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.

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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, no 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 organization.

Rather than hiring a team of professional accountants to manually gather data from multiple business accounts, Xero accounting software allows for immediate collaboration.

The collaborative aspect of Xero software allows business owners to save time, effort, and most importantly, money.

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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.

Small Business Features 

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. 

Business Performance Dashboard

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. 


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. The Xero bookkeeping system allows users to create invoices with templates, or customize 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.


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 cost.

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

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Partner Features

Depending upon your specific business needs, it may be helpful to enlist the help of a partner, like a financial advisor or an accountant. 

For those who want to use expert Xero bookkeeping services collaboratively–or for professional accountants and bookkeepers to use on their own– Xero accounting software offers a few unique partner features, detailed below. 

Xero HQ

As an open platform for accountants and bookkeepers, Xero HQ allows for a streamlined organization of clients and projects. The ability to customize your workflow makes this aspect of Xero accounting software extremely valuable for accounting and bookkeeping professionals alike.

Client Base Focus

Xero software allows for an in-depth look into industry and practice. Users can find popular client-based apps that are being used by their peers, a list of client industries, banking relationships, and more.

Perform Manual Journals

For advisors, this is a great Xero bookkeeping feature. The partner version of Xero accounting software allows users to easily perform ledger adjustments with manual journals. 

Users can also oversee actions and generate full reporting from all postings, making Xero software a valuable tool for advisors.

Additional Features

For professional use of Xero bookkeeping and Xero accounting, users gain access to the following additional features:

  • Use the activity feed
  • Maintain a single client list
  • Use report templates
  • Bulk code transactions
  • Find & record transactions
  • Export uncoded bank statement lines
  • Connect Xero Practice Manager & Xero Workpapers

The Bottom Line: How Does Xero Software Work? 

When it comes to small business accounting software, Xero bookkeeping is a simple process, which is only one benefit to using Xero accounting software.

Not only is it simple to use Xero payroll and Xero accounting tools, but users can also file tax information and connect to hundreds of other helpful business apps at a moment’s notice.

At Xero, they consider themselves–and we’re inclined to agree–the Quickbooks of the future. With free conversion of QuickBooks files, there is no doubt that Xero software is making waves in the world of small business accounting software.

If you’ve been reading Xero reviews and are not sure about whether you want to invest in accounting software for your business, it might help to think of it this way:

If you can essentially run your business with one software tool that has a clean, efficient, easy-to-navigate interface, why wouldn’t you give it a shot?

How Much Does Xero Accounting Software Cost?

You know the saying–the best things in life are free. Unfortunately, Xero accounting software is not one of those things. That being said, would you trust it nearly as much if it WAS free?

The bright side is that all new members may sign up for a free 30 day trial to test the waters and see if Xero software is the right fit for them and their company. 

For those who decide that Xero accounting software is right for them, Xero accounting subscriptions can currently be purchased at a promotional 30% off for the first 6 months

xero payroll

Image Source: Xero Reviews

Xero Pricing Plans

Xero pricing plans vary in cost and what features they offer, though there are some key similarities throughout each of the five subscription plans.

Before getting into the specifics of what each Xero pricing plan entails, our Xero review would like to highlight the features that are included with each subscription option. 

Common Features

No matter what Xero software plan you choose, you will have access to the following features

  • Financial performance reports
  • iPhone & Android apps
  • Connect to bank accounts
  • 24/7 expert support
  • Quotes, invoicing, & dashboard access
  • Integration with over 500 apps
  • Secure SSL encryption

Still, there are some differences between the three Xero pricing plans, which means you get to pick and choose what matters most and decide for yourself which Xero pricing plan is right for you.

Starter Plan

The Starter Plan is the most basic of the five Xero software subscriptions, but it comes with some powerful Xero accounting tools. 

For $9 a month ($6.30 for the first 6 months), the Starter plan allows users to:

  • 5 invoices & quotes per month
  • Enter 5 bills
  • Reconcile 20 bank transactions

Because it does not offer payroll or multi-currency tools, this is the best Xero pricing plan for freelancers or business owners who do not need to hire additional employees.

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Standard Plan

The Standard Plan offers everything the Starter Plan offers and then some. For $30 a month ($21 for the first 6 months), the Standard Plan allows users to:

  • Send invoices & quotes
  • Enter bills
  • Reconcile bank transactions
  • Issue payroll for up to 5 people

Because this Xero pricing plan allows for unlimited invoicing, quotes, bills, bank reconciliation, and invoices for 5 people, this is a great Xero software subscription for small businesses.

Arguably, the most important feature of this Xero pricing plan comes from the ability to conduct payroll. Xero software combines tax features with their payroll tools, allowing for automatic tax calculations and tax rate updates. 

Premium Plan

While the Starter and Standard Xero pricing plans are primarily focused on small businesses with a handful of employees, the Premium Plan can be customized to fit payroll needs.

There are three subcategories of Xero pricing plans within the Premium subscription:

  • Premium 10: For $70 a month ($49 a month for the first 6 months), users can submit payroll for up to 10 employees.
  • Premium 20: For $90 a month ($60 a month for the first 6 months), users can submit payroll for up to 20 employees.
  • Premium 100: For $180 a month ($126 for the first 6 months), users can submit payroll for up to 100 employees.

No matter which Premium Xero pricing plan you choose, you will have access to over 160 different currencies, aside from the obvious differences in payroll. If you frequently deal with employees or clients from other countries, this may be the option for you.

Xero Accounting Software: The Pros 

There is no use denying that Xero is a nifty tool that could save a stressed out business owner from several premature gray hairs and sleepless nights.

