QuickBooks Online vs Xero for US Agencies: Which Handles Project-Based Billing Better?
Compare QuickBooks Online and Xero for agency invoicing, retainers, project profitability, time tracking, expenses, reporting, integrations and client billing workflows.
For an agency, the practical question is not simply which accounting platform has more features. The better fit depends on how you quote work, bill retainers, track employee and contractor time, manage project costs, collaborate with accountants and connect your accounting system to the rest of your software stack.
Project profitability
Both platforms can connect revenue and project costs, but QuickBooks offers a particularly extensive project-profitability and job-costing workflow.
Agency invoicing
Both support online invoicing and project-related billing. Your choice becomes more important when you need retainers, progress billing, time-based billing or complex approval workflows.
Software ecosystem
Integration quality matters as much as accounting features. Your CRM, project-management platform, payment processor and payroll tools should feed the accounting system cleanly.
Table of Contents
- What project-based billing means for an agency
- QuickBooks Online for agencies
- Xero for agencies
- QuickBooks Online vs Xero comparison
- Project billing workflow comparison
- Real-world agency cost scenarios
- Retainers, milestones and recurring revenue
- Project profitability and job costing
- Time tracking and billable hours
- Integrations and agency software architecture
- Cash flow and accounts receivable
- Security, access and accountant collaboration
- How to choose for your agency
- Frequently asked questions
What Project-Based Billing Means for a US Agency
Agency accounting looks simple until the first few dozen client engagements arrive. A creative agency may sell fixed-fee website projects, monthly retainers and hourly consulting at the same time. A digital marketing agency may combine recurring management fees with advertising spend, contractor costs and performance-based work. A software development agency may invoice a deposit, monthly milestones and final delivery.
That creates a much more demanding accounting workflow than simply sending an invoice and recording a payment.
The accounting system needs to answer questions such as:
This is why choosing between QuickBooks Online and Xero should begin with the agency's billing model rather than the accounting dashboard.
Think in workflows, not features
A project accounting platform becomes valuable when information flows from estimate or proposal → project → time and expenses → invoice → payment → reconciliation → profitability report.
If your agency has to export spreadsheets between each stage, the software stack is still creating administrative work even if the accounting application itself is powerful.
QuickBooks Online for US Agencies
QuickBooks Online has a particularly mature project-financial workflow for businesses that need to connect project revenue with labor, expenses and profitability.
QuickBooks Online Plus and Advanced support Projects for tracking income and costs associated with specific projects. QuickBooks also supports project profitability reporting, labor-cost tracking and progress invoicing.
For agencies, this can be useful when the project itself is the financial unit that management wants to monitor.
Where QuickBooks fits naturally
- Website design and development projects
- Marketing campaigns
- Consulting engagements
- Retainers with separate project work
- Fixed-price projects
- Time-and-materials consulting
- Contractor-heavy projects
- Agencies with detailed project-cost reporting
QuickBooks Online Plus is currently listed at a standard price of $140 per month and supports up to five users. QuickBooks Online Advanced is listed at $340 per month and supports up to 25 users. Promotional offers can temporarily reduce those prices, so agencies should compare the normal subscription price with the promotional price before building a long-term software budget.
QuickBooks Advanced also expands user permissions, custom reporting and workflow automation. That can become important when an agency has finance staff, project managers, executives and external accountants who need different levels of access.
If your agency is already evaluating its broader infrastructure, you may also want to review our guide to managed cloud hosting for US small businesses. Accounting software may be SaaS, but the websites, portals, APIs and client applications surrounding it still depend on reliable infrastructure.
Xero for US Agencies
Xero takes a similarly cloud-first approach but has a different product structure around project accounting. Its Established plan includes project time and cost tracking, project invoicing and project profitability capabilities.
Xero Projects lets agencies record time, expenses and other project costs and connect those details with invoicing. Agencies can create quotes, invoice fixed-price or time-and-materials work and review project financials against budgets.
