XERO or MYOB? Which is right for my business? Jan 9, 2024
Cloud-based accounting is a game-changer. Live, secure, and easily accessible data redefines how businesses operate. Banking is directly integrated into accounting systems, streamlining reconciliations and slashing error rates. With the right permissions, Advisors can tweak accounting records on the go, ensuring precision for specific needs. This tech has reshaped accounting, making it more efficient and accessible than ever before.
In Australia, when it comes to cloud-based accounting solutions, two names stand out: Xero and MYOB. As a budding entrepreneur diving into the business world, selecting between these platforms can be difficult; each offers a suite of features tailored to manage finances effectively. So in this blog, we’ll explore both solutions and how they can benefit your startup’s financial journey.
MYOB, founded in the early 1980s, aided small and medium-sized enterprises digitise their financial records. In the pre-cloud era, software purchases required physical installation without the luxury of automatic updates or remote access. MYOB evolved over the years to meet customer demands, eventually transforming into the sophisticated cloud-based solution it is today.
In 2006, Rod Drury founded Xero in Wellington, New Zealand, initially named ‘Accounting 2.0,’ signifying a reinvention of accounting into a decentralised, easily accessible format. Since then, Xero has expanded massively, reaching over 180 countries and boasting more than 3 million subscribers by September 2021.
It entered the market as a dedicated cloud-based “software-as-a-service”, its innovation and technological foresight marked it as a product ahead of its time.
What’s the difference?
From the perspective of cost, both solutions offer a monthly access fee; MYOB Lite at $12, Pro at $25, reaching up to AccountRight Premier for $80. Xero also offers varied tiers; the Starter Plan is $13.50, and the Ultimate 10 plan is $55. Both platforms offer flexibility as your needs evolve.
Regarding payroll, MYOB offers flexibility in its Lite and Pro options at $1.50 per person monthly, limited to a maximum of two employees. However, Account Right Plus and Premier accommodate unlimited employees without additional charges. Xero, on the other hand, structures its payroll differently across plans, ranging from handling one person in the Starter plan to accommodating up to 10 in the Ultimate 10 plan.
Bank Reconciliation and Invoicing
Bank feeds play a crucial role in ease of use. MYOB currently supports a wider range of bank connections than Xero, although Xero integrates with more modern financial service providers. Both platforms offer these feeds to ease data entry and minimise errors.
Bank reconciliation, an essential accounting process, varies between the two. MYOB’s Lite package provides room for two accounts, while other packages offer an unlimited number. In contrast, Xero’s Starter package lacks reconciliation features, which are only available in more advanced plans.
Invoicing capability differs between the platforms. MYOB enables the creation and dispatch of unlimited quotes and invoices. In contrast, Xero’s Starter package restricts the number of invoices one can generate.
Mobile app Difference and third-party integration.
Xero consolidates various functions into one app, offering a unified platform for viewing insights, managing invoices, and tracking cash flow. Conversely, MYOB features separate applications for different tasks like uploading receipts, creating invoices, and managing staff, providing additional functionalities for on-the-go business management.
The extent and compatibility of third-party integrations also diverge between Xero and MYOB. Xero’s extensive App Store boasts over a thousand integrations, while MYOB’s library offers several hundred, potentially limiting the integration options available for different business needs.
For reporting, MYOB’s Lite package offers only basic tax and management reports. Whereas Xero users can generate short-term cash flow and business snapshot reports, providing concise yet informative insights.
Inventory management, vital for businesses handling stocks, is available in MYOB’s AccountRight Plus and Premier packages. MYOB includes comprehensive inventory management, while Xero compensates for this feature through third-party apps. Reporting capabilities differ as well—Xero allows multiple reports to run simultaneously, catering to power users, while MYOB limits users to one report at a time with limited customisation.
Usability and Interface
Usability stands as a significant aspect in choosing between Xero and MYOB. Xero’s interface is often preferred by novices due to its user-friendly design, facilitating an easier start for those with limited accounting experience. On the flip side, MYOB’s more advanced payroll and inventory tracking features cater to skilled bookkeepers and accountants.
Which is Best for Your Business?
Each feature comparison shows how MYOB and Xero cater to different business requirements, from pricing structures to the depth of services offered in accounting processes.
Support systems differ, too—Xero relies heavily on online resources and community support, whereas MYOB offers business-day phone support, a potential lifesaver when in a pinch.
So, choosing between Xero and MYOB for your business accounting needs depends on a variety of factors. Xero’s user-friendly interface, scalability, and comprehensive reporting features make it a great fit for businesses that prioritise ease of use and require robust reporting capabilities. MYOB, on the other hand, stands out with its unlimited payroll options in higher-tier plans and superior inventory management features, catering well to businesses with more complex payroll and inventory needs. Both offer strong bank compatibility and invoicing features. Ultimately, the decision should be based on your specific business requirements, balancing cost-effectiveness with the functionality that best supports your business operations.
For assistance with defining what your needs are, or if you’d just prefer for someone else to take care of your books, Team SBA can help you out. Speak to us today.