Wave Accounting Review: Pros, Cons, Alternatives

For micro businesses and self-employed entrepreneurs who just need the essentials, this free accounting software is a great option.

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Wave Accounting is an ideal choice for micro-businesses with less than 10 employees, contractors, freelancers and other service-based businesses on a budget. This financial management platform is user-friendly and approachable — especially for those with no prior accounting experience — yet fully functional. It allows you to manage bookkeeping, accounting and invoicing in one place through internal integrations.

Although Wave’s invoicing capabilities make it a particularly appealing option for service-based businesses, this small-business accounting software does have its limitations. It doesn’t have the option to upgrade to a higher-tier plan with additional features, making it ill-suited for larger and fast-growing businesses.

Pros

Cons

  • Free.

  • User-friendly.

  • Unlimited income and expense tracking.

  • Unlimited invoicing with customizable templates and payment terms; dedicated invoicing mobile app.

  • Unlimited users with varying user permissions.

  • No additional plans to increase functionality (e.g., time tracking, inventory management).

  • No phone support; live chat support only available for paid services (Wave Payments and Payroll).

Deciding factors

Price

Free. The free Wave software includes accounting, invoicing and receipt scanning.

Maximum number of users

Unlimited.

Ease of sharing with accountants

Good. You can invite your accountant to Wave via email and designate their user role. Wave recommends “editor” permissions for bookkeepers and accountants, which gives full access to purchases, accounting and reports, as well as limited access to sales.

Scalability

Poor. Although Wave offers add-on products (e.g., Wave Payroll, Wave Money) that can be useful for businesses that want to bundle financial services, it does not provide more advanced accounting plan options outside of its free software.

Ease of use

Excellent. Wave is easy to use, even without prior accounting knowledge. The software has a clean design and intuitive user interface. Plus, the Wave Help Center offers a range of resources to help you get started and answer common questions you may have.

How does Wave Accounting work?

Getting started

You can sign up for Wave quickly and easily online. After providing a few basic details about your business — name, type, currency you use, address — you’ll have instant access to your free account.

Connecting your accounts

Once logged in, your main dashboard will show your cash flow, profit and loss, invoices, bills and other financial insights. From the dashboard (or the Banking menu on the left-hand side), you’ll be able to connect your bank and credit card accounts to automatically download and categorize your transactions.

When you reconcile your books, you’ll navigate to the “Reconciliation” tab within the Accounting menu. If you need to manually edit, add or remove any transactions, you can do so on the Reconciliation or Transactions pages. Next, you can add sales tax (if necessary), create customer profiles and customize your invoice templates.

Costs and features

Wave's free accounting software has no contract and no hidden charges.

Although accounting and invoicing are separated into two different product sections on the Wave website (shown similarly below), they don't require separate accounts. These solutions are integrated within your dashboard and you’ll access them both through your single Wave login.

Wave Accounting

Price: Free.

Features:

  • Unlimited income and expense tracking.

  • Customizable sales taxes.

  • Unlimited bank and credit card connections.

  • Exportable accounting reports and financial statements.

  • Dashboard monitoring for cash balances and invoice statuses.

  • Digital receipt upload and transaction management.

Wave Invoicing

Price: Free.

Features:

  • Unlimited invoicing.

  • Automatic payment reminders.

  • Ability to turn estimates into invoices once approved.

  • Ability to accept online credit card and bank payments within invoices using Wave Payments (fees apply).

  • Option for invoices and accounting to sync automatically.

  • Ability to create and send invoices, monitor payment statuses and receive notifications.

In addition to its free services, Wave has software that does come with fees, including Wave Payments and Wave Payroll.

Wave Payments

Payment processing pricing:

  • 2.9% plus 60 cents per transaction for Visa, Mastercard and Discover payments.

  • 3.4% plus 60 cents per transaction for American Express payments.

  • 1% per transaction ($1 minimum fee) for bank payments.

Features:

  • Accept credit card payments over the phone, online or in person.

  • Set up recurring billing with automatic payments.

  • Sync with your Wave account.

  • Receive credit card payments within two business days and bank payments in one to seven business days.

Wave Payroll

Pricing:

  • Full-service: $35 per month plus $6 per employee/independent contractor paid per month.

    • Federal and state tax payments will automatically be transferred on your behalf.

    • Available only in the following states: Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, Wisconsin.

  • Self-service: $20 per month plus $6 per employee/independent contractor paid per month.

    • Wave will calculate what you’ll owe in state and federal payroll taxes, but you are required to file the paperwork and submit payment.

