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Xero vs MYOB vs QuickBooks
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22/12/2017

Xero vs MYOB vs QuickBooks

Xero, MYOB Essentials and QuickBooks Online are currently the most commonly used cloud/online accounting software packages in Australia.

In this article, we’ll explain what you should look for in cloud/accounting software. We’ll also tell you about the companies behind these software packages and do a product comparison.

What should I look for in cloud/online accounting software?

Probably the two most important factors to consider when choosing cloud/online accounting software are:

  • The range of apps (programs) offered by each service provider in relation to your needs. Don’t pay for a lot of bells and whistles that you won’t need if you don’t have to. For example, you won’t need a payroll feature if you don’t have staff and you won’t need inventory functionality if you’re in a service business that doesn’t have stock. You can usually add on apps like these later if you need them.
  • How well the cloud/online accounting software will connect with your other business systems and services.

Xero

Xero cloud accounting software

Xero is a New Zealand-based organisation that specialises in developing cloud/online accounting software for small and medium-sized businesses. It was founded in 2006 and entered the Australian market in 2008. It now has offices in Sydney, Melbourne, Brisbane, Perth and Canberra and has captured significant market share. At the end of 2017, Xero had more than 1.2 million global subscribers.

Because it only provides cloud/online accounting software, Xero has been able to focus exclusively on this market as it has grown over the past decade. Its main competitors (MYOB and Intuit/QuickBooks) haven’t had this luxury. Instead, they have had to focus on products in several different sectors, including maintaining and upgrading their product offerings in the declining traditional accounting software sector.

Xero offers three types of cloud/online accounting business plans: Xero Starter, Xero Standard and Xero Premium. The company also offers 30-day free trials on any of these products.

The main features and current pricing of each of these Xero plans are outlined below.

1) Xero Starter: $25/month. Each month you can send up to 5 invoices and quotes, enter and pay 5 bills, pay 1 person, and reconcile up to 20 bank transactions.

2) Xero Standard: $50/month. Each month you can send an unlimited number of invoices and quotes, enter and pay an unlimited number of bills, pay 1 person, and reconcile an unlimited number of bank transactions.

3) Xero Premium: $60/month. Each month you can send an unlimited number of invoices and quotes, enter and pay an unlimited number of bills, pay up to 5 staff* (including superannuation), and reconcile an unlimited number of bank transactions. The premium plan also has the capability to handle multiple currencies.

* You can arrange to pay more than 5 staff if necessary for an additional monthly charge in the premium plan.

All three Xero plans incorporate features such as:

  • Bank account feeds (including a payment facility).
  • Inventory tracking and management.
  • Budgeting.
  • Reporting (including a customisable dashboard).
  • Purchase orders.
  • GST/BAS calculations.
  • A fixed asset register.
  • Information security.
  • File storage.
  • Mobile accessibility.
  • Contact lists.
  • No lock-in contracts.
  • Mac, PC, tablet and mobile accessibility
  • Free 24/7 online support.

You can also add a feature called Xero Projects to any of the three plans above. This optional feature allows you to track the time, money and profitability of different jobs that your business does. Adding this feature costs an additional $10/month for 1 user and another $7 per month for each additional user.

MYOB

MYOB is an Australian organisation founded in 1991. It provides a range of tax, accounting and software services to small and medium-sized businesses. It has dominated computerised accounting systems for small-to-medium sized businesses for much of its existence, but has been seriously challenged in the growing cloud/online accounting segment of the market by Xero.

MYOB’s most popular cloud-based accounting system is currently MYOB Essentials.

Like Xero, MYOB offers three types of cloud/online accounting business plans: MYOB Essentials Starter, MYOB Essentials Payroll and MYOB Essentials Unlimited Payroll. They also offer 30-day free trials on any of these products.

The main features and current (end of 2017) pricing of each of these MYOB plans are outlined below.

1) MYOB Essentials Starter: $25/month. Each month you can send up to 5 invoices, pay 1 person, and have up to 25 bank transaction feeds.

2) MYOB Essentials Payroll: $40/month. Each month you can send an unlimited number of invoices, pay 1 person, and have up to 250 bank transaction feeds.

3) MYOB Essentials Unlimited Payroll: $50/month. Each month you can send an unlimited number of invoices, pay an unlimited number of staff, and have up to 250 bank transaction feeds.

All three MYOB Essentials plans incorporate features such as:

  • Reporting (including a customisable dashboard).
  • GST/BAS calculations.
  • Information security.
  • No lock-in contracts.
  • 90-day money back guarantee.
  • Mac, PC, tablet and mobile accessibility
  • Free 24/7 phone or online support.

QuickBooks

QuickBooks is an accounting software package from Intuit, a US-based business and financial software company that was founded in 1983. Their most popular cloud/online accounting program is currently QuickBooks Online.

QuickBooks offers four types of cloud/online accounting business plans: QuickBooks Mobile App, QuickBooks Simple Start, QuickBooks Essentials and QuickBooks Plus. Like Xero and MYOB, QuickBooks also offers 30-day free trials on any of these products.

The main features and current (end of 2017) pricing of each of these QuickBooks plans are outlined below.

1) QuickBooks Mobile App: $9.99/month. This is marketed by the company as the ideal cloud/online accounting software for the self-employed sole trader. It allows you to:

  • Track the kilometres you travel.
  • Record and maximise your tax deductions.
  • Track your income and expenses.
  • Send invoices.

2) QuickBooks Simple Start: $16.50/month. It allows you to:

  • Record and maximise your tax deductions.
  • Track your income and expenses.
  • Send invoices.
  • Pay up to 10 staff per month.*
  • Send an unlimited number of quotes.
  • Track GST and manage your BAS.
  • Access your data from your desktop computer, tablet or smartphone.

