Xero VS FreshBooks: Comparison

Xero and FreshBooks are both strong accounting software options, but which is right for you? Learn which one fits the size, and needs, and budget of your business.

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Erica Seppala
Editor & Senior Staff Writer

Last updated onUpdated July 15, 2026

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	Xero	FreshBooks
Ideal For	Medium to large businesses	Small to medium businesses
Pricing	$25 - $90/month	$23 - $70/month
Standout Features	Numerous advanced features Supports unlimited users 1,000+ integrations	Excellent customer support Strong proposals feature International invoicing
What’s Missing	Built-in payment processing & payroll Phone support Tax support	Strong reporting Additional users included in monthly fee Some advanced features

Table of Contents

Xero VS FreshBooks At A Glance
Where Xero Wins
Where Xero Falls Short
Where FreshBooks Wins
Where FreshBooks Falls Short
Xero VS FreshBooks: Pricing Comparison
Xero VS FreshBooks: Features Comparison
Which Is Best For My Business: Xero Or FreshBooks?

Xero VS FreshBooks At A Glance

Xero is cloud-based accounting software with robust accounting features, unlimited users, hundreds of integrations, and strong reporting. Unlike many competitors, Xero includes unlimited users on every plan, making it a good fit for growing businesses.

Its biggest drawbacks are limited customer support options, reliance on third-party payroll integrations in some regions, and pricing that may be high for some small businesses. Even so, Xero remains one of the strongest QuickBooks alternatives for businesses that need scalable accounting software.

FreshBooks is easy-to-use accounting software with excellent invoicing, time tracking, customer support, and a clean, intuitive interface. It’s a great fit for freelancers and small businesses that prioritize simplicity over advanced accounting features.

FreshBooks’ biggest limitations are its limited reporting, fewer advanced accounting features than some competitors, and higher costs as you add users. Businesses with more complex accounting needs may eventually outgrow the platform.

While Xero and FreshBooks are both strong accounting software choices, neither may be the right option for your business. If this is the case, be sure to check out the best small business accounting software for other great choices that may offer what you’re looking for.

Where Xero Wins

Xero stands out for its advanced accounting features, including inventory management, project tracking, and one of the strongest contact management systems available in small business accounting software. It’s scalable enough to support growing businesses without adding user fees.

Unlike many competitors, Xero includes unlimited users on every plan at no additional cost. It also supports multiple organizations under a single login, though each business requires its own subscription.

With more than 1,000 integrations, robust security, and a 99.97% uptime guarantee, Xero offers one of the most comprehensive accounting ecosystems on the market.

Here’s what sets Xero apart:

Unlimited users on every plan
Advanced accounting features
Scalable for growing businesses
1,000+ integrations
Strong security

Where Xero Falls Short

Xero’s Starter plan is affordable but restrictive, making it a better fit for freelancers or very small businesses than growing companies. Businesses that send a high volume of invoices or bills will likely outgrow the plan quickly.

Xero also has a steeper learning curve than simpler accounting software, particularly for first-time users. While it offers extensive accounting functionality, beginners may need extra time to get comfortable with the platform.

Xero relies on third-party integrations for payroll and payment processing rather than offering these features natively. It also doesn’t provide built-in tax filing or tax payment services.

Here’s where Xero falls short:

Starter plan has usage limits
Steeper learning curve than some competitors
No built-in payroll or payment processing
No tax support

Where FreshBooks Wins

FreshBooks stands out for its intuitive interface, excellent customer support, and ease of use. Unlike more feature-rich accounting platforms, FreshBooks is designed to help freelancers and small businesses get up and running quickly with minimal training.

FreshBooks also offers built-in invoicing, time tracking, and online payments through FreshBooks Payments, making it especially well-suited for service-based businesses. Payroll is available through FreshBooks Payroll, powered by Gusto in the U.S.

Here’s where FreshBooks stands out:

Excellent customer support
Easy to learn and use
Built-in invoicing and time tracking
Online payment processing

Where FreshBooks Falls Short

FreshBooks’ lower-tier plans limit the number of billable clients you can invoice, so growing businesses may need to upgrade sooner than expected.

Compared to competitors like Xero, FreshBooks offers fewer reports and lacks features such as inventory management and built-in accounts payable workflows.

FreshBooks also charges for additional users, which can make it more expensive for teams than accounting software that includes multiple users at no extra cost.

Here’s where FreshBooks falls short:

Client limits on lower-tier plans
Limited reporting
Missing some advanced features
Additional users cost extra

Xero VS FreshBooks: Pricing Comparison

	Xero	FreshBooks
Price	$25 - $90/month	$23 - $70/month
Number Of Users	Unlimited	Additional users for $11/month per user
Discounts Available
Payroll	Gusto integration starts at $49/month + $6/month/employee	$40+/month + $6/month/user
Payments	Varies by third-party processor	2.9% + $0.30 for most transactions

Xero has three pricing plans, but be aware that the lowest-priced plan has limits on invoices and bills and does not include all of the features you’ll receive with the more expensive options.

Discounts are available for new users, and a 30-day free trial is available to test out the software.

Xero supports unlimited users at no additional cost. If you want to add more businesses under your account, you’ll have to pay a monthly subscription fee for each additional business.

Xero doesn’t have built-in payroll, but a direct integration with Gusto is available. You also won’t find built-in payment processing, but Xero integrates with popular options like PayPal and Square.

