Xero vs Square: The Smarter Choice for You

Running a business means making smart decisions, especially when it comes to organizing and reconciling your financial data.

If you’re stuck between handling payments and sales data and simultaneously get access to detailed financial management and reporting, you need tools that allow you to create a complete financial workflow from transaction to tax filing.

Two such tools are Xero and Square.  

Remember, choosing between Xero vs Square goes beyond picking a software. It’s about setting up the financial system your business will rely on. 

Xero gives you detailed accounting features, while Square focuses majorly on providing easy payment solutions and simple bookkeeping. 

This guide breaks it all down, so you can choose which tool fits your business best and discover how Webgility helps you get the most from both.

Overview of Xero and Square

Before diving into a detailed comparison, let's understand what each platform does and their core purposes in the ecommerce world:

What is Xero?

Xero is a cloud-based accounting platform built for streamlining financial management for businesses of all sizes. It offers powerful tools for:

• Invoicing and billing
• Bank reconciliation
• Financial reporting and analytics
• Inventory tracking
• Multi-currency support

Xero is mainly used by accountants/bookkeepers, SMBs, merchants, and ecommerce businesses who require a clean, scalable solution for managing finances.

What is Square?

Square is primarily known for its payment processing and point-of-sale (POS) systems. It provides:

• Credit/debit card processing
• Square POS and hardware for storefronts
• Tools like Square Invoices, Square for Retail, and Square Appointments
• Built-in inventory and staff management features

Square is designed for physical businesses such as retailers, restaurants, and service providers that need fast, easy, all-in-one commerce solutions.

Also read: Best Accounting Automation Software to Watch Out for in 2025

Xero vs Square: Core features comparison

Now that we understand what each platform offers, let's examine how Xero and Square stack up against each other across the most critical business functions:

1. Payment processing

Payment processing plays an important role in operating any business, whether you're collecting payments online, in-store, or on the go. Here’s how Square and Xero differ in their approach:

Verdict:

• Choose Square if you want a turnkey payment system with POS and hardware bundled in. Ideal for retail stores, restaurants, and service businesses
• Opt for Xero if you already use a particular payment processor or want to have more options to collect and monitor payments. Built especially for service-based or B2B invoicing and streamlining bookkeeping workflows

2. Accounting & bookkeeping

Accurate bookkeeping and robust accounting practices are important for compliance, financial insight, and business growth. While Xero and Square both offer financial tracking features, they serve different roles:

Verdict:

• Choose Xero if you need complete accounting functionality or require detailed reporting and regulatory compliance
• Choose Square if you're primarily looking for simple sales tracking and plan to integrate with a dedicated accounting system later (such as Webgility for automation)

3. Inventory management

Whether you sell products online, in a physical store, or through multiple channels, managing inventory across platforms is key to running operations and staying profitable. Let’s look at how Square stacks up against Xero in handling inventory:

Verdict:

• Pick Square if you want a real-time stock management tool. It integrates with your POS and ecommerce platforms, helps with physical sales, and comes with built-in alerts

• Choose Xero if you're primarily tracking inventory for accounting purposes, or you operate a low-complexity product-based or service-driven business

Pro tip: Use Webgility to connect Square's advanced inventory features with Xero’s accounting tools. This setup helps to automate inventory sync, keep your books accurate, prevent overselling, forecast demand, and improve fulfillment.

4. Integrations 

A platform’s integrations define how well it fits into your overall tech stack. Xero offers broad flexibility with hundreds of third-party apps, while Square provides a tightly integrated suite of in-house tools for a more streamlined experience.

Verdict:

• Choose Xero if you need a flexible, customizable platform that works well with a wide range of business apps and grows with you

• Choose Square if you like a simple, all-in-one system where everything is ready to use with minimal set up needed

Xero vs Square: Pricing breakdown

Let’s break down the pricing for Xero and Square, including plans, fees, and what’s really included:

Hidden costs to consider:

• Xero: Payment processing fees from third-party providers, potential add-on app subscriptions

• Square: Hardware costs, premium feature subscriptions, and higher processing fees compared to some competitors

Verdict: 

• For accounting-focused businesses, Xero provides exceptional value with its comprehensive financial management tools. 

• Square offers excellent value for businesses prioritizing payment processing and POS functionality, though the total cost can increase with processing volume.

Xero vs Square: Ease of use & setup

How quickly you can get started and stay productive matters. Here's how Xero and Square compare in setup, usability, and support:

When to choose Xero vs when to choose Square?

Deciding between Xero and Square comes down to what kind of business you run, what financial tools you need, and how complicated your operations are. Take a look at which scenarios fit each platform and how Webgility makes them even better:

When to choose Xero:

• You need advanced financial management
  If your business deals with complex financial data, like multi-currency transactions, accrual-based reporting, or detailed ecommerce cash flow forecasting, Xero provides the tools to manage it all seamlessly
• You rely on an accountant or bookkeeper
  Xero is built with professionals in mind. It enables easy collaboration with accountants by accessing your records, creating reports, and keeping you compliant without swapping files back and forth.
• Your business has complex accounting needs
  From managing multiple revenue streams and departments to preparing for tax season with precision, Xero handles nuanced accounting tasks that go far beyond spreadsheets.
• Inventory and app extensibility needs
  Xero is best for businesses that need to extend their capabilities with specialized inventory, ecommerce, CRM, or job management apps from a broad marketplace, especially if you sell across multiple channels.
• You want robust financial reporting and analytics
  Xero offers customizable reports (profit & loss, balance sheet, budgeting, cash flow) with real-time data, visualization tools, and the ability to segment by business unit, project, or location for granular insights and better decision-making.

