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Zoho Books is the best accounting software overall for sole traders and micro-businesses due to its superior reconciliation tools, lower starting price, and intuitive interface.
However, when it comes to deciding between the two, the victor will ultimately depend on your specific needs. While Xero took me a bit more time to get to grips with, I found that its advanced cash flow management features and its generous user limits make it a better choice for growing businesses, those managing complex financial processes, and those yielding high profits.
Xero and Zoho Books are some of the best accounting software for small businesses, but they both excel in different areas. To help you choose between the two, we offer a granular comparison of their accounting features, user experience, pricing plans, and more.
- Zoho Books is the better accounting software overall, winning over Xero in financial reconciliation and planning, ease of use, and pricing.
- Zoho Books offers a completely free plan alongside paid plans starting at $15/user/month, while Xero starts at $27/user/month and offers a 30-day free trial.
- Xero supports unlimited users across all its pricing tiers, making it more cost-effective for large or growing teams, whereas Zoho Books has strict user limits.
- Zoho Books provides a modern interface with multi-channel support, whereas Xero has a steeper learning curve and heavily relies on 24/7 online help resources and user forums.
- While Xero excels in AI automation and 1,000+ third-party integrations, Zoho Books offers native bill scanning, cash shortfall alerts, and built-in time tracking.
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Xero vs Zoho Books: At a Glance
Xero and Zoho Books are both leading accounting platforms, but it’s safe to say their specialisms lie in different areas. Here’s a summary of how the providers compare head-to-head.
- Overall, Zoho Books offers slightly stronger core accounting than Xero, due to its superior journal entry and financial reconciliation tools.
- Zoho Books places stringent user limits on all of its plans; all of Xero’s plans welcome unlimited users, making it the most cost-effective provider for large teams.
- Zoho Books’s clean interface and straightforward navigation make its learning curve much shallower than Xero’s.
- Zoho Books’s entry price is lower than Xero’s ($15/user/month compared to $27/user/month), and Zoho Books offers a free plan, making it the more affordable option overall. However, Xero is currently running a special deal that gives businesses 90% off its plans for the first six months.
- While both providers boast useful cash flow projection tools, Zoho Books alerts users about potential cash shortfalls, making it the better choice for businesses with unpredictable revenue streams.
- Zoho Books’ support options are excellent, letting you reach out via phone lines, email, live agent, and AI chatbot, while Xero requires you to solve problems independently through its user forums and a knowledge center.
- Both providers let you connect with heaps of third-party apps, but Xero’s app marketplace is around double the size, offering 1,000+ options, compared to Zoho Books’ selection of 500+.
Who is Xero better for?
- Users with prior experience using accounting software
- Businesses managing complex workflows
- Businesses yielding high profits, with lots of clients
- Businesses interested in integrating their accounting software with specific applications
Who is Zoho Books best for?
- New business accounting software for the first time
- Self-employed workers or micro businesses wanting to get started for free
- Retailers who want to manage their inventory effectively
- Businesses already using one of Zoho’s services
Xero vs Zoho Books: Top Features Comparison
Xero and Zoho Books are both brimming with useful bookkeeping and financial management features. Yet, after putting the providers through their paces in our research and user testing, I found they excel in different areas.
Read on to see how Xero and Zoho Books’ features compare head to head.
Tax management: It’s a tie
After pitting Xero’s and Zoho Book’s tax management features against each other, they performed similarly well. Both providers let you calculate taxes and assign taxes to different categories, and offer support for different tax types like VAT, income tax, and CIS.
Xero and Zoho Books both automatically update taxes as regulations change too, helping businesses stay up to date with compliance without having to make manual amendments. Unfortunately, neither platform provides tools that assist with tax forecasting, though, so if you’re in need of this capability, I’d recommend opting for FreeAgent instead.
Get Started with Accounting Software Today
We recommend Xero for the best value, and QuickBooks for a richer feature set
Financial reconciliation: Zoho Books
Zoho Books outperforms Xero in financial reconciliation by providing native, in-house bill scanning, whereas Xero requires third-party add-ons like Scan2Invoice.
That said, both providers sync with multiple bank accounts, send receipts following transactions, and refund customers, making them both reliable choices for businesses serious about keeping their finances in check.
Invoicing: It’s a tie
Xero and Zoho Books also score neck-and-neck in our research on invoice management. Both providers let you keep on top of payments by setting up recurring invoices, automating invoice and quote sending, and supporting multi-currency invoices.
Users can also see when clients have viewed an invoice and automatically send them reminders, to ensure they’re never getting short-changed.
Both providers let you customize your invoices with your company branding too – from your logo to custom color scheme – helping you to maintain professionalism with clients. Xero even lets you automate invoice processing with AI, eliminating the need for you to tackle piles of admin manually.
Cash flow forecasting: Xero
Xero wins in the cash flow forecasting category thanks to its cash flow projection tool, which provides users with visibility into how cash balances will rise and fall in response to expected transitions.