This makes Xero particularly interesting for agencies that want accounting and project accounting to live closely together without building a large collection of separate financial tools.
Xero pricing matters for agencies
Xero's US Established plan is currently listed at $90 per month. Xero has announced that the US price will increase to $97 per month from October 1, 2026. Growing is scheduled to increase from $55 to $59 per month, while Early is scheduled to increase from $25 to $27 per month.
Xero also states that its pricing is in USD and excludes sales tax. Optional add-ons can create additional costs, so agencies should not compare subscription prices alone.
Important distinction for agencies
Xero's headline subscription price does not automatically tell you the total cost of running your agency's finance stack. You should also consider payment processing, payroll, expense management, time tracking, project management and any third-party applications required to complete your workflow.
QuickBooks Online vs Xero: Agency Comparison
The table below focuses on the capabilities that matter when an agency sells services rather than physical products.
| Agency requirement | QuickBooks Online | Xero | What the agency should consider |
|---|---|---|---|
| Project tracking | Projects available in Plus and Advanced | Projects available in Established | Check how your team creates, updates and closes projects. |
| Project profitability | Detailed project profitability reporting | Project profitability and project financial reporting | Both can connect project revenue and costs. |
| Progress invoicing | Supported from estimates | Project-based progress billing supported | Useful for milestone-driven client work. |
| Time tracking | Native time features plus QuickBooks Time options | Project time tracking | Compare how many tools your employees actually need. |
| Labor costing | Project labor-cost tracking | Project time and cost tracking | Critical for agencies selling staff hours. |
| Multi-currency | Available depending on plan and configuration | Multi-currency included in Established | Important for US agencies serving UK/EU clients. |
| User model | Plus: up to 5; Advanced: up to 25 | No per-user subscription fee on standard plans | Look at total workflow cost, not just seat price. |
| Third-party integrations | Large app ecosystem | Large cloud-accounting ecosystem | Verify the exact integration before migration. |
| Accountant collaboration | Strong accountant ecosystem | Cloud-first accountant collaboration | Ask your CPA or bookkeeper which system they already support. |
Feature availability can vary by plan, region, account configuration and product updates. Always confirm the exact configuration before purchasing or migrating.
Which Handles the Full Project Billing Workflow Better?
A better way to compare the platforms is to follow one client project from signed proposal to final payment.
| Workflow stage | QuickBooks Online approach | Xero approach | Agency question |
|---|---|---|---|
| Proposal | Estimates can become the starting point for billing | Quotes and project setup can establish expected work | Can sales handoff happen without retyping financial data? |
| Project setup | Create project linked to customer | Create project linked to customer | Can every engagement use the same naming structure? |
| Time | Track employee and contractor time | Track time against projects | Can billable and non-billable time be separated? |
| Expenses | Assign project-related expenses | Assign bills and expenses to projects | Can client costs be captured before invoicing? |
| Billing | Progress and project invoicing | Project-based invoicing | Can invoices match the contract? |
| Payment | Online payment options and reconciliation | Online invoice payment options and reconciliation | How quickly does payment information return to accounting? |
| Profitability | Project profitability reports | Project profitability and project summaries | Can managers see margin without spreadsheets? |
Real-World Agency Cost Scenarios
Subscription price comparisons become more useful when applied to realistic agency structures. The following scenarios are illustrative planning models rather than vendor quotes. They show how the economics change as an agency becomes more complex.
| Agency scenario | Typical team | Billing model | Financial complexity | What matters most |
|---|---|---|---|---|
| Small web studio | 3–5 people | Fixed projects + deposits | Low to medium | Simple invoicing and project margin |
| Growth marketing agency | 8–15 people | Retainers + campaign fees | Medium | Recurring billing, staff costs and client profitability |
| Development agency | 15–25 people | Milestones + time and materials | High | Time tracking, project costs and margin forecasting |
| International consultancy | 20–40 people | Retainers + hourly + international projects | High | Multi-currency, access control and integrations |
Scenario: a 10-person digital agency
Imagine an agency with 10 employees managing 25 active clients. Five clients are monthly retainers, 10 are recurring service accounts and the remaining clients are fixed-price or milestone projects.
