Wave is a double-entry accounting website with a price tag that appeals to freelancers and independent contractors, though some very small businesses with employees could use it, too. It’s free, unless you sign up for payroll or customer payments. Since we last reviewed Wave, the service has added new tools and enhanced existing ones, such as integration with H&R Block for tax filing (H&R Block acquired Wave in July 2019), an improved transactions page, a new Activity tab in the expanded customer profiles, and the ability to attach receipts to transactions.
While Wave remains a fine accounting service for small businesses, our current Editors' Choice winners are FreshBooks and Intuit QuickBooks Online because they offer the best blend of features, flexibility, and usability.
How Much Does Wave Cost?
While most small business accounting apps charge for their services—from $4.99 per month for GoDaddy Bookkeeping’s base product to $80 per month for QuickBooks Online Plus—Wave's primary accounting features are absolutely free. However, there are charges for payments and payroll. Credit card processing costs 2.9% plus 30 cents per transaction, and a little more than that for American Express (3.4% plus 30 cents per transaction). Bank payments (ACH) are charged 1% with a $1 minimum fee.
Wave Payroll is available for a $35-per-month base fee, plus $6 per month for each employee or contractor if you are in one of the 14 states supported by automatic tax payments and filing (we list those states a little later). The remaining 36 states are self-serve ($20 per month plus $6 for each employee or contractor), which means you must pay and file your payroll taxes yourself, though Wave does all the necessary calculations. Wave’s free status is a selling point at any level of business, and it's especially beneficial for freelancers and other very small businesses, for whom every dollar matters.
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Wave’s lack of a subscription fee, though, may not matter to small businesses that need the accounting tools it doesn’t include. FreshBooks offers a four-tiered subscription schedule. You can start small if you want and easily make the transition to more full-featured versions when it’s necessary. Prices range from $15 per month for FreshBooks Lite to $50 per month for FreshBooks Premium (a custom level is also available for larger companies).
Great Setup Tools
When you sign up for a Wave account, you first encounter the site’s onboarding process. You provide your name, business name, and industry, then you choose which direction to go first in the setup process: invoicing, accounting, or payroll. I chose accounting to start. The next step in this multiscreen wizard asks several questions about your business. You supply your answers by selecting from drop-down lists and then move on to options that include connecting your bank, managing transactions, and defining sales tax. If you choose a step that requires additional prep work, you’re directed there.
You can also set up Wave by visiting the website’s toolbar and Settings menu, but you're less likely to miss something important if you use the dedicated setup feature. The Settings menu is always available, so you can add and edit information here as you go along. By browsing through Wave's settings before you begin, however, you can learn more about the site’s capabilities, especially if you didn’t go through the whole setup process.
Connecting to your financial accounts is an especially important task since Wave is built on this exchange of data. The site does allow manual entry of transactions, but it’s nearly impossible to run your business this way because you can’t see when deposits and withdrawals have cleared until you get your monthly statement. You can download both business and personal transactions. There are categories labeled Personal Expense or Withdrawal and Deposit from Personal, so you can separate these transactions for bookkeeping purposes. The site refreshes your data every time you log in.
User Management is the first selection in the Settings menu. Wave has exceptional multilevel user access options for a free site. You can invite other users to access Wave and assign them to one of several roles: Admin, Editor, Payroll Manager, Viewer, or Black Advisors Tax Pro. Other settings options include Invoice Customization, Dates & Currency, and Sales Taxes.
Smooth Operations
All online accounting services claim to be easy to use. Wave lives up to that claim. It's one of the cleanest, most understandable business services I've seen and is easier to use than Zoho Books in some areas. Wave adheres to double-entry accounting standards, but it does the grunt work in the background. What you see is rarely confusing. The same can be said about FreshBooks. Despite its advanced capabilities, it’s easy for non-accountants to learn how to use it and maintain their financial books.