FreshBooks has three pricing plans. Like Xero, there are limitations on the cheapest plan, as well as some limitations on the next highest tier. An additional plan with custom pricing is also available.

FreshBooks also offers new user discounts. You can also score a discount with annual pricing. FreshBooks offers a 30-day risk-free guarantee, plus a 30-day free trial to try out the software.

FreshBooks supports multiple users, but it comes at an additional cost. You can also add FreshBooks Payroll and FreshBooks Payments to accept online payments.

Xero VS FreshBooks: Features Comparison

Feature	Xero	FreshBooks
Invoicing
Inventory Management
Fixed Asset Management
Budgeting
Accounts Payable
Proposals
Payroll	Gusto Integration
Tax Support
Reports	55+	20+

Both Xero and FreshBooks have the standard features you would expect to see in good accounting software. Xero does have the edge when it comes to advanced features, although FreshBooks has a few tricks up its sleeve with its proposals feature and built-in payroll.

Here’s a detailed comparison of what to expect in terms of features from Xero and FreshBooks.

Invoicing

Xero only has a single invoice template, but you can also create your own fully customized invoices.

Some of Xero’s time-saving invoice automations include automatic reminders, recurring invoices, bulk invoices, and invoice replication.

FreshBooks has two customizable invoice templates. One notable feature is a built-in chat option to communicate directly with your customers. FreshBooks is also compatible with 170+ currencies and 16 languages, making it a great option for international invoicing.

Automated reminders, recurring invoices, and other automations are also available but are reserved for subscribers of the Plus and Premium plans.

Inventory Management

Xero has an inventory management feature that lets you add products or services. You can add basic item information, internal notes, and other information. Xero also lets you track inventory.

FreshBooks has a basic items list that lets you add products and services, as well as basic information like item descriptions. There is no inventory tracking or advanced inventory features.

Fixed Asset Management

With Xero, you can track and manage your fixed assets. This feature lets you import information on your assets, calculate depreciation, manage disposals, and run reports.

A comparable feature is not available from FreshBooks.

Budgeting

Xero helps you track your finances with built-in budgeting. This feature can be used to create three-month budgets up to budgets for the next two years.

Unfortunately, FreshBooks does not have a budgeting feature.

Accounts Payable

Xero has an accounts payable feature that makes it easy to create and manage your bills right within the software. You can simplify the process by setting up recurring bills, too.

Unfortunately, FreshBooks does not have an accounts payable feature that allows you to manage your bills.

Proposals

FreshBooks has a well-developed proposal feature for Plus and Premium plan subscribers. FreshBooks users can create proposals that include sections such as the scope of work, pricing, and terms. Proposals on FreshBooks can also quickly and easily be converted to invoices.

Xero does not have a similar feature.

Payroll

FreshBooks has built-in payroll that provides unlimited payroll runs, automatic payroll tax filing, and automatic payroll tracking.

Xero doesn’t have built-in payroll, but it does integrate with Gusto payroll software.

Tax Support

With FreshBooks, you can store your tax information and prepare 1099s and W-2s.

Without built-in payroll, Xero no longer offers tax support.

Reports

Xero has a number of reports to help you track the financial health of your business.

FreshBooks has a very limited number of reports that generally cover the financial basics.

Integrations

Xero outshines FreshBooks (and other competitors) in terms of integrations, offering over 1,000 integrations in the Xero App Store. API is also available for developers.

While FreshBooks can’t top that, it still offers a respectable 100+ integrations with popular options like Gusto, Basecamp, and Asana. API is available for developers.

Customer Service

One area where Xero falls a little short is in its customer service and support. Most notably, the lack of phone support may pose a problem for many users. While Xero does offer email support, response times have increased from a few hours to a day or longer.

Users who value good customer service and support may be disappointed in these issues, although Xero does offer self-service options such as a help center and video tutorials.

On the other hand, customer service is where FreshBooks really excels. The company has even won awards for its exceptional customer service.

FreshBooks does offer phone support and responds quickly. Emails are also answered promptly. Customer service reps are knowledgeable and friendly. You can also find the answers you’re looking for through FreshBooks’ other resources, including a help center, free webinars, and a company blog.

Which Is Best For My Business: Xero Or FreshBooks?

Xero and FreshBooks have each attracted millions of business owners looking for accounting software solutions. However, there are very distinct differences that make these options suitable for different types of businesses.

Xero’s advanced features, numerous integrations, and support for unlimited users make it a top choice for mid-to-large-sized businesses that are willing to put in the time and effort to learn the software.

FreshBooks is a better fit for smaller businesses that want easy-to-use software equipped with basic features such as invoicing.

Choose Xero If …

You run a growing business that needs scalable accounting software
You don’t want to pay extra for additional users
You need advanced accounting features
You rely on integrations with other business software

Choose FreshBooks If …

You’re a freelancer or run a service-based or small business
You want intuitive, easy-to-use accounting software
You prioritize invoicing, time tracking, and customer support
You don’t need advanced accounting features like inventory management

If you’re torn between the two, make sure to take advantage of the 30-day free trials that each offers. You can get hands-on with the software without making a commitment to find the option that works best for you.

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Erica Seppala

Editor & Senior Staff Writer at Merchant Maverick

Erica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.

View Erica Seppala's professional experience on LinkedIn.