The agency might have project managers entering project status, employees tracking billable hours, contractors submitting expenses and finance staff sending invoices. The accounting platform therefore becomes a central integration point rather than simply a place to record transactions.
In this environment, the difference between saving five minutes per invoice and saving five minutes across an entire workflow becomes significant.
Scenario: a 20-person development agency
A development agency with 20 employees can have dozens of active projects, hundreds of weekly time entries and substantial contractor expenses. A $25,000 project can look profitable at the proposal stage and become marginal after additional development hours, third-party services and change requests.
Project-level cost visibility therefore matters more than a simple monthly income statement.
Retainers, Milestones and Recurring Agency Revenue
Retainer accounting is one of the areas where agency workflows become more nuanced.
A client may pay $5,000 per month for digital marketing, $3,000 for SEO, $2,500 for website maintenance and additional fees for project work. The accounting system needs to distinguish recurring revenue from one-time project revenue.
Your chart of accounts, products and services, classes, projects or tracking categories should therefore be designed before you start migrating data.
Retainer-heavy agency
Prioritize recurring invoices, payment tracking, revenue categorization, client profitability and clean integration with CRM and payment systems.
Project-heavy agency
Prioritize estimates, project costs, billable time, contractor expenses, milestone invoices and project profitability.
QuickBooks Online's progress invoicing workflow is particularly relevant when an agency starts with an estimate and invoices the customer progressively as work is completed.
Xero's project workflow can also support fixed-price and time-and-materials invoices and progress payments, making it relevant for project-driven professional services businesses.
Project Profitability: Where the Comparison Gets Serious
Revenue alone can make an agency look healthy. Project margin tells a different story.
Consider a website project sold for $30,000. The agency budgets 180 internal hours at an effective cost of $45 per hour, plus $2,500 in contractors and $1,000 in project expenses.
| Project financial item | Illustrative amount |
|---|---|
| Client contract value | $30,000 |
| Internal labor cost | $8,100 |
| Contractor cost | $2,500 |
| Project expenses | $1,000 |
| Illustrative direct project cost | $11,600 |
| Illustrative gross contribution before overhead | $18,400 |
| Illustrative gross contribution margin | 61.3% |
Now imagine the project consumes another 80 hours because of scope changes. At the same internal cost rate, that adds $3,600 of labor cost.
The project may still be profitable, but its margin has changed materially.
This is why project accounting is valuable. It gives the agency a way to compare planned economics with actual economics.
Management question to ask every month
Don't ask only, “How much did we invoice?”
Ask, “Which client engagements generated revenue, consumed resources and produced the strongest contribution margin?”
QuickBooks Online provides project profitability reports that can include project margin, time costs and unbilled time and expenses. Xero's project tools similarly provide project financial information and profitability reporting.
Time Tracking and Billable Hours
Time tracking is critical for agencies that bill by the hour or use time as a profitability metric even when clients pay fixed fees.
A fixed-price agency still needs to know whether a $10,000 website took 80 hours or 180 hours.
Without that information, future proposals become guesses.
| Agency use case | Why time matters | Accounting implication |
|---|---|---|
| Hourly consulting | Time directly determines billable revenue | Billable time must flow accurately into invoices |
| Fixed-fee development | Time measures delivery efficiency | Labor cost affects project margin |
| Monthly retainers | Time reveals whether the retainer is underpriced | Compare actual effort with recurring revenue |
| Marketing campaigns | Time helps calculate client-level contribution | Combine labor and campaign expenses |
QuickBooks Online supports project time tracking and can use labor costs to help calculate project profitability. Xero Projects also supports project time and cost tracking.