Wave's user interface and navigation system are set up in a fashion similar to its competitors'. The main workspace sits in the right two-thirds of the screen. Ads that used to appear on the right side are now gone. Wave now makes its money by suggesting and selling related accounting services. The left vertical pane displays a series of tabs representing the application's sections: Dashboard, Sales, Purchases, Accounting, Banking, Payroll, and Reports. There’s a new link to H&R Block tax filing services. Another link, Wave Advisors, refers to Wave’s in-house accounting services. Monthly bookkeeping and payroll support start at $149 per month, and accounting coaching goes for a one-time fee of $229. Wave’s Tax Service starts at $1,500 annually.
There's also a link to Wave's substantial library of integrations. Some are direct connections, like Google Sheets and Shopify. In addition, you can integrate Wave with the 1,000+ applications that Zapier supports. QuickBooks Online and Xero have their own libraries that contain hundreds of related applications. Some expand on the sites’ existing capabilities, while others add functionality that the site doesn’t have.
Clicking on each section icon in Wave reveals a dedicated submenu for each one. Click Sales, for example, and you can click again to go immediately to screens such as Estimates, Invoices, Customer Statements, and Products & Services. FreshBooks is better than Wave at tucking away its features, but every screen in Wave still looks fine and is easy to understand. If you do have questions, Wave provides plenty of help. Its onsite guidance includes an excellent interactive support bot that lets you ask questions and helps you narrow down your queries. There’s also a lot of context-sensitive help. Support via email is available as well.
Simple Dashboard, Minimal Records
The site’s simplicity begins with its dashboard. All the online accounting services I've tested offer a dashboard that displays similar types of information, but Wave's is one of the best I've come across. The Cash Flow report appears at the top of the screen in graph form, followed by Profit & Loss. Below that is a list of outstanding invoices and bills—mini aging reports. You can click on any of them to view the underlying transactions. The dashboard also displays account balances and income/expense numbers and charts, as well as links to common activities like adding customers and customizing your invoices.
Record templates for customers, vendors, and products and services are less detailed than those of some competitors—especially Zoho Books, whose templates allow much more information about each contact or item. You can import customer and vendor data via CSV files or as Google Contacts. Your other choice is to enter each record manually.
This doesn’t take long, since customer and vendor records only contain fields for extended contact information, though you can now specify multiple contacts and see a timeline of customer communications. There are more, specialized fields if you designate someone as a 1099 contractor. Product and service records are very basic, too. You can enter a name and description, price, and sales tax information. If you check boxes to indicate that you buy and/or sell an item, you have to specify an account name. If the one you need doesn’t appear in the drop-down box, you can click the plus sign to see more.
Wave's Transaction Table
Wave manages to include everything you need to know about transactions on one page, located under the Accounting link. Most of this screen is taken up by a current list of the transactions you've imported from financial institutions (or added manually). This table's columns display each transaction's date, description (such as Taxi Receipt or Payment to Paper), amount, category (which you can edit if Wave has incorrectly assigned a transaction or didn't guess), and amount. To the right of each is a check mark, which you click to verify that the transaction is complete and correct.
Wave now allows in-line editing of transactions, which is supported by most competing sites. You used to have to modify transactions in a separate pane that appeared on the right side of the screen. Now, you just click a link at the end of the row to show a transaction’s details. If it's an expense, for example, you can edit the description so it's more understandable than what the bank submits. You can add a customer or vendor, add sales tax, split the transaction between categories, and duplicate or delete the transaction. Since my last review, Wave has added the ability to upload and attach a file, like a receipt. A new reconciliation feature was introduced in 2020. Wave's deep, flexible transaction management tools are as good as anyone’s in this group of accounting websites.
A Few Deficits
As full-featured as it is, Wave lacks functionality in some key areas. While you can create product and service records for use in sales and purchase forms, you can't track inventory stock levels (more on this in a moment). Nor does Wave offer a dedicated time-tracking tool as FreshBooks does. You can record blocks of time as products, but this isn't a particularly elegant workaround.