Zoho Books also offers cash flow forecasts to help users plan for future bumps in the road, but I didn’t find it as intuitive as Xero’s.
Financial planning: Zoho Books
Zoho Books is better at helping businesses plan their finances. Unlike Xero, Zoho Books alerts users about potential cash shortfalls and surpluses, and is capable of creating ‘what-if’ scenarios to help businesses prepare for future financial outcomes.
For these reasons, I recommend Zoho Books over Xero for businesses intent on growing, as well as those dealing with fluctuating demands.
AI automation: Xero
Xero floors Zoho Books in AI automation. Not only does the platform offer useful AI-powered insights to help users identify important trends and anomalies in financial data, but the platform also lets users automatically categorize budgets and forecasts, saving workers from having to carry out these tasks manually.
Zoho Books offers a handful of AI-powered features, including proactive error detection and automated financial reconciliation, but its capabilities are nowhere near as advanced as Xero’s.
Third-party integrations: Xero
Xero is your safest bet if your business needs to integrate your accounting platform with niche systems. Xero offers the best App Store out of any other accounting provider we researched, with over 1000 third-party integrations available for businesses to choose from.
Xero adds new entries regularly too, and lets users create their own integrations using APIs, making the potential of the system feel limitless, especially compared to platforms without established app stores like Clear Books.
Both providers let you customize your invoices with your company branding too – from your logo to a custom color scheme – helping you to maintain professionalism with clients. Xero even lets you automate invoice processing with AI, eliminating the need for you to tackle piles of admin manually.
Help and Support: Xero
Xero’s support center is head-and-shoulders better than Zoho Books‘, due to its round-the-clock availability.
Xero lets you get in touch with a member of its customer support 24/7 by using the Contact Xero Support button at the bottom of its online articles. The provider also offers a wide range of support articles and an AI-generated search results feature, which helps provide you with relevant information quickly.
Zoho Books, on the other hand, lets paid users resolve queries by email, phone, and chat — while free users will be restricted to email options only. The clincher is that its live chat and phone channels are only available from 9 am to 6 pm, Monday to Friday, making the platform less useful than Xero for businesses operating outside of traditional business hours like restaurants and hotels.
Check out our guide to the best accounting software for hotels to learn how sector-specific providers when it comes to support, price, and more.
Xero vs Zoho Books: Ease of Use
Zoho Books is much easier to use than Xero. After testing out both systems firsthand, I found Zoho Books’s interface to be much more modern than Xero’s, which was quite dated and clunky in comparison.
Zoho’s well-signposted sidebar helped me locate features quickly, and its dashboard houses all the important insights small businesses need, without overcomplicating it. In comparison, navigating Xero felt like an uphill battle, due to its poorly designed dashboard and lack of visual indicators when I completed tasks.
While carrying out some processes with Xero, like uploading receipt images and creating bills, was straightforward, simple tasks like importing clients or changing currency were unnecessarily complicated.
“I didn’t like the dashboard. It was hard to keep track of where everything was. It was quite overwhelming. The headings are generic and this made it difficult to find things.” – A member of Tech.co’s user testing team
Xero’s saving grace was that when I did encounter an issue, I was able to resolve it quite quickly through its useful help and support resources. Ultimately, I still concluded that Zoho Books’ slicker interface made it much easier to use overall, making the platform better suited to businesses managing simple bookkeeping tasks and novice accounting software users.
Xero vs Zoho Books: Pricing Plans
If you’re looking for a budget-friendly or free accounting system, I’d definitely point you in the direction of Zoho Books.
Zoho Books offers a total of five plans: Standard ($15 per month), Professional ($40/user/month), Premium ($60/user/month), Ultimate ($120/user/month), and Elite ($240/user/ month). The provider also lets you get started for completely free with its Free plan.
In contrast, Xero only offers three: Early ($27/user/month), Growing ($59/user/month), and Established ($97/user/month). As you can see, Xero’s entry price is slightly higher than Zoho Books. However, the provider is currently running a promotional deal that gives businesses 90% off all its pricing plans for the first six months, bringing its entry price down to just $2.70/user/month.
Read on to learn more about how Xero and Zoho Books’ pricing plans compare, and to see their plans side-by-side.
Zoho Books’ entry-level plan is cheaper
Zoho Books’ paid plans start from $15/user/month, which is $12 lower than Xero’s entry price of $27/user/month. While this margin may not seem too big, it will make a difference for small businesses requiring decent accounting features while wanting to keep overheads as low as possible.
This being said, Xero’s cheapest paid plan, Early, does offer a number of features that Zoho Books Standard lacks, including short-term cash flow forecasts and unlimited invoicing, making it a better deal for businesses that require these capabilities.
Zoho Books offers a free plan
Unlike Xero, Zoho Books has a completely free plan tailored towards solopreneurs and micro businesses. The Free plan gives you access to a decent raft of bookkeeping features, including invoice creation, automated payment reminders, and receipt tracking, but limits access to one user.
