Accounting Software Comparison: QuickBooks, Xero, FreshBooks, Wave

The Four Contenders

If you are a small business owner looking for accounting software, you will hear the same four names over and over: QuickBooks Online, Xero, FreshBooks, and Wave. Each has a different strength. None of them is perfect. Here is what you actually need to know.

QuickBooks Online

Best for: Businesses that need robust reporting, payroll integration, and accountant collaboration.

QuickBooks Online is the most widely used small business accounting platform in the United States. Most accountants and bookkeepers know it, which means finding help is easy.

Strengths:

• Comprehensive financial reporting
• Payroll add-on that integrates directly
• Huge ecosystem of integrations (CRMs, payment processors, inventory tools)
• Most accountants are already familiar with it
• Strong mobile app

Weaknesses:

• Pricing has increased significantly over the years
• The interface can feel cluttered with features you do not need
• Customer support quality varies widely
• Plan limits on billable users can push you to higher tiers fast

Pricing: Simple Start around $30/month, Essentials around $60/month, Plus around $90/month. Prices change frequently and promotional rates expire.

Xero

Best for: Businesses that want clean design, unlimited users, and strong multi-currency support.

Xero is a New Zealand-based platform that has gained significant traction in the US market. Its biggest selling point is unlimited users on every plan.

Strengths:

• Unlimited users on all plans
• Clean, modern interface
• Strong bank reconciliation tools
• Good project tracking on higher tiers
• Over 1,000 integrations

Weaknesses:

• Payroll is an add-on with limited state support
• Fewer US accountants are deeply familiar with it compared to QuickBooks
• Invoice customization is more limited
• The Starter plan limits the number of invoices and bills per month

Pricing: Starter around $29/month (limited), Standard around $46/month, Premium around $62/month.

FreshBooks

Best for: Service-based businesses and freelancers who need excellent invoicing and time tracking.

FreshBooks started as an invoicing tool and grew into a full accounting platform. It still shines brightest at invoicing and client-facing features.

Strengths:

• Best-in-class invoicing experience
• Built-in time tracking
• Client portal for estimates and payments
• Easy to learn with minimal accounting knowledge
• Excellent mobile app

Weaknesses:

• Less powerful reporting than QuickBooks or Xero
• Not ideal for inventory-heavy businesses
• Per-client pricing on lower tiers can get expensive as you grow
• Double-entry accounting is available but not as deep as competitors

Pricing: Lite around $19/month (limited clients), Plus around $33/month, Premium around $60/month.

Wave

Best for: Very small businesses and solopreneurs who need free basic accounting.

Wave is the only truly free accounting software on this list. It makes money through payment processing and payroll add-ons.

Strengths:

• Core accounting, invoicing, and receipt scanning are free
• No user limits
• Clean and simple interface
• Adequate reporting for basic needs
• No credit card required

Weaknesses:

• No inventory management
• Limited integrations compared to paid competitors
• Payroll is a paid add-on and is only available in certain states
• Customer support is limited on the free plan
• Fewer advanced features as your business grows

Pricing: Free for accounting and invoicing. Payroll starts around $20/month plus per-employee fees. Payment processing charges standard credit card rates.

How to Choose

Choose QuickBooks Online if you want the widest range of features, need payroll built in, or your accountant specifically asks for it. It is the safest default choice for most small businesses.

Choose Xero if you have multiple team members who need access, work internationally, or prefer a cleaner interface. The unlimited users model can save significant money for growing teams.

Choose FreshBooks if you are a service business that lives and dies by invoicing and time tracking. Consultants, designers, and small agencies love it.

Choose Wave if you are just starting out, have a very tight budget, or your accounting needs are simple. Upgrade to a paid tool when you outgrow it.

What Your Accountant Thinks

Before you pick, ask your accountant or bookkeeper what they prefer. Many offer discounted rates if you use the platform they specialize in. If you do not have an accountant yet, QuickBooks Online gives you the widest pool of professionals to choose from.

Migration Reality Check

Switching accounting software mid-year is painful. If possible, make the switch at the start of a fiscal year. Export your chart of accounts, outstanding invoices, and vendor lists before migrating. Most platforms offer import tools, but expect some manual cleanup.

The SBA recommends keeping detailed financial records regardless of what tool you use. The software is just the container. The discipline of recording every transaction and reviewing your numbers monthly is what actually keeps your business healthy.