Note: Choose Xero for advanced accounting and financial oversight, especially with professional bookkeeping needs or complex business structures. 

Also read: How to Get Clean Books Automatically With Xero Automation

When to choose Square:

• You want a simple POS and payment solution
  Square lets you seamlessly take payments in-person, online, and via mobile, with unified records and real-time reporting, which makes it ideal for omnichannel sellers.
• You want fast and easy setup
  Square is plug-and-play, allowing even non-technical users to get up and running with minimal setup—perfect for startups, pop-ups, and temporary events.
• Low, predictable transaction fees are important
  Square’s transparent, flat-rate pricing helps small businesses avoid surprises or negotiations with merchant processors.
• You prefer a native, integrated ecosystem
  Square offers not just POS and payments, but also payroll, loyalty programs, ecommerce, email marketing, and inventory- all integrated within a single suite.

Note: Opt for Square if you prioritize simple, intuitive payments and POS with easy setup.

When to choose Webgility?

• You want the best of both worlds:
  Webgility connects Square’s seamless POS and sales platform with Xero’s advanced accounting features, enabling you to unify operations and financials. It bridges in-store, online, and marketplace transactions directly into your accounting system, reducing operational silos
• You want to combine Square’s ease of sales with Xero’s powerful accounting
  Webgility syncs orders, fees, taxes, and payouts directly into Xero, so your books reflect reality, without duplication or delays
• You're tired of manual reconciliations and spreadsheet work
  Stop downloading reports, matching transactions, and fixing errors. Webgility automates your back office, freeing your team from repetitive tasks
• You need real-time, accurate, automated financial data
  With daily syncing and order-level detail, you get audit-ready books and financial clarity across all your channels, without lifting a finger
• You need advanced workflow customization:
  From customizable sync preferences (order-level vs summary, scheduling, mapping) to support for sales tax, COGS, and multi-currency, Webgility offers granular control to adapt automation to your exact business requirements

Note: Choose Webgility if you are an omnichannel seller, ecommerce business owner, or any in-store owner using Square for sales and Xero for accounting and wanting to scale without adding headcount. 

Xero vs Square: Pros and cons summary

Here's a deeper look at the pros and cons of each:

Xero advantages:

• Comprehensive double-entry bookkeeping, advanced reporting, and professional-grade financial management tools
• Customize business solutions through more than a 1000 app integrations
• Detailed financial reports and customizable dashboards provide valuable business insights
• Supports multiple currencies, making it great for global businesses or companies handling foreign transactions

Xero disadvantages:

• Additional setup and costs for payment processing capabilities
• Requires basic accounting knowledge and time investment to master
• Using premium tools and external add-ons might raise overall expenses
• Businesses needing point-of-sale functionality need to integrate third-party solutions

Square advantages:

• Integrated payment processing, POS, and basic business management in one platform
• Minimal learning curve with intuitive interfaces designed for quick adoption
• Industry-leading POS functionality with reliable hardware options
• Clear, flat-rate processing fees with no hidden costs
• Gives 24/7 phone help from well-informed support team

Square disadvantages:

• Simple bookkeeping features might not handle more advanced accounting demands
• Processing rates can be higher than some specialized payment processors
• Fewer options for customizing reports, workflows, or integrations
• You get the most benefit when using Square's built-in tools instead of top-tier standalone alternatives

Final Verdict: Xero or Square (Which is better)

Both Xero and Square serve distinct but complementary purposes. 

Choose Xero if you need robust accounting capabilities, advanced financial management, and flexible integrations for complex or growing businesses. 

On the contrary, Square can be your go-to tool if you want a straightforward, integrated POS and payment platform that streamlines sales and customer-facing operations. 

Need both? Consider Webgility's integrated approach.

Webgility bridges both platforms, letting you use Square's commerce tools while maintaining Xero's accounting capabilities, without manual reconciliation work.

FAQs

Which companies use Square?

Square supports more than 4 million businesses. It works with everything from small coffee shops to big restaurant groups like Blue Bottle Coffee. It's popular among retailers, restaurants, and mobile businesses like food trucks.

Does Square offer full accounting features like Xero?

No, Square provides basic financial summaries and sales reports but lacks robust accounting features. You’ll need an accounting tool like Xero for full functionality.

What does Webgility do in the Xero–Square setup?

Webgility automates syncing Square sales, fees, taxes, payouts, and inventory directly into Xero in real time. It reduces manual bookkeeping, simplifies reconciliation, supports multi-channel and multi-currency, and provides accurate financial reporting.