When I started my Xero review, I had just done my own taxes with another tool and felt like I really understood what bookkeeping software actually needs to get right, what's a nice-to-have, and what just annoyed me about the one I was using. If you do everything at once instead of staying on top of your bookkeeping as you go, that's a lot of data to input into any tool. And especially as a solopreneur, it really matters how well a piece of software is built because time is scarce. With Xero, founded in New Zealand in 2006, I noticed straight away it's well thought out. In this Xero review, I'll tell you why, and I'll focus on the AI and small business side of things. It's not for nothing that my site is called AI tools SME!

Who is Xero for?

Xero is built for small business owners, and setting it up was genuinely simple, even for someone like me who isn't great with numbers. It works for solopreneurs, small teams, and businesses with employees alike, since it includes its own payroll function, and handling transactions in bulk shows it scales just as well for someone billing 5 clients a month as it does for someone billing 500. And you can invite collaborators to help with taxes once you can pay someone to take over this part of the business.

My Xero Review

How I tested Xero

I wrote this Xero review to add it to my accounting software comparison. I was curious to see how much the software can do on its own and with AI, which is a huge lever these days. I was hoping for a solid chatbot, maybe even an agent, and plenty of automation. But I also wanted to see the solid basics: how easy are bank reconciliation, invoice creation, and getting a clear profit-and-loss overview? How quickly can a busy business owner onboard with Xero? Is it possible to get everything setup in a day?

How My Xero Test Went

The very first steps with Xero were easy. After confirming a few essentials, like my fiscal year, I tried adding my bank connection. Xero supports a long list of bank feeds, but mine just wasn't one of them, so I uploaded it as a file instead. Quickly mapping the columns to the right Xero fields, so far no hiccups.

Then came the bank reconciliation, where I matched the transactions coming in from my bank against the bills and payments I had already uploaded. Xero did most of that matching by itself, and I mostly just confirmed what it suggested. This is where I started to feel slightly delighted, because I had fumbled around with this process way too much in the past, always wondering why other accounting software couldn't just add one and one together when it's so obvious as matching the same amount on the same date. Apparently this is an art Xero is capable of.

Xero AI and Automations

Starting out with the simplest possible mini-automation, I set up a few bank rules. This feature lets me tell Xero that a certain payee always means a certain thing, e.g. Webflow is always categorized as a website subscription. Most of my spending is on AI services and software subscriptions that repeat monthly, so this covered a big chunk of my transactions without me having to touch them ever again.

Next, I tried JAX, Xero's AI superagent, and asked it what it could do for me. One of the many examples it gave was creating an invoice, so I asked it to do exactly that and entered all the data through the chat. It created the invoice and saved it as a draft. The only hiccup was that JAX didn't add the client's address to the contact, so the invoice was missing it too. Adding the address once is an easy fix, though, and with the help of JAX, I can now prompt the invoice, preview it, and send it straight. I dive much deeper into JAX's functions in my blog 'Xero JAX: I Tested The Accounting Agent On 3 Real Tasks.'

❤️ Before we get started I'd like to thank you for using my affiliate links to sign up to free trials. You help me stay afloat and create more of this genuine content. ❤️

Xero Analytics: Also powered by AI

One really important feature is Xero Analytics, because it shows me where my small business actually stands. Well, a quick note before I dive in: I'm showing you Xero's trial data here, not my own. Sharing my actual business numbers with you felt a bit too naked for my taste.

The dashboard is fully customizable. The preset includes these widgets: net income, total income, total expenses, gross profit margin, net income margin, operating expenses, bank accounts, debtor days, and creditor days. What I really love is that each widget comes with its own AI feature. One click, and it generates a unique insight for your specific numbers.

There's also a deeper Overall Performance Insights report that zooms out. Instead of a single month, it looks across a full stretch of time (in my test, close to a year) and tracks how income, expenses, and margins moved month to month. It flags the swings, calls out where gross margin held up well, and points out patterns worth watching, such as debtor or creditor days stretching out.

I think this is really cool. I don't have an accountant myself, because my business is simple enough that I don't need one. But that also means I'm left on my own with it and I'm not sure where to focus more and where to spend less, so I really like these AI features in Xero.

What I Like About Xero

AI not just in the marketing
As mentioned above, I'm a real fan of the AI features in Xero, which either help me do less or help me understand more. The company has done a great job adopting the newest technology. JAX, which I'd call an accountant agent, is clever and genuinely helpful.

The small automations add up...positively!
Individually, none of these are mind-blowing, like bank rules that categorize a recurring payee for you or suggested matches on incoming transactions. But my accounting isn't one big task, it's a hundred small repetitive ones. Xero chips away at most of them. Thinking back to doing my taxes recently, the bank rules alone would have saved me hours on categorizing.

Great navigation and dashboard
Xero shows me batches of transactions at once instead of making me open each entry separately. That sounds simple, but this is just an example of a thought-out navigation and system setup. Especially practical when I need to fix the same mistake across many entries.

It's easy for someone who isn't an accountant
I set it up myself, without a bookkeeper and without the slightest accounting talent. Also nice, Xero launched a Xero Coaches program in the US this year, free one-on-one onboarding calls for the first 90 days of a new subscription. So if I'd get stuck somewhere, I would have someone to show me how to get unstuck.