The practical choice should depend on where employees already record time. If the team lives inside a dedicated project-management platform, forcing them to enter the same information twice can create unnecessary administrative overhead.
Integrations: The Accounting Platform Should Not Work Alone
Modern agencies rarely run their entire business inside one application. A typical stack might contain a CRM, proposal platform, project-management tool, payment processor, accounting platform, payroll service, cloud storage and communication tools.
That makes integration architecture one of the most important parts of the QuickBooks vs Xero decision.
| Business system | System of record | Accounting data passed downstream |
|---|---|---|
| CRM | Leads, opportunities and client relationships | Customer identity and contract context |
| Proposal software | Quotes and signed agreements | Customer, project and billing information |
| Project management | Tasks, milestones and delivery status | Billable hours or project status where supported |
| Accounting | Invoices, expenses, payments and financial records | Financial reporting and reconciliation |
| Payment processor | Customer payments | Payment and settlement information |
| Payroll | Employee compensation | Payroll expenses and related accounting entries |
QuickBooks provides an app marketplace covering areas such as customer management, invoicing, payments, project management, payroll, expenses and compliance. That can be useful for agencies that need to extend the accounting platform without replacing it.
Before selecting an integration, check whether it supports one-way synchronization, two-way synchronization, field mapping, historical data migration, error handling and duplicate prevention.
One rule for agency integrations
Every important piece of data should have one clear owner.
Your CRM should own customer relationships. Your project platform should own delivery. Your accounting platform should own financial records. Your payment processor should own transaction execution.
If you're also reviewing the infrastructure behind your agency's SaaS-connected websites and applications, see our guide to shared vs VPS vs cloud hosting for small businesses.
Agencies with larger cloud footprints should also understand AWS data egress costs, especially when client portals, analytics systems or media-heavy applications move large volumes of data.
Cash Flow and Accounts Receivable for Agencies
Profitability and cash flow are not the same thing.
An agency can have profitable projects while still struggling with cash flow because clients pay 30 or 60 days after invoice, projects require contractor payments before client collections, or retainers are billed after service delivery.
This is why invoice status, payment timing and accounts receivable should be visible to management.
Track
Outstanding invoices, invoice age, client payment history and upcoming cash requirements.
Segment
Separate recurring retainers, milestone invoices, one-off projects and reimbursable expenses.
Automate
Use reminders, payment links and reconciliation workflows to reduce manual finance administration.
Xero provides online invoicing and payment features, while QuickBooks supports invoice and payment workflows within its broader accounting platform. The best fit depends on the payment methods, bank connections and payment processor your agency already uses.
Security, Permissions and Accountant Collaboration
Financial software contains some of the most sensitive information in an agency: bank information, payroll data, tax records, client billing details and financial performance.
User permissions therefore matter as the agency grows.
A five-person studio can often operate with a simple administrator and accountant arrangement. A 25-person agency may need separate access for finance, operations, project management and leadership.
QuickBooks Online Plus supports up to five users, while Advanced supports up to 25 users and provides more granular access controls. Xero emphasizes a no-per-user-license model on its standard plans, but agencies should still evaluate the exact permissions and roles required for their workflow.
The objective is not to give everyone access to everything.
The objective is to give every person enough access to complete their job without unnecessarily exposing financial information.
If your agency sells hosting, website maintenance or cloud infrastructure as part of its services, our guide to white-label reseller hosting platforms for agencies can also help connect your operational and financial planning.
