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), Bill.com (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 Bank Reconciliation Screenshot –
My Wish List:
- Xero does not accept online payments from customers. However, Xero does play nice with FreshBooks and Bill.com, 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 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.