Xero Accounting Software Review

Xero is cloud-based accounting software that has been designed to be easy to use. It can work with all tax reporting requirements in the United States, Canada, Australia and New Zealand. One of the main features of Xero is that it automatically updates bank transactions every time money moves through your account.

This ensures you're always up to date with what's happening at any given moment.

With Xero, you'll never have to worry about forgetting an expense or entering something incorrectly into your books.

The system automatically pulls information from your credit card statements, so you don't even have to remember what was purchased anymore!

You can do everything from managing expenses and invoicing clients to reconciling accounts and paying suppliers directly.  It’s easy to use with no need for training or installation of software on your computer; simply log in online anytime, anywhere.

The app also has an iOS version, so you can manage your account while on the go! With Xero, it doesn't matter if you're an accountant or small business owner - all users will find it simple and intuitive.

Xero is a software that helps small businesses with their accounting needs. It has been developed by accountants for accountants, and it can be used by anyone who wants to keep track of their finances.

In this article, I will provide you with a summary of the features provided by Xero Accounting Software Review so that you can determine whether or not it is suitable for your needs.

Xero Review: What You Need to Know About Xero Accounting Software

When it comes to small business accounting software, there is certainly no shortage of options.

Small business accounting software allows small business owners to manage their finances like never before, providing anywhere from basic accounting and payroll to tax assistance, charts, and graphs to track financial progress.

Over the past few years, Xero accounting software has emerged as one of the best small business accounting software programs–but how do you know if Xero software is right for you?

Our Xero review will take an in-depth look at Xero accounting tools, services, features, and Xero pricing plans to provide an expert review of this small business accounting software.

With our Xero review as a guide, small business owners will be well-equipped in determining whether Xero accounting tools and software are right for them.

What Is Xero Software? How Did Xero Accounting Begin?

Founded in 2006 in New Zealand, Xero is a global cloud-based accounting software geared specifically toward small business owners. Its primary focus is to help small businesss thrive through better tools, information, and connections.

With over 1 million subscribers, Xero accounting software is a formidable force amongst small business accounting software programs.

Xero software was created under the premise that small business accounting should deliver three core services:

• Up-to-Date Information - Understanding current profitability and cash flow position is crucial for small businesses. This includes knowing how much money they are sitting on, how much money is leaving, and how much money is coming in.  Xero accounting software strives to provide this through innovative, insightful accounting tools that keep small business owners up-to-date at all times matter where they are.
• Quality Advice - Our Xero review found that, through using Xero software, businesses can be instantly connected with bookkeeping and accounting experts. Collaboration can occur in real-time, making it convenient and easy for small business owners to integrate quality advice into their Xero accounting tools.
• Single Ledger - When it comes to Xero software, the single ledger is all about accessibility and organisation. Xero accounting software allows for immediate collaboration rather than hiring a team of professional accountants to gather data from multiple business accounts manually. The collaborative aspect of Xero software allows business owners to save time, effort, and, most importantly, money.

Presentation and Direction

The appearance of Xero and QuickBooks Online couldn't be more different from one another. Xero is more compact, taking up only the centre of the screen on some pages, as opposed to QuickBooks Online, which sprawls across the entirety of the screen and makes use of large letters and graphics.

On their respective homepages, also known as dashboards, each provides important financial data and links to activities linked to it in a manner that is unique to them. Although they are both efficient, I favour the method used by Xero.

For instance, the tool presents account balances alongside links to reconciliation screens, numerical and graphical representations of overdue invoices and unpaid payments, as well as the total cash coming in and going out of the business.

In addition, there is a list of cost claims and a watchlist for certain accounts. Nearly everything you see on the dashboard is a link that you may click on to navigate to other pages or do other activities.

Every single accounting product that I tested has its own navigation system, and I haven't come across a single one that didn't function properly. Tabs are arranged in a horizontal row at the top of the Xero website. These tabs divide the site into categories that are both logical and functional, such as Dashboard, Business, Accounting, Projects, and Contacts. To access the settings and other housekeeping activities, click on your company's name in the top left corner of the screen.

You can expect to spend the most of your time working each day in the Business menu. It opens to various different subfunctions, such as Products and services, Invoices, and Bills to pay, among others.

In Xero, you have the option to manually enter bills. However, if you send them to your personal Xero address by email with attachments, the website will transfer some of the important data into a draught copy of the bill.

After entering the sales overview and drilling down further, you will use common conventions for data entry and navigation. The top portion of the screen contains four buttons that, when clicked, offer up various tools that allow users to create sales transactions, send statements, import sales invoices, and search for particular invoices and quotes.

Information on your invoices can be found below that. You may quickly view the number and total dollar amount of invoices that are in draught form, those that are awaiting approval and payment, and any sales transactions that are past due using the large buttons.