QuickBooks Online vs Xero for Common Agency Models
| Agency model | Key accounting requirement | QuickBooks Online considerations | Xero considerations |
|---|---|---|---|
| Web design agency | Fixed projects, deposits and milestones | Strong project tracking and progress invoicing | Strong project tracking and project invoicing |
| SEO agency | Monthly retainers and staff time | Useful project profitability and labor tracking | Useful project time and cost tracking |
| Software development agency | Time, contractors and change orders | Detailed project cost and profitability capabilities | Project tracking and cost visibility |
| Creative agency | Projects plus recurring client work | Flexible financial reporting and project tracking | Cloud-first accounting and project accounting |
| International consultancy | Multi-currency and cross-border clients | Evaluate multi-currency setup and plan requirements | Established includes multi-currency |
These are workflow comparisons, not universal recommendations. The right choice depends on the agency's accounting process, existing software, accountant preference and reporting requirements.
What About QuickBooks Online Advanced?
Growing agencies should not compare Xero Established only with QuickBooks Online Plus. QuickBooks Online Advanced is a different tier designed for organizations that need broader user access, more advanced reporting, workflow automation and expanded project capabilities.
QuickBooks currently lists Advanced at $340 per month before promotional pricing and provides access for up to 25 users. It also includes advanced project financial features, customized permissions, workflow automation and more extensive reporting capabilities.
That makes the comparison more useful when your agency has moved beyond a small finance team and needs accounting to serve operations, project management and leadership simultaneously.
How to Compare Total Cost of Ownership
Subscription price is only the first line in an agency's accounting budget.
| Cost category | Questions to ask |
|---|---|
| Accounting subscription | What is the standard monthly price after the promotion ends? |
| Users | How many finance, operations and accountant users are required? |
| Time tracking | Does the accounting plan include enough time functionality? |
| Project management | Will the agency still need a separate project-management platform? |
| Payroll | Is payroll native, integrated or provided by another application? |
| Payments | What transaction fees apply to customer payments? |
| Automation | Will an automation platform be needed to connect the stack? |
| Migration | How much time will historical data cleanup and migration require? |
| Accounting support | Will your accountant charge more to work in an unfamiliar platform? |
For a broader look at how technology choices affect small-business infrastructure budgets, see our Cloudways vs Hostinger cloud performance comparison.
A Practical Selection Framework for Agency Owners
Instead of starting with a feature checklist, score your own workflow against these questions.
Billing complexity
Do you invoice deposits, milestones, recurring retainers, hourly work and reimbursable expenses?
Project complexity
Do managers need to compare estimated project costs with actual labor and expenses?
Team size
How many people need accounting access today, and how many will need access in two years?
International work
Do you invoice customers in GBP, EUR, AUD or other currencies?
Integration requirements
Which CRM, payment, payroll and project-management applications must exchange data with accounting?
Accountant preference
Does your CPA, bookkeeper or fractional CFO already have a preferred workflow?
The answers will usually narrow the field much faster than reading dozens of feature pages.
Migration Checklist: Moving an Agency to QuickBooks or Xero
If you're changing accounting platforms, avoid treating migration as a simple data import.
The test-month approach is particularly useful for agencies with active projects. Run both systems in parallel long enough to confirm that invoices, payments, expenses and project reports reconcile correctly.
How This Fits Into a Modern SMB Software Stack
Accounting software should not become an isolated application. It should be one layer of the agency's broader cloud architecture.
| Layer | Primary purpose | Example data |
|---|---|---|
| CRM | Sales and relationships | Leads, opportunities, contacts |
| Contracts | Commercial agreements | Scope, terms, signatures |
| Project management | Delivery | Tasks, milestones, workload |
| Accounting | Financial record | Invoices, bills, expenses, payments |
| Payments | Transaction execution | Card, ACH and other payment events |
| Payroll/HR | People and compensation | Payroll, contractors, benefits |
| Analytics | Management visibility | Margin, revenue, utilization, cash flow |
This architecture is especially important for agencies approaching 20–50 employees. At that point, manual spreadsheet transfers can become a hidden operating cost.
You can explore the broader technology architecture in our SMB Software Stack hub, which connects accounting, payments, CRM, contracts, payroll and other operational software into one content cluster.
