Choosing the Right Bookkeeping Software: QuickBooks Online vs. Xero vs. Wave

As a small business owner in the service industry, you already have enough on your plate without worrying about manually tracking your income and expenses. Bookkeeping software can make financial management easier, but with so many options available, how do you choose the right one?

Three of the most popular bookkeeping software options—QuickBooks Online, Xero, and Wave—each offer unique features, pricing, and usability that cater to different business needs. Whether you're a solopreneur, a growing service provider, or managing a team, picking the right software can save you time, reduce stress, and keep your financials in order.

Let’s compare these three bookkeeping solutions to help you decide which one best suits your business.

QuickBooks Online: The Industry Standard

Best For: Small businesses that need advanced features, CPA compatibility, and scalability.

QuickBooks Online (QBO) is one of the most widely used accounting software options available today. Many accountants and CPAs are familiar with it, making tax season smoother. If you need comprehensive financial reporting, automation, and third-party app integrations, QuickBooks Online is a strong contender.

Pros:

✔ User-friendly dashboard with easy-to-read reports.

✔ Automatic bank feeds that sync transactions in real-time.

✔ Invoicing, expense tracking, and bill payment all in one place.

✔ Seamless integration with payroll, payment processors, and e-commerce platforms.

✔ Highly scalable—can grow with your business.

Cons:

❌ Higher price point than Wave and Xero.

❌ Can be overwhelming for first-time users without bookkeeping experience.

❌ Some features (such as advanced reporting and inventory tracking) are only available in higher-priced plans.

Pricing:

• Simple Start: $30/month (basic features for solopreneurs)

• Essentials: $60/month (adds bill management & multi-user access)

• Plus: $90/month (adds project tracking & inventory)

• Advanced: $200/month (advanced reporting & automation tools)

If you plan to work closely with a CPA, QuickBooks Online is an excellent choice since most accounting professionals are already familiar with the platform.

Xero: The Best for Collaboration and Simplicity

Best For: Small to medium-sized businesses looking for flexibility and collaboration.

Xero is known for its clean, simple interface and unlimited user access, making it an excellent choice for service-based businesses with teams or remote workers. It provides a solid set of features, including invoicing, bank reconciliation, and expense tracking, all within a more affordable price range than QuickBooks Online.

Pros:

✔ Unlimited users on all plans—ideal for teams.

✔ Simple, intuitive dashboard that makes bookkeeping less intimidating.

✔ Automated bank reconciliation helps keep records accurate.

✔ Integrates with over 1,000 third-party business apps.

✔ Affordable mid-tier option compared to QuickBooks.

Cons:

❌ Lacks built-in payroll in the U.S. (requires integration with third-party services).

❌ Not as widely used by CPAs as QuickBooks Online, so make sure your accountant is comfortable with Xero.

❌ Learning curve if you are switching from another software.

Pricing:

• Early: $15/month (best for freelancers, limits invoices and transactions)

• Growing: $42/month (unlimited invoicing and bank transactions)

• Established: $78/month (adds multi-currency and expense tracking)

If your business needs affordable software that allows multiple users without additional fees, Xero is a great alternative to QuickBooks Online.

Wave: The Free Option for Solopreneurs

Best For: Freelancers, solo service providers, and very small businesses that need basic bookkeeping.

Wave stands out because it’s completely free for its core accounting and invoicing features. If you run a simple service-based business and need basic bookkeeping without the bells and whistles, Wave is an excellent choice.

Pros:

✔ Free accounting and invoicing software—perfect for businesses on a tight budget.

✔ Easy to use and simple interface for beginners.

✔ Tracks income, expenses, and generates financial reports.

✔ Accepts online payments with competitive transaction fees.

Cons:

❌ Limited automation and advanced features compared to QuickBooks and Xero.

❌ No built-in time tracking or inventory management.

❌ Customer support is limited unless you pay for additional services.

Pricing:

• Accounting & Invoicing: Free

• Payments: 2.9% + $0.60 per credit card transaction

• Payroll (if needed): Starts at $40/month + $6 per employee

If you’re a solopreneur or just starting out, Wave provides an excellent, no-cost bookkeeping solution until you need more advanced features.

How to Choose the Right Software for Your Business

Before selecting bookkeeping software, consider:

✔ The complexity of your business finances. If you have multiple revenue streams, payroll, or inventory, QuickBooks Online might be best.

✔ How many people need access. If you need unlimited users, Xero is a great option.

✔ Your budget. If cost is your primary concern, Wave provides essential features for free.

✔ Your accountant’s preference. Some CPAs prefer working with specific software, so it’s worth asking before you decide.

Final Thoughts

Choosing the right bookkeeping software can make managing your business finances significantly easier. Whether you need a full suite of accounting tools with QuickBooks Online, the collaboration-friendly Xero, or the budget-friendly Wave, picking the right one depends on your business’s unique needs.

If you’re still unsure which bookkeeping software is best for you, I’d be happy to help you figure it out.

📞 Give me a call at 406-404-8955, and let’s make sure you’re set up with the right system for your business!