easy to correct errors and the reports can be as detailed as needed.

    I have read the tips and find them helpful.


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