FreshBooks vs Xero: Which Freelance Accounting Tool is Right for You?

This service costs $20 per month plus 3.5 percent and 30 cents per transaction. FreshBooks is an accounting software program geared toward small businesses and independent contractors. In addition to standard double-entry accounting and report functions, FreshBooks specializes in generating invoices. The ability to get paid on the go by converting an estimate and/or billable hours into an invoice makes FreshBooks a particularly appealing option for service-based businesses.

Features: FreshBooks vs. Xero

Whether you use the desktop software or the mobile app, you can detail expenses, send invoices and run reports. If you’re a small business owner looking for more automation and insights, this may be the right plan for you. For $25/month, you can bill up to 50 clients, set up recurring billing and client retainers, run business health reports, and send unlimited proposals (in addition to the Lite features).

Accounting software

In Xero, you can view the platform as a demo company with pre-recorded data, which makes it far easier to see how the platform will look and operate when you input your own business’s data. Indirect taxes are imposed on a certain group but paid for by another. Manufacturers and sellers are usually responsible for remitting indirect taxes but they pass the cost down to the consumer. Common types of indirect taxes include sales tax, excise tax, customs tax, and environmental tax. Indirect taxes are usually levied upon goods and services, and in most cases, the seller or manufacturer is responsible for remitting these taxes to the government. However, they are not required to pay the taxes themselves—they can pass the cost of the tax down to someone else, usually the consumer.

Indirect Taxes Advantages

We prefer Xero if you’re a larger business looking for more potent features, such as bank account reconciliation and Gusto payroll software. Xero also has robust file storage that lets you manage and share documents, bills, contracts and receipts on the cloud. Speaking of the cloud, both software earned a spot on our best cloud accounting software list. FreshBooks and Xero are both prominent accounting software options but each caters to different business types. FreshBooks is known for its user-friendly interface, streamlined features and emphasis on client and project management.

Goods and Services Tax (GST)

Of all the accounting software platforms we reviewed, FreshBooks’ invoicing functionality impressed us the most. Creating invoices in FreshBooks is much easier than in other platforms ― automatic invoice generation and customization are a breeze. We especially like the fact that you can generate invoices from estimates and quotes in two clicks.

From Xero to Hero: 95% Of Small Businesses Say FreshBooks Is Easier to Use

1. Has robust reporting tools and report customization options, basic inventory tracking in all plans and a capable mobile app; Early plan limits the number of invoices and bills.
2. However, when you compare features, QuickBooks Online inches ahead for its stronger feature set, ease of sharing with accountants and customer support.
3. Accounting can be confusing and overwhelming for business owners who aren’t trained accountants.
4. All projects as well as time tracking for all clients can also be accessed in the time-tracking tab on the sidebar, under the projects tab.

When you compare them head-to-head though, Xero pulls through as the more scalable, easy-to-use solution for small businesses looking to grow their operations. It includes stronger accounting features across all its plans, as well as unlimited https://www.kelleysbookkeeping.com/gross-margin-ratio/ users, inventory management and access to over 1,000 third-party integrations. FreshBooks cloud based accounting software is built for non-accountants running small and medium sized businesses – making it easy to create invoices and get paid.

Additionally, as with FreshBooks, Xero includes a Gusto integration ― however, this integration doesn’t incur extra fees. Across the board, we found Xero’s built-in integrations ― and roughly 100 additional integrations ― to be approachable and powerful. Ya know who always picks up and never transfers you when you call FreshBooks?

FreshBooks has simple, transparent pricing that fits your budget. You know who picks up and never transfers you https://www.online-accounting.net/ when you call FreshBooks? FreshBooks has the best rating for customer support among all competitors at 91%.

On the other hand, FreshBooks has limitations for larger companies or teams. Adding a team member to your account will cost an extra $11 per month, for example, and the lower-tier plans have a limit to how many clients you can have. FreshBooks is a great option for freelancers, small business owners and anyone who needs to send invoices and accept payment as part of a business. On the other hand, if you’re a larger team or want more customization options or more than one person on the account, it may be worth considering another option such as QuickBooks. Have the reports that you need at your fingertips all the time with FreshBooks. In the Reports tab, you can access popular business accounting reports such as profit and loss, sales tax summary, aging accounts, invoice details and expense reports.

Imagine doing this without invoicing software—dealing with paper invoices and receipts and having to keep track of phone and address records separately. Xero is a powerhouse accounting software, with asset liability management the ability to create and send purchase orders, quotes, invoices and more with a few clicks. You’ll also get inventory management, accounting reports and cloud file storage, all on the base plan.

If you frequently collaborate on finances with your business’s co-owners, Xero saves you more money than just about any other accounting service provider. FreshBooks earned 4.4 out of 5 stars in our in-depth review of its features, customer support, affordability and overall user experience. We took a close look at these key categories to help you as you compare the best accounting software for your business. Easy-to-use invoicing, payments, project management, accounting features, and so much more, is why over 30 million businesses in 160+ countries have used FreshBooks. Global digital transformation has redefined the day-to-day operations of accountants as they increasingly transition to data-driven cloud accounting platforms.

And FreshBooks is a unique accounting software program in that it allows you to bring your software along with you while serving billable clients. We recently launched a bill payments solution that uses open banking – powered by Crezco – and allows businesses to manage, approve, and pay GBP supplier bills directly from Xero. This hot topic was discussed at Xerocon London 2024 where industry leaders shared clever new technology that makes accepting payments a piece of cake. Xero is the first major accounting software to offer tech such as eInvoicing and the upcoming feature of Tap to Pay in the UK and Australia. Read on to learn exactly how Xero’s evolving platform can help you and your clients.