You can see at a glance which of your quotes are in draught form, which have been sent, which have been accepted, and which have expired. There are additional accounting sites that operate in a manner that is analogous to this one, making it simple to get an overview of the current standing of your transactions.

When you select Awaiting Payment from the list of invoices, a new window will emerge with a table revealing all of the associated financial dealings (this is the same screen you see when you click on the Invoices link under the Business tab). While you are there, you have the ability to switch between different tabs that indicate their various conditions.

You may generate new invoices, credit notes, and statements using the buttons at the very top of the page. You can also import and export invoices using the CSV file format using these buttons.

On every page of its website, Xero makes use of navigation methods that are just as efficient, so users may have both access to data and links to related tasks. It does a fantastic job of offering a variety of views of your financial data as well as the navigation tools that are required to work with those data.

Who, then, provides the superior and more productive user experience? That decision is up to the individual. Some users will find that the straightforward and cost-effective manner in which Xero operates best suits their needs. Others prefer the appearance of QuickBooks Online and Zoho Books because it is roomier and more aesthetically pleasant.

How Does Xero Software Work?

Xero software uses a key set of unique Xero bookkeeping features to provide comprehensive and efficient business accounting benefits. While Xero accounting software is primarily geared toward small business owners, it can also be used by partners (accountants and advisors).

Therefore, when talking about how Xero software works, it’s important to discuss two separate sets of features: small business and partner.

While Xero software offers a full suite of features, our Xero review will focus on a core set of notable small business accounting software features.  The Business Performance Dashboard can be considered as your main hub for all of your important information.

Here you will find charts and graphs to track business performance, in-depth analysis and detail on profit, bank accounts and statements, budgets, and more.

Ultimately, the Business Performance Dashboard provides a comprehensive overview of performance and provides access to multiple Xero bookkeeping tools.

Invoicing

As any small business owner knows, invoicing is a crucial component to any small business accounting software.

Xero accounting software provides expert invoicing tools, allowing for users to generate professionally branded invoices. In addition, the Xero bookkeeping system allows users to create invoices with templates or customise their own.

Once invoices are sent, the Xero bookkeeping software will accept online payments through a debit or credit card, or invoices can be paid through PayPal.

Inventory

Not many small business accounting software products provide tools to track inventory, which makes Xero accounting software stand out among the competition.

For single-location retailers and wholesalers, the inventory feature of Xero bookkeeping software is invaluable. Users can keep track of quantity and dollar value, generate performance reports on specific products, and view profit margins.

Additionally, our Xero review found that the inventory feature allows users to view real-time data for stock levels, values, and average purchase costs.

Additional Features

For a detailed list of Xero accounting software features, you can visit Xero’s website. For a quick overview of additional features, see below:

• Payroll
• Bank reconciliation
• Mobile apps
• Data security
• Pay bills
• Expense claims
• Quotes
• Reporting
• Purchase orders
• Files
• Multi-currency
• And more

Sales taxes and Expenses

When I did my evaluation of Xero a year ago, they had recently released a whole new method for keeping track of expenses. Both the mobile apps and the browser-based version of the Expenses tool give a better user experience, greater functionality, and more flexible user permissions than the previous version did. More on this topic will be discussed later.

You have the ability to create an expense record on your desktop computer or laptop computer, define an account, assign it to a project or customer, add labels, and optionally upload a picture. You can even create an expense record that uses a different currency than the one you are working in.

On the other hand, the detail level of the expense forms is lower than that of QuickBooks Online. For example, the fields for payment method and payment account are not there, and the browser-based form does not allow for the addition of sales tax.

One of the most important aspects of accounting is keeping tabs on the money that has been spent. Xero helps you log your spending. There is a second possibility available for importing paper receipts of expenses into Xero.

In 2018, the company made the acquisition of HubDoc and has continued to maintain a close connection with it (HubDoc also integrates with QuickBooks Online and Bill.com). The service is exactly what it seems like it would be: a centralised location for the majority of the financial documents you have (statements, invoices, bills, and receipts).

You are able to set up online connections to your various suppliers and financial institutions, and HubDoc will automatically bring in documents and read some of the data from those sources (such as the date and the amount), inserting it on HubDoc forms based on the rules that you designate.

You can either take pictures of the documents using mobile apps or upload them directly into the system using either your computer or email. Xero ensures that all data is entered into the appropriate modules. After the initial free trial period, the monthly cost of HubDoc is $20.

Xero does an excellent job of handling taxes related to sales. In the menu titled "Advanced Settings," you have the option to turn on "Sales Tax Lookup," and if you do so, the programme will retrieve the appropriate rate based on the customer's actual location (on most sites, you have to find the rates yourself and enter them). These rates are from Avalara, which is one of the leading providers of sales tax data solutions, so you can rest assured that they are accurate (QuickBooks Online does not have this relationship). Additionally, you can get two other sales tax reports, namely the Sales Tax Summary report and the Sales Tax Audit report.