It has plenty of great features working to its advantage, which explains the overwhelmingly positive response it has received since its entrance into the United States market in 2012.

Before concluding our Xero review, let’s take a closer look at the positive features that we have highlighted thus far.

Positive Aspects of Xero Software

After taking an in-depth look at Xero accounting software, our Xero review has highlighted a few specific features that make Xero software stand out as a great small business accounting software. 

Xero Reviews

Since its creation in 2012, there have been some overwhelmingly positive Xero reviews from business accounting experts. 

For example, MerchantMaverick gave a 5-star rating in their Xero review, awarding Xero accounting software with a perfect score. 

Other Xero reviews from industry experts are similarly positive. In their Xero review, PCMag rated Xero software as Excellent (4.0).

Organized Interface

Xero takes what could easily be hundreds of printed physical papers and merges them into one easy–to-read software program.

Not only does this save valuable time, but it also saves small business owners from potential frustration and the costs associated with outsourcing for accounting help. 

24/7 Support

If you have a problem with the Xero software, you can reach Xero by e-mail any time. Literally. The company offers the unique option of 24/7/365 support, so you don’t have to struggle for long before you hear back from one of their support gurus.

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QuickBooks Conversion

Xero offers a free automatic file conversion when switching from QuickBooks to Xero accounting software. This means that all transactions from the current and prior fiscal year can be preserved and uploaded into Xero software. 

Even better, Xero accounting software offers plenty of help to create a seamless transition. A free two-part live webinar series can help you prepare for the transition, and they also provide a conversion help guide and instructional videos

500+ Included Apps

As if the software itself isn’t enough, Xero also offers over 500 business apps right at your fingertips. Compatible apps are separated into 17 categories, including:

  • Inventory
  • Payments
  • CRM
  • Time Tracking
  • Point of Sale
  • eCommerce
  • Payroll & HR
  • Reporting
  • Bills & Expenses
  • Debtor Tracking

Unlimited Users

Because Xero software is web-based as opposed to downloaded, multiple people can view the information from any device at once, making collaboration a breeze.

You no longer have to buy several programs for each individual; you just provide the necessary log-in information to those you wish to have access.

Help is Available

Xero bookkeeping experts and accountants are available should any problems arise. If you need someone to look over your information, they will do it for you and give you helpful advice.

Constant Updates

Xero updates itself, so once you’re a registered user, you will receive those updates as they come. There is no need to pay for a more expensive, updated version as you would with most other software programs.

Xero Accounting Software: The Cons

Despite all that it has to offer, no software comes without its own set of bumps in the road. This wouldn’t be a fair Xero review if we didn’t look at the negative aspects of the software. So, what needs some work?         

Negative Aspects of Xero Software

After taking an in-depth look at Xero accounting software, our Xero review has highlighted a few specific areas of improvement for Xero software. 

Not Geared Toward Growth

In spite of its handiness, Xero isn’t particularly helpful for a growing business. If you are a comfortably small company with 5-10 employees, Xero is your dream come true. If you are a fast-growing business, you may quickly outgrow the Xero accounting software.

E-mail Support Only

We’ve all grown accustomed to our tried and true methods of support. You have a problem, you call an 800 number, and your problem is solved.

As Xero is a web-based business, it’s no surprise that their support is also web-based. Users must submit an e-mail rather than receive the instant gratification of talking to someone on the phone.

Payroll Limitations

A big selling point to the more expensive monthly plans is the option to do Xero payroll from your computer.

Unfortunately, when it comes to Xero payroll capabilities, the Xero software is somewhat lacking.

There is a bit of a catch: Xero payroll is only currently available in 36 U.S. states. Out of these, 27 are unable to use electronic services.

Once Xero payroll works out its kinks, it will definitely make the software itself much more valuable.

Mobile Xero App

The ability to use the mobile Xero app option is great for business owners on the go. The Xero apps themselves, however, may need some work.

Though Xero reviews for both the iPhone and Android apps aren’t awful, they’re not great either. To be fair, there aren’t enough ratings on iTunes to provide an average, but at the time of this review, the Xero accounting app has just over 150 ratings and 2.5 stars.

Xero reviews for the Android app seem to be a little better, with over 1,800 reviews and 3.5 stars.

Most Xero software reviews agree that this one could use some work.

Not for Newbies

Let’s get something straight: Xero is for small business owners, but it isn’t for unseasoned business owners. While Xero does its best to help you with quick tutorial videos and the promise of 24/7 support, Xero software remains a very professional program.

If you’re just starting out and a jumble of big accounting words doesn’t sound like a good time, steer clear of this one.

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Conclusion: Is Xero Accounting Software Worth It?

In short, yes–if you’re looking for an effective small business accounting software, then Xero accounting software is certainly worth it. 

Xero is not going to solve all of your problems. It’s not going to help your business turn a profit, nor is it going to take a world of stress off of your shoulders. But it will certainly help.

Even when purchasing the most expensive Xero pricing plan, Xero software is well worth the money you’re shelling out.

You pay your monthly fee and have unlimited access to all of your filings. You can also share the log-in information with anyone and everyone you wish to see the accounting information, which means you don’t have to buy multiple copies of the same program. All in all, it’s a steal.

Xero software isn’t without its flaws, but no software is. If you are able to look past the occasional glitches and hiccups, you will find a tool that helps small business owners stay on top of things.

If you can look past the flaws, you will find that Xero accounting software can be a valuable tool to help small business owners organize and manage their finances, saving valuable time, effort, and of course, money. 

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