Xero is cloud-based accounting software for small businesses. Along with basic accounting capabilities, it includes invoicing and payroll abilities. Like QuickBooks Online, it can work well as general-purpose law firm accounting software. It lacks specific trust-accounting features, though.
Invoicing. Xero allows you to create customizable invoices that allow clients to pay directly from the invoice. Clients can pay online instantly using credit and debit cards or PayPal. You can also automate invoice notifications to alert you when receivables are overdue.
Payroll. If you have employees, Xero’s payroll feature lets you manage employee working hours, send checks by direct deposit or check, and file taxes. Employees can submit timeslips and request time off through Xero. They can also log in securely to view their own payroll information, something often unavailable to employees in smaller firms.
Dashboard. When it comes to keeping an eye on your firm’s finances as a whole, Xero’s dashboard and bank reconciliation features are useful. The dashboard lets you see all bank accounts at a glance, including outstanding balances for credit cards. Keep an eye on expenses, unpaid invoices, and customizable data sets all in one place. With bank reconciliation, you can automate transaction matching by creating custom rules. You can also bulk import transactions by using cash coding.
Expenses. You can track expenses with Xero and approve or deny reimbursements for employees’ business expenses with a click of a button. You can record and store receipts in Xero, even from their mobile app while you’re on the go. You can also assign billable expenses directly to clients as appropriate.
Other notable features include the multi-currency accounting capabilities, analytic reports, file storage, and contact-list creation tools. Xero also has an extensive library of how-to videos to help you better use the software and train your team.
Xero’s pricing is based on how many invoices you need to send and what features you’d like. All pricing tiers allow for unlimited users.
- The Starter tier costs $9/month and allows you to send 5 invoices and quotes per month, pay 5 bills, and reconcile 20 bank transactions. You can generate W-2 and 1099 forms, but you cannot do payroll or file taxes.
- The Standard tier, which is likely the one most solo and small-firm lawyers would use, is $30/month and allows for unlimited invoices and quotes, unlimited bank transactions, and payroll for up to 5 people. It does not include multi-currency support.
- The Premium tier is $70/month and gives you all the features of the $30 tier, plus payroll for 10 people (you can do payroll for up to 100 people for $180/month), and includes multi-currency support, which is likely not something you will need often.
All tiers also give you access to its iOS and Android apps.
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Things You Might Want To Know
Security. Xero has industry-standard data encryption, and backs up your account daily across multiple servers. It also encrypts your data when stored on its servers and when transferring your data between its own data centers while backing up or replicating your data. Zero also offers two-factor authentication. Physical access to the data centers is monitored 24/7 and Xero performs regular security audits.
Migration. Xero allows you to import data from other programs in both TXT and CSV format. It also allows you to import from a QuickBooks file format with Xero’s conversion tool, which converts US QuickBooks accounts from QuickBooks 2007 or later. It can automatically convert the current and previous fiscal year, and you can convert earlier years by purchasing one of Xero’s add-ons. Unfortunately, Xero cannot convert payroll information, closed purchase orders and quotes, or bill reference numbers.
Integration. Xero has a number of add-ons and integrates with over 600 other applications, including payment vendors like Square and PayPal, time tracking programs like Harvest, and office programs like Microsoft Word. You can also create custom integrations if there isn’t an integration for what you want. Xero also integrates with law practice management software like ActionStep and Clio, where you can track client invoices and expenses, then hand them off to Xero for accounting. Xero will also create custom integrations.
Mobile Apps. Xero has both iOS and Android apps, with the former boasting iPhone, iPad, and Apple Watch support. The apps are robust and have features well suited for people doing a lot of business away from the office. You can even scan and upload receipts and track expenses while out with clients.
Who Xero Is For
Xero is a good fit for firms looking for a feature-rich, all-in-one accounting software solution, particularly given its wide variety of integrations. It is also relatively inexpensive, particularly because it does not charge on a per-user basis. And if you are a productivity tinkerer/lifehacker type, Xero may very well appeal to you because of those add-ons and integrations. Remember, though, that the lowest tier does not include payroll or multi-currency support. (For what it’s worth, at Lawyerist, we switched our own books to Xero at the beginning of 2014, and we’re definitely a little happier with Xero than with QuickBooks online).