Good reporting and analytics
Seeing who owes me and who I owe, without having to dig for it, is what I expect from accounting software. Xero delivers a solid dashboard and reporting tool and added an AI layer on top of it. On top of that, the Established plan adds reporting on cash flow forecasting, which is useful when you want to look ahead rather than just backward.

What I Didn't Like About Xero

The onboarding video didn't do much for me
Xero has a video guide that's supposed to walk you through getting started, but it plays more like a product promo than an actual tutorial. It tells you what Xero can do rather than showing you how to do it. If this was my first tango with bookkeeping software, I would have had to look elsewhere for advice on how to get started. A proper step-by-step video, one that goes through the real screens in order so you can follow along while you click, would be helpful.

It's a bit pricier than some competitors
Xero sits above other accounting software tools on price, so if you're comparing tiers on cost alone, it won't be the cheapest option on your list. That said, you also get more in the package, unlimited users on every plan being the obvious one, since most competitors charge per seat. For a small business with a bookkeeper or a second person in the books, that difference can close the gap pretty quickly. And I really don't want to mention AI again, otherwise I might end up sounding like Sundar Pichai at his Google I/O keynote 2023.

My Overall Verdict of Xero

Xero does what I want accounting business apps to do: it takes the repetitive parts off my plate and makes everything simple enough that I don't ever dread opening it. The setup took about an hour, the bank reconciliation largely handled itself, and the AI features actually delivered instead of just showing up in their ads.

What convinced me most wasn't any single feature, but how much the small things add up. JAX drafting an invoice from a chat message, bank rules for my recurring subscriptions, suggested matches on incoming transactions. Individually, they save a few minutes. Over a year of bookkeeping, they save a lot more than that.

It isn't the cheapest accounting platform out there, and the onboarding video left me with questions. But the time-saving aspect convinced me, and you get unlimited users across all tiers. As an entrepreneur, my time is worth a lot, and I prefer to pay 10 extra bucks if, in the end, everything runs smoothly, which Xero really does.

If you mostly want your accounting to run itself and you don't want to think about it much, Xero is worth a look. The 30-day free trial and quick onboarding give you enough room to import your own numbers and see whether Xero accounting software is for you.

Xero FAQs

How much does Xero cost?
Xero has three US tiers: Early, Growing, and Established. Xero pricing runs from $25 a month at the entry tier to $90 a month for Established. Every plan includes unlimited users, which is unusual for accounting software, since most competitors charge per seat. Xero offers discounts for new users. You can access an elevated offer via my link here.

Is Xero worth it for a small business owner or solopreneur?
Based on my Xero review, yes, if you want your bookkeeping to be modern and leverage the newest technology. Automations and AI handle the repetitive work, and unlimited seats on every tier means you're not paying extra to bring someone else in later.

Does Xero have a free trial?
Yes, Xero offers a 30-day free trial, so you can import real data and try the bank reconciliation before you pay anything.

What is JAX in Xero?
JAX is Xero's AI assistant, I would personally call it an agent. You can ask it questions about your books or have it complete accounting tasks for you, such as drafting an invoice based on information you type into the chat. Testing JAX was the part of this Xero review I was most curious about, and I think it's a great AI application within Xero.

Which Xero plan should I choose?
Pick based on invoice volume and whether you need payroll. The Early plan caps the number of invoices and bills you can enter each month, which works if you're sending a handful. 'Growing' removes those caps. 'Established' adds advanced reporting, multi-currency, and projections. Start lower and upgrade when you actually hit the limits.

What is Xero Payroll?
Xero Payroll is Xero's native payroll solution for US businesses, powered by Gusto's payroll engine and built directly into the platform, so you can run payroll and manage pay runs without leaving Xero or syncing a separate app.

What is Xero Bill Pay?
Xero Bill Pay is Xero's built-in accounts payable and receivable tool, powered by Melio, that lets you pay bills and collect customer payments directly in Xero without switching to a separate platform.

Is there a free plan on Xero?
No, Xero doesn't have a permanently free plan, but it does offer a 30-day free trial so you can test it with your own numbers before committing to a paid tier.

Do I need an accountant to use Xero?
No. I set mine up without a bookkeeper and without an accounting background. That said, Xero is widely used by accountants and bookkeepers, so if you do work with one, they most likely already know it. You can also invite collaborators into your account, and Xero can connect you with an accountant if you want one.

Can Xero connect to my bank?
Usually yes, through a bank feed that pulls transactions in automatically. My own bank doesn't offer one, so I imported statements manually as a file instead. Xero accepts several formats, and mapping the columns took not even a couple of minutes.

Does Xero integrate with other tools?
Yes. Xero has a large app marketplace with integration options for payment processors like Stripe, ecommerce platforms like Shopify, and payroll services like Gusto. There's also a Xero app for handling receipts and checking your numbers from your phone.

Where do I get help if I get stuck?
My first instinct would be to ask JAX, and in many cases it will be helpful and answer your questions. Otherwise, Xero Central is the main help center and can cover questions as well. Customer support is available through the platform. Xero also runs a Xero Coaches program in the US with free one-on-one onboarding calls during your first 90 days.