QuickBooks Online vs Xero: Questions to Ask Before Switching
Can we track profitability by client?
If the answer is no, determine whether you need a project-accounting integration or a different accounting plan.
Can we see unbilled work?
This matters for hourly agencies and fixed-price projects where internal labor is the primary delivery cost.
Can our accountant work efficiently in the platform?
A technically capable accounting application can still create operational friction if your finance partner has no established workflow for it.
Can our CRM and project system integrate cleanly?
Check actual integrations rather than relying on generic “integrates with” claims.
What will we pay after introductory discounts?
Always build the agency budget using standard pricing rather than temporary promotional pricing.
QuickBooks Online vs Xero for US Agencies: The Practical Takeaway
QuickBooks Online and Xero can both handle important parts of a project-based agency billing workflow. The meaningful difference comes from how your agency operates.
QuickBooks Online is particularly relevant when detailed project profitability, labor costing, progress invoicing, broader financial workflows and a large integration ecosystem are central to the business. QuickBooks Online Plus provides project profitability features, while Advanced expands the user, reporting, workflow and project-financial capabilities for larger teams.
Xero is particularly relevant for agencies looking for a cloud-first accounting platform with project tracking, project costs, time, invoicing and profitability functionality integrated into its Established plan. Its no-per-user-license model can also make the subscription structure easier to evaluate for growing teams, although agencies should account for add-ons and the announced October 2026 US price changes.
The most useful decision is therefore not “Which accounting platform is universally better?”
Instead, map your agency's actual workflow: proposal → project → time → expenses → invoice → payment → reconciliation → profitability. Then choose the platform that requires the fewest manual handoffs while giving your finance team the reporting and controls it needs.
Frequently Asked Questions
Is QuickBooks Online or Xero better for a US agency?
Both can support US agencies. The more appropriate platform depends on project complexity, billing models, user requirements, integrations, accountant preference and reporting needs. QuickBooks Online places strong emphasis on project profitability and job costing, while Xero Established includes project time, cost, invoicing and profitability functionality.
Can QuickBooks Online track agency project profitability?
Yes. QuickBooks Online Plus and Advanced support Projects for tracking project income and costs, and QuickBooks provides project profitability reporting. Labor costs, expenses and other project transactions can be incorporated into project financial analysis.
Can Xero track project profitability?
Yes. Xero Projects can track project time and costs and provide project profitability information. Xero states that Projects is included in the Established plan.
Can QuickBooks Online create progress invoices?
Yes. QuickBooks Online supports progress invoicing from an estimate, allowing an agency to invoice portions of a project as work progresses.
Can Xero handle fixed-price and time-and-materials projects?
Yes. Xero's project accounting workflow supports fixed-price and time-and-materials invoicing, along with project time and cost tracking.
How much does QuickBooks Online Plus cost?
QuickBooks currently lists the standard price of QuickBooks Online Plus at $140 per month, with a temporary promotional offer shown on its US website. Promotional pricing should not be treated as the long-term subscription cost.
How much does Xero Established cost in the US?
Xero currently lists Established at $90 per month and has announced that the US price will increase to $97 per month from October 1, 2026. Prices exclude sales tax and optional add-ons.
Does Xero charge per user?
Xero's US pricing pages state that its standard plans do not have per-user subscription fees. Agencies should still review the specific plan, add-ons and feature requirements before calculating total cost.
Should an agency use its accounting software as its project-management system?
Not necessarily. A common architecture is to use dedicated project-management software for delivery and the accounting platform as the financial system of record. The important requirement is reliable synchronization between the systems.
What should an agency measure besides revenue?
Useful metrics include project gross margin, utilization, billable hours, unbilled time, accounts receivable, average payment time, contractor costs and revenue by client or service category.
Official Product Resources
For current plan details and feature availability, review the official product pages before purchasing:
Product pricing, feature availability and promotional offers can change. Confirm the current vendor terms before making a purchasing or migration decision.