If you are a freelancer or a service business that lives on invoices, estimates and billable hours, pick FreshBooks: it is built around getting paid, with estimates and time tracking from its entry plan, proposals and client retainers from its mid plan, and phone and email support. Pick Xero if more than one person works in your books or if you invoice customers overseas, because every Xero plan includes unlimited users and basic inventory, and its top plan adds multi-currency and project tracking. Both now sell payroll as an optional add-on, so neither wins on that alone. The real split is how each one charges you to grow: FreshBooks by the clients you bill and the people on your team, Xero by the plan features you need, with a monthly invoice cap on its entry plan.
Plans and pricing checked October 2026, and every figure below is read live from our pricing database, the same data as the table and calculator above.
Xero vs FreshBooks pricing: billable clients against invoice caps
Xero's entry plan is $27/mo (Early), its mid plan $59/mo (Growing) and its top plan $97/mo (Established), each billed monthly with no contract and each with unlimited users. The entry plan caps how many invoices and bills you can raise in a month; the mid plan lifts the cap, and the top plan is where multi-currency and project tracking live. Sales tax, W-9 collection, 1099 management and basic inventory are on every plan, with an optional Inventory Plus add-on for more.
FreshBooks prices on a different axis. Its entry plan is $23/mo (Lite), its mid plan $43/mo (Plus) and its top plan $70/mo (Premium), with a quote-only Select tier above them. The plans are separated mainly by how many billable clients you can have: a low cap on the entry plan, a higher cap on the mid plan and no cap on the top plan. Every plan includes a single user, and each additional team member is charged per person. FreshBooks bills monthly or yearly and prices the yearly term below the monthly one.
The two ladders do not line up rung for rung. A consultant with only a handful of clients and no need for proposals or retainers can stay on FreshBooks' entry plan, while on Xero the same consultant moves up a rung once monthly invoices pass the entry cap; a small agency with several people in the books pays per seat on FreshBooks and nothing extra for seats on Xero. The comparison table on this page shows the current prices, and the calculator above folds your invoices, users and employees into one estimated monthly figure for each. The calculator does not ask for billable clients, so its FreshBooks estimate is the entry plan: check the client cap in the table against your own list before relying on it.
Who is each one built for
FreshBooks is Canadian and started life as an invoicing tool; the accounting came later. It is aimed at freelancers and service businesses, and shaped around one person or a small team who bill clients for their time: estimates that turn into invoices, time tracking that flows onto them, reminders when an invoice goes unpaid, and from the mid plan proposals and retainers for recurring clients. Behind that it runs double-entry reports and bank reconciliation, so it is a real set of books, but the ledger serves the invoicing rather than the other way round.
Xero is from New Zealand and is a general ledger first, aimed at everything from a sole proprietor to an established small business. Its entry plan can run one person's books, but its shape suits a business with more going on: several people reconciling, bills to pay as well as invoices to send, basic inventory on every plan with an optional Inventory Plus add-on, and a top plan that adds multi-currency and project tracking. New customers get free onboarding with a product specialist in their first months.
- Users included: Xero Unlimited, FreshBooks 1
- Accountant access: Xero Yes (free), FreshBooks Yes (Plus)
Xero vs FreshBooks payroll: both are add-ons now
Both sell payroll as a paid add-on rather than including it in the plan price, and it is available on every plan. Xero's is Xero Payroll, powered by Gusto, so pay runs happen inside Xero and post to the ledger without a separate login. FreshBooks' is FreshBooks Payroll. In each case the charge sits on top of the plan figure.
- Payroll add-on: Xero $36/mo + $6/emp, FreshBooks $40/mo + $6/emp
Put your headcount into the calculator above and the payroll line appears in both estimates; if you run payroll elsewhere, leave it at zero and compare the plans alone.
Sales tax, 1099s and multi-state selling
The compliance basics are on both, with a difference in depth. Xero applies sales tax and manages W-9s and 1099s on every plan, and handles multi-state tax through its Avalara integration, which can also file returns as a paid service. FreshBooks applies sales tax on invoices and reports 1099 contractor payments, but its multi-state handling is limited and it tracks tax rather than filing it.
- Sales tax: Xero Yes, FreshBooks Yes
- Multi-state tax: Xero Yes, FreshBooks Limited
- 1099 contractors: Xero Yes, FreshBooks Yes
- Tax filing: Xero Yes, FreshBooks No
Multi-currency, projects and inventory: how far each one scales
This is where Xero's ladder earns its place. FreshBooks can invoice in other currencies, but its multi-currency accounting is lighter than what Xero's top plan offers, and Xero carries basic inventory on every plan with an Inventory Plus add-on to grow into. Projects cut the other way at the bottom of the ladder: time tracking is part of what FreshBooks is, with hours flowing straight onto invoices, while Xero reserves project time and cost tracking for its top plan. Project profitability reporting sits on the top plan of each.
- Multi-currency: Xero Yes (Established), FreshBooks Limited
- Inventory: Xero Limited
- Project tracking: Xero Yes (Established), FreshBooks Yes
- Receipt capture: Xero Yes (Hubdoc), FreshBooks Yes (Plus)
- Support: Xero 24/7 online, FreshBooks Phone + email
Which one connects to AI assistants
Both ship AI inside the product. The difference is the route out: Xero publishes an official Model Context Protocol server, so an assistant that speaks MCP can be pointed straight at your Xero data, while FreshBooks' route runs through a third-party connector. On today's data Xero has the more direct path for anyone building AI workflows on their books.
- In-product AI: Xero Native (JAX), FreshBooks Native (AI categorization, receipt OCR)
- Agent route: Xero Native MCP (official), FreshBooks Via 3rd-party (Zapier)
Pros and cons for this matchup
FreshBooks wins on the invoicing workflow: estimates, time tracking and payment reminders are the product, proposals and retainers join them from the mid plan, and phone and email support come with it. Its limits are the billable-client caps, a single included user with every extra seat charged per person, lighter multi-currency accounting, limited multi-state sales tax and no tax filing.
Xero wins on reach: unlimited users on every plan, sales tax, 1099 management and basic inventory from the entry rung with an Inventory Plus add-on beyond it, multi-state tax and filing through Avalara, multi-currency and project tracking on its top plan, and an official MCP route for AI assistants. Its costs are the monthly invoice cap on the entry plan, project tracking only at the top, and online support rather than phone and email. Payroll is a draw: both sell it as a paid add-on.
The verdict
For a freelancer, consultant or small service business that bills for its time and works alone or with a helper or two, FreshBooks is the pick: the invoicing and time tracking it is built around are the work you actually do, and proposals and retainers are one rung up when you need them. Xero is the better ledger for a business with several people in the books, customers in other currencies, multi-state sales tax to manage or inventory that needs room to grow, and unlimited users is the feature that tips a growing team toward it. Both sell payroll as a paid add-on, so payroll does not decide this one. Run your invoices, users and employees through the calculator on this page, check FreshBooks' client cap in the table against your own list, then ask the question that does: in two years, will your accounting software be used by one person billing clients, or by a team running a business?