* You can arrange to pay more than10 staff if necessary for an additional $4 per staff member per month.

3) QuickBooks Essentials: $27.50/month. It has all the features outlined in the QuickBooks Simple Start plan above, plus the following:

  • You can have multiple users.
  • You can control what information each of your users can access.
  • You can manage your bills and payments.
  • You can record transactions in multiple currencies.
  • You can arrange to pay recurring invoices and bills.
  • You can track your billable hours.

4) QuickBooks Plus: $38.50/month. It has all the features outlined in the QuickBooks Essentials plan above, plus the following:

  • The functionality to track your billable expenses.
  • Inventory tracking and management.
  • Project-tracking functionality.
  • Purchase orders.
  • Budgeting.

All four QuickBooks plans incorporate features such as:

  • Reporting (including a customisable dashboard).
  • Information security.
  • No lock-in contracts.
  • Mac, PC, tablet and mobile accessibility
  • Free 24/7 phone or online support.

Which cloud/online accounting software package should I choose?

The best cloud/online accounting software for you will depend on the needs of your business.

All three companies (Xero, MYOB and QuickBooks) have good reputations and are compliant with Australian accounting regulations (e.g. GST and payroll).

Here are the major pros and cons of each of their cloud/online software offerings:

Xero 

Pros:

  • Well designed and intuitively easy to use.
  • Great functionality.
  • Great reporting capabilities.
  • Extensive webinar training available online.
  • Good mobile app.
  • More available add-ons than MYOB and QuickBooks. For example, you can get industry-specific add-ons in areas like hospitality, manufacturing and education. 

Con:

  • The most expensive of the three offerings. If it has extra functionality that you don’t need, QuickBooks might be a better option. 

MYOB Essentials

Pros:

  • A user-friendly design.
  • It’s also easy to use and understand.
    It’s perfect for non-accountant types, avoiding jargon like debtors and creditors. It uses phrases like “Money in” and “Money out” instead.
  • Good mobile app.

Con:

  • It has fairly limited reporting functionality.

QuickBooks Online

Pros:

  • Great functionality.
  • Great reporting capabilities.
  • Easy to use.
  • Online training and video support available if necessary.
  • Great mobile app. It has more functionality than the Xero and QuickBooks mobile apps, so if you’re looking to do more on the run, it’s the best option.
  • Comparatively the best value for money if its functionality will do everything you need.

Con:

  • Perhaps not as user-friendly design and layout as the Xero and MYOB offerings.

All the cloud/online accounting software packages that we have reviewed and compared in this article have useful features. Compared to traditional desktop accounting software, these cloud-based offerings will save you time by helping to make you more efficient.

They’ll also make it much easier for you (or your accountant) to prepare your monthly/quarterly Business Activity Statements, as well as your annual tax return.

Other general benefits of cloud/online accounting software include:

  • Access to your business’s financial information anywhere and at any time (provided you have an Internet connection). This is becoming increasingly important as we become more mobile in terms of when and where we work. You’ll no longer be tied to your computer. Traditional desktop accounting software on the other hand can usually only be accessed on the computer it is installed on.
  • Allowing you to easily share your business’s financial information with appropriate internal and external third parties (e.g. your accountant or the Australian Taxation Office). You no longer need to visit your accountant or email large and confidential files. They can access all the information they need via your cloud/online accounting system.
  • A monthly subscription fee, rather than a large upfront license fee.
  • Lower set up costs (both for the accounting software and the computer infrastructure needed within your own organisation).
  • Lower computer system maintenance costs within your own organisation.
  • The ability to more seamlessly connect with your other business software and financial services by automatically feeding data to compatible systems. This reduces the amount of tedious administrative work that you need to do.
  • Allowing you to keep your business’s financial information as accurate and up-to-date as possible. This should help you to make quicker and better business decisions.
  • No need to have your own computer security and information backup systems.
  • The ability for multiple people in different locations to access the software at the same time for different purposes. Unique users can have their own unique passwords.
  • Automatic software upgrades and enhancements. There is no need for you to manually update your software like you must do with traditional accounting software products.
  • No need to install and run large accounting software applications on your computer system.
  • The ability to scale the software as your business grows.

Of course, while Xero, MYOB Essentials and QuickBooks Online currently have the largest share of the cloud/online accounting software market in Australia, there are other smaller players. These include Reckon One, Saasu and Sage One.

  • Reckon One. This is the cloud/online accounting software of an Australian organisation named Reckon. This company was founded in 1987. It provides a range of desktop and cloud-based accounting, business, document and practice management software. Reckon previously distributed QuickBooks software in Australia on behalf of Intuit, QuickBooks’ American-based parent company. However, at the end of that arrangement it developed its own software to complete in this growing and now dominant sector of the computerised accounting market.

How we can help

At Bristax, business accounting is one of our specialist areas. We can help you with appropriate advice on any financial or company accounting issue, including answering any questions you might have on which cloud/online accounting software is best for your needs. It’s best to seek professional advice.

We would be happy to speak or meet with you to discuss your situation. We’ll take the time to understand your circumstances and provide appropriate advice to meet your needs.

You can contact us on 1300 883 597. We have offices in Brisbane, Sydney and Melbourne and provide full tax and accounting services Australia wide via internet, email and phone.

This article is for general information purposes only and has not been prepared with reference to the circumstances of any particular person. You should seek your own independent financial, legal and taxation advice before making any decision in relation to the material in this article.