Xero vs. QuickBooks Online for Canadian Businesses: Which One is Right for You?
If you run a business in Canada, chances are you’ve come across Xero and QuickBooks Online (QBO).
They are two of the biggest cloud accounting platforms, but which one is the best fit for your business?
In this guide, we’re putting them head-to-head, comparing pricing, features, ease of use, integrations, customer support, and tax compliance, all with a focus on what really matters to Canadian business owners.
By the end, you’ll have a clear idea of which software is the right one for you.
Pricing: Which One Gives You More Bang for Your Buck?
Let’s start with pricing, because nobody wants to overpay for software.
QuickBooks Online Pricing
QuickBooks Online has four pricing tiers in Canada:
- EasyStart – $24/month
- Designed for solo business owners
- Includes one user, basic invoicing, and expense tracking
- Essentials – $54/month
- Supports three users
- Adds bill management and multi-currency support
- Plus – $80/month
- Designed for growing businesses
- Includes up to five users, project tracking, and inventory management
- Advanced – $160/month
- Built for larger businesses
- Supports up to 25 users, customizable reporting, and workflow automation
QuickBooks frequently offers promotions like 50% off for the first three months, so be sure to check for discounts before signing up.
Xero Pricing
Xero keeps things simple with three pricing tiers:
- Starter – $20/month
- Capped at 20 invoices and 5 bills per month
- Best suited for freelancers and very small businesses
- Standard – $48/month
- Removes the invoicing cap
- Great choice for most small businesses that don’t need multi-currency functionality
- Premium – $67/month
- Includes multi-currency support for businesses dealing with international transactions
One big advantage of Xero is that all plans allow unlimited users, unlike QuickBooks, which charges more as you add users.
Xero also runs promotions, like 90% off for the first three months, so keep an eye out for deals.
Verdict on Pricing
- If you need multiple users at a lower cost, Xero is the better deal.
- If you want more built-in features at the lower tiers, QuickBooks may be the better value.
Features: How Do They Compare?
Now let’s get into features to make sure that you find the right software application that actually works for your business.
Invoicing and Billing
Both platforms handle invoicing well, but there are some key differences:
- Customization - QuickBooks Online offers more customization, allowing you to personalize invoices, send automated reminders, and even track when a client has viewed an invoice.
- Charging Interest on Late Payments - If you’re on the Advanced plan, QBO also makes it easy to charge interest on overdue invoices by automatically calculating and adding late fees when a payment is past due. Unlike QBO, Xero does not have an automatic late fee function, so interest on overdue payments must be added manually.
- Getting Paid - Xero keeps things clean and simple, with a built-in “Pay Now” button for Stripe and PayPal. However, the Starter plan limits invoices to 20 per month.
Reporting and Analytics
- QBO - QuickBooks Online offers advanced customization, allowing businesses to tailor financial reports with filters, custom fields, and memorized reports.
- Xero - Xero’s standard reports are easy to use and customize, making them a great fit for most small businesses. However, if you need deeper insights and forecasting, you’ll need to upgrade to Xero Premium.
Payroll (for Canadian Businesses)
- QBO - QuickBooks Online Payroll can calculate payroll taxes, generate T4s, and handle direct deposits—but it comes at an extra cost of $55/month + $6 per employee.
- Xero - Xero does not have built-in payroll in Canada, so businesses must use a third-party app like Wagepoint or Payworks. While this means payroll and bookkeeping are handled separately, the overall cost is typically lower than QBO.
If you need help choosing a third-party payroll provider, check out our guide on payroll software for Canadian businesses.
Verdict on Features
- QBO wins for built-in payroll and has a slight edge with robust report customization.
- Xero wins for simplicity and ease of use.
Ease of Use: Which One Feels More Intuitive?
QuickBooks Online
- Comes with strong onboarding tutorials.
- Widely used by Canadian accountants, making it easier to get professional help.
- Packed with features, but the busier user interface can feel overwhelming at first.
Xero
- Minimalist design makes it easier for beginners to navigate.
- Bank reconciliation is particularly smooth.
- Customizing reports is more limited compared to QuickBooks.
Need Help Getting Started?
If you're looking for help getting started with Xero or QuickBooks Online, we have online courses that will give you a solid foundation.