If you want to test out Xero before committing to a subscription, the provider does offer a 30-day free plan, compared to Zoho Books’, which only lasts 14 days.
If you’re able to make do without some basic accounting features with a permanently free version, you can also check out our guide to the best free accounting software.
The average price of Xero’s plans is lower
While Zoho Books offers more affordable options for smaller businesses, the average price of its plans ($79.17/user/month) is actually quite a lot higher than Xero’s. This is because while Xero’s priciest plan – Established – is capped at $97/user/month, Zoho Books offers two premium plans – Elite and Ultimate – which come in at $120/user/month and $240/user/month, respectively.
This isn’t necessarily a negative, though, as for businesses that can afford it, Zoho Books’ priciest tier offers some stand-out features that Xero lacks, like 50+ Pre-built data visualizations, and KPI tracking.
Xero’s plans have more generous user limits
Unlike Zoho Books, which places stringent user limits on all of its paid plans, none of Xero’s plans cap user numbers. This is pretty unprecedented for accounting software, with most of the other platforms we’ve researched placing some kind of user limits on most of their plans.
Xero’s generous user caps will benefit businesses with large teams the most, as they won’t be required to upgrade to a pricier plan to give lots of users access to the software.
How Did We Compare Xero vs Zoho Books?
At Tech.co, we take our impartial research and analysis seriously, so you can have complete confidence that we’re giving you the clearest, most useful recommendations.
After conducting an initial investigation to identify the most relevant, popular, and established accounting tools in the market, we conducted further research, including testing six major accounting software platforms.
Based on years of market and user needs research, we’ve established an accounting software testing methodology that scores these platforms against six main categories, and 25 subcategories — with a total of 1,512 areas of investigation being considered overall.
We also put the platforms through their paces with hands-on testing to gain a deeper grasp of their average user experience. We dedicated 57 hours to carrying out 37 user tests, with a total of 555 tasks being completed in total.
Our main testing categories for accounting software are:
- Core accounting features: We check how adept a platform will be at managing accounting tasks, focusing on key bookkeeping features like invoicing, tax preparation, journal entry, time tracking, financial transactions, and payment support.
- Operational efficiency: We determine how capable a system is at ensuring day-to-day processes run seamlessly, paying close attention to third-party integrations, collaboration tools, AI automation, and customization options.
- Financial planning: We assess how capable a system will be at measuring income, profits, and losses. Specifically, we check for the presence and quality of forecasting and budgeting, inventory management, reporting, and compliance tools.
- Help and support: We assess how useful and reliable a platform’s support system is, focusing on support options, whether it’s 24/7 support or knowledge center accuracy, as well as cloud backup, and security safeguards.
- Pricing: We compare the overall cost of each platform, taking factors like monthly costs, set-up fees, hidden fees, and free plans into account. We also measure how strict contracts are, and how much it would cost for a business to terminate them early.
- User experience: An overall judgment of how easily users can interact with the platform. We tested each accounting platform and got our team to report how easy they were to use, how they felt when they were using them, and how likely they were to recommend the platform to another business.
When it comes to calculating a product’s final score, not all testing areas are weighted evenly, with factors like “core accounting features” and “operational efficiency” being prioritized for small businesses, while sector-specific features are valued more highly for businesses across different industries.
We understand that accounting software is always evolving. That’s why at Tech.co, we have full-time product researchers to re-run this testing process regularly. It’s the only way to ensure our results remain reflective of the present day.
Learn more about our research.
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FAQs
Yes, but the process is manual. Neither Zoho Books nor Xero offers an automatic direct import tool for switching between platforms.
You must export your Chart of Accounts, contact lists, outstanding invoices, and transaction histories into CSV files from one system and format them to match the required import templates of the other.
Xero provides automatic currency conversions using real-time rates (sourced from XE.com) on its higher-tier plans. It automatically calculates realized and unrealized gains or losses across foreign currency bank accounts, invoices, and bills.
Zoho Books supports multi-currency invoicing and bills across paid plans, automatically pulling daily exchange rates. However, base currency adjustments and revaluations require manual setup depending on the tier.
Zoho Books features robust native inventory tracking, letting you track stock levels, set reorder points, adjust stock, and generate inventory reports on most paid tiers. For advanced needs (like multi-warehouse tracking or batch tracking), it integrates natively with Zoho Inventory.
Meanwhile, Xero offers basic untracked and tracked inventory functionality included in all plans, which works well for simple stock monitoring. For complex inventory management (such as bill of materials or serial tracking), Xero relies heavily on third-party marketplace integrations like Unleashed or DEAR Inventory.
Zoho Books offers a dedicated client portal where customers can see their complete transaction history, accept or reject quotes/estimates, make bulk invoice payments and download statements directly.
Xero provides an online invoicing link where clients can view and pay individual bills via integrated gateways (like Stripe and GoCardless), but it lacks a centralized self-service dashboard for clients to manage their overall account history without third-party add-ons.