Features in both versions:

  • Run payroll and pay employees with direct deposit.

  • Employee self-service: Employees can update bank and contact info, view pay stubs and tax forms.

  • Generate W-2 and 1099 forms.

  • Monitor employee leave time and accruals.

  • Sync automatically with all other Wave products.

  • Receive priority access to customer support.

Wave Advisors

Pricing:

  • Bookkeeping and payroll support: Starts at $149 per month.

  • Tax service: Starts at $899 per year.

  • Accounting and payroll coaching: $329 one-time fee.

Features:

  • Receive personalized support from in-house Wave professionals.

  • Use Wave’s bookkeeping service to outsource your bookkeeping or use accounting coaching to learn how to do it yourself.

  • Work with a professional to file your taxes.

Benefits of Wave accounting

Free

It’s hard to beat free accounting software, especially if you’re running a small business on a budget. With Wave, you receive a lot of features, like unlimited invoices and unlimited users, that are not always included with paid accounting software plans.

Customizable invoicing

Wave’s invoicing is free and unlimited, with customizable templates and a user-friendly interface, putting it on par with some of the top invoicing solutions for small businesses.

In addition, Wave allows you to add and manage customer profiles and send payment reminders, receipts and follow-up emails. It also offers a dedicated invoicing mobile app so that you can send invoices and track payments.

Easy to use

Wave accounting is simple and easy to use, with a user-friendly interface and intuitive design. Unlike some accounting software, you don’t need prior knowledge to get the most out of the system; you can easily navigate the platform and quickly learn as you go.

Wave offers a thorough online Help Center with guides on setting up your account and completing common tasks, as well as video tutorials for accounting basics. You can also talk to other business owners about tips or questions you may have through the Community forum on Wave’s website.

Drawbacks of Wave accounting

Not scalable

Wave’s free accounting software can be a great option if you run a small business with less than 10 employees or don’t need more advanced features that alternatives might offer. For small businesses any larger than that, however, Wave is extremely limited. Unlike competitors, Wave doesn’t offer multiple plans to increase the software’s functionality. It’s also missing an audit trail.

For example, QuickBooks Online doesn’t have a free plan, but it’s an excellent choice for scalability as it offers four different plans, each of which includes additional features. With the higher-tier QuickBooks plans, you have access to time tracking, inventory management and employee expenses management, none of which are offered with Wave.

Limited customer service

Wave Accounting only offers self-serve customer support. One-on-one support is available for Accounting customers through Wave's paid Accounting Coach option.

Alternatives to Wave

FreshBooks

Pricing: Starts at $15 per month (when billed monthly).

Pros: Like Wave, FreshBooks can be a good choice for micro businesses and solopreneurs. It includes unlimited invoicing, estimates and expenses with all plans. There's also a client self-service portal, unlimited time tracking and inventory tracking.

FreshBooks is well-known for its ease of use, particularly when it comes to its mobile app. It also offers both phone and online-based customer support.

Cons: FreshBooks’ lowest-tier plan lacks some basic accounting features, like double-entry accounting reports, and the first two plan tiers limit the number of billable clients. None of FreshBooks’ plans include an audit trail that accountants can review. Moreover, FreshBooks only includes one user with all of its plans, except the Select plan which includes two; to add users, you’ll need to pay $10 per person per month.

FreshBooks Accounting

FreshBooks
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on FreshBooks' website

QuickBooks Online

Pricing: Starts at $30 per month.

Pros: QuickBooks Online is the industry standard for small-business accounting software and can be a particularly worthwhile option if you’re going to be working with a bookkeeper or accountant on a regular basis. QuickBooks Online offers four different plans to choose from and is well-known for its robust reporting, record-keeping and inventory management features.

Moreover, you can integrate QuickBooks with hundreds of third-party tools available in the app marketplace. There are also add-on Intuit services like QuickBooks Payroll or QuickBooks Time.

Quickbooks Online

QuickBooks
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on QuickBooks' website

Cons: Although QuickBooks Online is fairly user-friendly, it’s much easier to use if you have some basic accounting knowledge. You may find that this software has a bit of a learning curve. Compared with free software like Wave, QuickBooks plans are expensive. The most basic plan, Simple Start, costs $30 a month, and the top-tier Advanced plan costs $200 a month, which is a sizable investment if you’re running a business on a tight budget.

QuickBooks Self-Employed (separate from QuickBooks Online) is designed for freelancers and independent contractors and costs $15 a month.