MYOB Essentials Accounting vs Xero Review – Which is Best for Micro-Business?

Accounting Software

Online accounting has certainly picked up momentum. Accounting software companies are continually improving and releasing programs in the battle to capture the SME market in online accounting. In this review, we compare the entry-level cloud programs offered by MYOB and Xero.

MYOB Essentials Accounting is an updated and rebranded version of MYOB LiveAccounts. Priced at $29 per month, MYOB Essentials has unlimited transactions, bank feeds, unlimited customer invoicing, supplier bills and unlimited users. At time of writing it also includes payroll for unlimited employees but this will soon be sold separately.

Xero’s Starter edition costs $25 per month and includes bank feeds, unlimited users, payroll for one employee, 20 bank transactions per month, five customer invoices per month and five supplier bills per month. Xero’s Standard edition, which costs $50 per month, adds unlimited bank transactions, invoices and bills and payroll for up to five employees.


MYOB Essentials Accounting dashboard is simple and easy to use. It relies on the traditional MYOB style with tasks along the top menu bar which are easy to select. It gives you snapshots of Money In, Money Out, and Bank balances at a glance. With the click of an arrow you can see all the bank/credit accounts and balances of each.

MYOB Essentials Dashboard
MYOB Essentials Dashboard

Xero’s graph-based dashboard is attractive. It can be tailored to include the preferred accounts you wish to see. Users can click on the menu bars of each graph to drill down for further information too. The Xero menu screen has tasks listed under tabs which navigate to other areas of the application.

Xero Dashboard
Xero Dashboard

Bank Feeds

MYOB uses its BankLink service to provide reliable and secure feeds. BankLink, a 25-year-old financial data aggregator acquired by MYOB, has a team of data accuracy specialists that review the feeds using internal processes. Once checked they are uploaded into the MYOB file.

Xero uses two types of feeds. Xero has established relationships with most of the major banks and imports bank feeds directly. For other financial institutions Xero uses a third-party provider, Yodlee. Yodlee requires the user to provide their online bank credentials to Xero. Yodlee automatically logs into the business’s internet banking account, copies the transactions and sends them to Xero.

Bank Rules

Bank rules are very easy to use in MYOB Essentials, however they are quite basic. There is no separation between deposit/withdrawal types and not enough allocation rules to avoid errors or to capture enough information.

Xero’s bank rules are comprehensive and allow up to seven rule conditions for matching transactions. This increases the accuracy in finding matching transactions in the live bank feed. It takes a few goes to get it working but then it works well.

Bank Reconciliations

MYOB Essentials allocates transactions to accounts in the Bank Transaction screen. Transactions will auto-match if you have bank rules set up. When you are ready to finalise your bank reconciliation, you go to the Bank Reconciliation screen. At this point, the balance should agree to the closing balance on your physical statement. The statement balance and your MYOB balance are also on this screen.

Bank reconciliation in Xero requires you to approve (OK) all transactions matched to bank rules or invoices and bills. Transactions with bank rules automatically match and adjust your calculated statement balance. Xero has running statements and cashbook balances on screen so you can see what your balance is at any time. Xero advises users to check the balance in Xero against physical statements as there are sometimes duplicate or missing transactions.


Neither MYOB Essentials Accounting nor Xero have inventory tracking. Both systems can create a list of item codes for sales and purchases, but there is no record of inventory quantity kept on hand. Both systems have third-party products available for more advanced inventory requirements. (MYOB AccountRight Live also has inbuilt inventory tracking.) So both products are on par in this area.


MYOB Essentials Accounting has unlimited invoices. Invoicing is nicely laid out with a drop-down menu to select the customer or you can create customers on the fly with all details including name, address, etc. Essentials also offers quotes.

Xero Starter allows only for five sales invoices and five bill transactions per month. Xero Standard ($50 per month) gives you unlimited invoices and bills. When entering invoices, adding a new customer/supplier does not allow for the recording of address, contact and other details. There is no drop down to select the customer from a list but when you start typing, the customer name appears.


Payroll for Essentials Accounting allows for unlimited employees at present.  This will change in the latter part of the year when payroll will be sold as an optional extra. Payroll is easy to use and follows a three-step process. Just follow the prompts.

Xero Starter allows for only one employee, while Xero Standard ($50 per month) allows for up to five employees. You have to purchase Xero’s Premium packages for more employees – Premium10 ($60) for up to 10 employees, Premium 20 ($70) for up to 20 employees and Premium 50 ($80) for up to 50 employees. One feature I love in Xero is the employee portal where staff can enter timesheets, apply for leave and view payslips online.

A pain point with Xero payroll is the lengthy process to raise a draft bill after you post your payrun, approve then authorise, then apply separately to a multi-payment on the bank feed.

Xero payroll
Xero Payroll


MYOB Essentials Accounting has a very basic card listing of customers and suppliers.

Xero has a more comprehensive card listing allowing for default print invoice templates, payment terms and tax code default by card.


MYOB Essentials and Xero users can invite accountants, bookkeepers and advisers into their file to collaborate with their client.

In Xero, accountants can also publish end of year reports straight from the software in the correct format.

Add-on Programs

MYOB Essentials recently added the ability to connect to third-party programs. The first bunch of add-on programs include Shoeboxed, ServiceM8 and SmartJobs.

Xero has a vast array of third-party products that integrate with it. Add-ons include Unleashed, Vend and Re-Leased to name a few.


MYOB has an online library of support notes, phone support, a community forum and live chat. There is also dedicated support for MYOB partners.

Xero has a community forum, but it does not have a phone support line. There is a good online self-help Q&A site and 24/7 email support.

Other Benefits

Inter-company accounts: Xero To Xero files makes it easy to deal with inter-company transactions.

Documents: Xero allows you to attach documents and photos against transactions, invoices and bills. Xero Starter gives you 1GB storage and Xero Standard gives you 5GB.

MYOB PayDirect: PayDirect allows smartphones to take payments which then update the software instantly so no more waiting for payments – handy for tradespeople on the road. This is in pilot stage for Essentials Accounting but will be available later in the year.

MYOB PayDirect
MYOB PayDirect


At the entry level, Xero is an appealing and easy to use program. Its main problem is the severe restrictions that are placed on the number of transactions that can be used per month in the Starter package. The next edition, which is closer to MYOB Essentials in features, costs double the price.

MYOB Essentials Accounting has no restrictions on the number of transactions, so would be suitable for a business that has grown beyond the micro stage.

This review was written by Pam Madytianos, director of accounting software consultancy 2 Peas and Bookkeepers4U, a bookkeeping agency accredited in MYOB, Xero and QuickBooks. 2Peas was the MYOB Bookkeeping Partner of the Year in 2013.

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