Monitoring Projects

Xero now provides features that make it possible to monitor the progress of projects. These tools have been developed over the past few years. This method of project management is straightforward, yet it works well for extremely small enterprises or organisations working on straightforward tasks.

You are obligated to delegate each project to a contact, and you have the ability to provide it with a name and a deadline, as well as an estimate of its budget and thorough bids.

A rolling total of the time and expenses that have been charged against the budget estimate as well as the amounts that have been invoiced and estimated is displayed on the home page that is specific to each project.

You are able to create and add jobs with ease, which can then be utilised in time entries, document expenses and estimates of expenses, and add expenses. You can, of course, choose to send an invoice for the entire project once it has been finished, and you are free to do so. However, you also have the option to send invoices at any time for a certain amount of time and/or expenses.

Using Xero for Payroll and Reports

Xero had been gradually expanding its payroll processing capabilities throughout the years, but the company has recently taken a new path. The website has just been connected with Gusto, the winner of our Editor's Choice award for payroll, which offers it the ability to administer payroll in a competent and complete manner.

There is even a single sign-on option, which will prevent you from having the impression that you are working in two different programmes (except for the very different user experiences).

The reports also continue to show signs of improvement. Xero provides templates for the standard financial reports that your accountant will require, in addition to dozens more in every area of the site (Sales and Purchases, Inventory, Fixed Assets (unique to Xero), Tax, and Projects). Xero is a cloud-based accounting software that is used by small businesses.

A variety of reports now provide filters that, when applied, enable users to more precisely isolate specific data categories of interest to them.

There have been a variety of improvements made to reports, and one report in particular stands out as particularly noteworthy: the Blank Report. This report may be fully customised by utilising the layout editor in Xero. For first-time users, the sheer amount of customization options may seem overwhelming; nevertheless, there is helpful content readily available online.

Software For Small Businesses That Is Professional Accounting At An Affordable Price

The use of Xero has been far simpler than I had anticipated; nevertheless, when it came time to file my taxes, I was taken aback when I saw that the default accounts and descriptions for expenses did not connect 1:1 to ATO categories.

(Because it's a New Zealand company, and the product that came before it was made in New Zealand, I really ought to have double checked this when I was setting up my accounts.)

Because of this, I will need to conduct a thorough audit of all of my financial dealings for the year 2018, and the Australian Taxation Office (ATO) has already received the astronomically inflated tax payment I was planning to make until I can conduct the audit and file my return using the extension.

Because Xero employs a well-known importing service that is trusted by the financial institutions, my experience importing data from those institutions has been significantly improved. I attribute this improvement to Xero's use of the service.

The ability to connect many invoices to bank deposits is helpful for me because I don't typically walk to the bank to deposit each check individually. This will become increasingly beneficial to me as my business expands.

I should definitely find an accountant to help me with this, but I haven't been able to locate one who is familiar with both Xero and the accounting needs of craft enterprises.

Pros

Software for professional double-entry accounting that is available at a price that is extremely reasonable Cash and accrual accounting are both supported by this system. Links to various financial institutions for conducting business. Instead of merely attempting to log in remotely, this importer makes use of the standard importer that is recognised by the financial institutions (and triggering fraud alerts) It is possible to match several invoices to a single deposit transaction that was imported from the bank. Can continue to use Xero even as the firm expands.

Cons

Pre-existing expense categories and descriptions do not map 1:1 with ATO definitions. As a result, I need to go back through all of my receipts to ensure that expenses are entered in the appropriate accounts. I did not realise this would be the case when I switched, so I have to go back through all of my receipts. It is now much harder to concentrate on particular spending categories in order to check transactions.

Due to the fact that I have not been successful in importing historical data from the prior app (perhaps due to the fact that it does not support double-entry), I am still required to pay the software's monthly fee in order to maintain access to my data. Because I do not have an integration with Craftybase, I am need to manually enter all client invoices and supplier purchases into their platform.

Motives for deciding on Xero

QuickBooks made available a specialised product for Etsy integration, however early customers experienced issues with data loss and were unable to retrieve it.

Otherwise, the cost of QuickBooks to cover the same capabilities that I use in Xero would have been quite expensive; even a QB consultant informed me that it's overkill for a firm of my size. Xero is an online accounting software. I can't recall the names of the other solutions that I researched, but I do recall that Xero came highly recommended by multiple owners of businesses that are comparable to mine.

Motives for moving to Xero

Outright depends on importing data from financial institutions, but the company was extremely unreliable (apparently, they don't use a standard importing service, and my credit union kept flagging them as hackers for remote logins), and customer service kept giving me the runaround. Outright depends on importing data from financial institutions. Additionally, there is no such thing as "professional" double-entry bookkeeping, and the system is not capable of being audited.

In addition, it is unable of correctly handling the Cost of Goods Sold and requires human solutions to be implemented. Last but not least, it is unable to produce the expert reports that are necessary when applying for loans.