Xero Review: Small Business Accounting Built Around Your Bank Feed

Xero is cloud accounting software for small businesses, built around one job: keeping your bank account and your books in agreement. We went through its plans and feature lists to see where it fits and where it starts to ask more of you.

How it works on paper

Xero connects to your business bank account and pulls in transactions, so reconciling becomes a matter of matching lines rather than typing them. On top of that sit invoices and quotes, bills, sales tax and cash flow forecasting. Xero says more than 1,000 apps connect to it, which covers most of what a small business bolts on later. It also says around 250,000 accountants and bookkeepers work with it, which matters if you want someone else to handle year end.

The plans

In the US there are three plans. Early covers quotes, 20 invoices and 5 bills a month, bank reconciliation, sales tax and a 30 day cash flow forecast. Growing removes the invoice limit and adds bill automation, automatic bank reconciliation and a 60 day forecast. Established adds multiple currencies, project tracking, expense claims and a 180 day forecast. All three run month to month.

The catch

The entry plan is limited for a reason. Twenty invoices and five bills a month is enough for a side business but tight for anything busier, so most small businesses should plan on Growing. Payroll is not included in the US either: Xero Payroll, powered by Gusto, is a paid add-on.

Who this is for

Xero suits small businesses that want clean books, bank feeds that do most of the work and an accountant who already knows the software. If you invoice more than a handful of clients a month, start on Growing. If you run payroll for a team, factor in the Gusto add-on before you compare it with the alternatives.