Verdict on Ease of Use
- If you want powerful features and don’t mind a learning curve, go with QuickBooks.
- If you want something simple and intuitive, go with Xero.
Which One Is Best for Your Business?
For Small Businesses and Solopreneurs → Xero
If you’re running a one-person business or a small team, Xero’s lower cost and unlimited users make it a great fit. Unlike QuickBooks Online, which limits users based on your plan, Xero allows you to invite your bookkeeper, accountant, or team members at no extra cost.
Additionally, Xero’s simple, clean interface makes it easy to handle your bookkeeping, even if you’re not an accountant. The bank reconciliation feature is particularly smooth, making it easy to categorize transactions and keep your books up to date.
If you don’t need complex payroll or project tracking, Xero is an affordable and easy-to-use choice for small business owners.
For Business Owners Who Want Ease of Use → Xero
Xero is known for its intuitive, user-friendly design, making it a great choice for business owners who want to spend less time on bookkeeping and more time running their business.
✅ Simple dashboard with a clean layout
✅ Side-by-side bank reconciliation for quick transaction matching
✅ Minimal learning curve compared to QuickBooks Online
While QuickBooks has some more advanced reporting options, it also comes with a steeper learning curve. If you want straightforward bookkeeping with minimal complexity, Xero is a fantastic choice.
For Service-Based Businesses → Xero
Service-based businesses, like consultants, freelancers, marketing agencies, and IT professionals, often don’t need complex inventory management but do need strong invoicing and expense tracking.
✅ Customizable invoices with easy payment links for Stripe and PayPal
✅ Recurring invoices for retainer-based businesses
✅ Expense tracking and reimbursements built directly into the platform
While QuickBooks Online also has strong invoicing features, Xero’s simplified workflow and seamless online payment integrations make it a great choice for service businesses.
For Businesses That Track Revenue and Expenses by Project → QuickBooks Online
If your business needs to track revenue and expenses for individual projects, QuickBooks Online is the stronger choice.
✅ Built-in project tracking (available in QBO Plus and Advanced)
✅ Easily link income and expenses to specific jobs or clients
✅ Detailed profitability reports per project
While Xero does offer Xero Projects as an add-on, it’s not as robust as QuickBooks Online’s built-in project tracking. If you run a construction company, marketing agency, or any business where tracking job profitability is critical, QBO is the better fit.
For Businesses That Need Built-In Payroll → QuickBooks Online
If you pay employees or contractors, QuickBooks Online’s fully integrated payroll system is a major advantage.
✅ Automates payroll calculations, tax remittances, and direct deposits
✅ Handles CRA payroll deductions and filings (CPP, EI, and income tax)
✅ Generates T4s and RL-1s for Quebec businesses
Xero does not have built-in payroll for Canadian businesses, meaning you’ll need to use a third-party service like Wagepoint, Payworks, or PaymentEvolution. This adds an extra layer of complexity and cost compared to QBO’s all-in-one solution.
If payroll is a key part of your business and you want it built in to your bookkeeping system, QuickBooks Online is the clear winner.
Final Verdict: Which One Should You Choose?
Both Xero and QuickBooks Online are excellent cloud-based accounting platforms, but the right choice depends on what matters most for your business.
- Choose Xero if you prioritize ease of use, clean workflows, and affordability. It’s a fantastic option for small businesses, solopreneurs, and service-based businesses that want simple invoicing, unlimited users, and an intuitive interface. If you don’t need built-in payroll or advanced reporting, Xero provides a straightforward, cost-effective solution.
- Go with QuickBooks Online if you need advanced financial tracking, project profitability insights, or built-in payroll. It’s the better choice for businesses that need robust reporting, detailed project-based accounting, and payroll automation. While QBO has a steeper learning curve, it offers more built-in tools that can save time in the long run.
At the end of the day, both platforms will help you stay on top of your finances; it’s just a matter of finding the one that fits your specific needs.
If you’re still unsure, taking advantage of free trials for both platforms is a great way to get a feel for which one suits you best.
Avalon Can Help
If you decide that Xero is the right fit but need help setting it up or managing your books, Avalon Accounting specializes in Xero support for Canadian businesses. We can help streamline your accounting processes so you can focus on growing your business. Reach out to us to learn more!
No matter which software you choose, having a solid bookkeeping system in place is key to running a smooth and successful business.