Integrated payroll is available from Wave, but it's not as accomplished as many competing standalone tools (which you can't use with Wave). Most states are self-serve, meaning Wave calculates payroll taxes, but users must pay and file them themselves. If you live in one of the 14 full-service states, though, Wave can make your payments and file the required paperwork with state agencies and the IRS. These states are Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin. Other accounting websites provide full service for all 50 states, either internally or through integration with a payroll site.
If your business carries inventory, you need a more advanced application like QuickBooks Online, which offers excellent inventory tracking. Wave doesn't provide any of its own inventory management capabilities, though it does integrate with two solutions from other vendors through Zapier.
Wave also lacks two built-in features offered by GoDaddy Bookkeeping and FreshBooks, respectively: the ability to estimate quarterly taxes and the option to record mileage as you drive using your smartphone's location services.
Invoicing and Billing
Wave handles invoicing quite capably, with some exceptions. Creating an invoice is as easy as pulling down a list of customers, items, services, taxes, and the like from the available fields. You can add new customers, items, and taxes on the fly if they haven't already been defined. The ability to add discounts is coming soon. You create estimates using a similar process, though they require you to enter an expiration date, and you can convert expenses into invoices.
A Preview option lets you see what the invoice will look like before you actually save and send it. If your Wave account is connected to a payment processor, customers receive information on the invoice about how to pay via credit card or e-check. Completed invoices look great and are customizable. You can choose from three different templates and add a logo and accent color. Other options here include setting defaults (like payment terms, title, and footer), editing or hiding invoice columns, and scheduling reminders. You can also change settings for estimates on this same page.
Recurring Invoices have a separate link on the Sales menu and are just as easy to use. After you create the invoice, you save it and proceed to a second screen on which you can specify the invoice frequency. This can be daily, weekly, monthly, yearly, or some custom setting you define. You can also specify the customer's time zone to ensure that the invoice is sent in the morning and isn't as likely to get lost. On the next screen, you have the option of allowing customers to pre-authorize recurring credit card payments, which is an unusual feature.
When your invoices have been sent, you can track the status (such as Unsent, Unpaid, Viewed, and Overdue) of each one. Wave allows you to see different views of your invoices by providing filters that include status, customer, and date range. It also displays three critical numbers at the top of the screen: dollar amounts for overdue invoices, those due within the next 30 days, and the average time to get paid. You can learn a lot about your accounts receivable from this page.
Wave introduced the ability to produce customer statements not too long ago, which was an important addition. You can create and send these to remind customers of past due payments or simply to provide them with a record of their account activity for their records. Unfortunately, you can only create statements for one customer at a time. QuickBooks Online allows you to create batch statements for multiple customers simultaneously.
Wave added a feature a couple of years ago called Instant Payouts that allows you to receive the funds from customer payments much quicker. After you successfully record a payment from a customer using one of Wave's supported payment-processing services, you click the Banking link and select Payouts. A list of recent payments appears, and a link in the upper right corner says Pay Out Now. Click it, and you see what your payout would be after the 1% fee is taken out. Once you approve the transaction, the payment will appear in the appropriate account, available for you to use (normally, these payments take two or more days). No other service I've reviewed handles expedited payments this way.
You can record simple vendor bills and their payment in Wave, but this function isn’t as developed as it is in QuickBooks Online. If some of your vendors are independent contractors, though, you can manage and pay them through Payroll by Wave, which helps you generate annual 1099 forms.
Limited Reports
As I said earlier, Wave offers customizable views within the Invoice screen that display, for example, a list of invoices for a specific customer or date range. The site also provides report templates that can be generated within the application and exported as CSV or PDF files.
Beyond the standard financial reports required by double-entry accounting rules (Profit & Loss, Balance Sheet, and Cash Flow), there are also reports related to specific elements of the site, like Income by Customer, Aged Payables, Sales Tax, and Account Balances. This is a fairly slim set of reports for a double-entry accounting website, but it provides an adequate amount of coverage considering the site’s feature set. QuickBooks Online offers many more, with plenty of customization options. Wave, though, does allow cash basis reporting for relevant reports.
Wave on Mobile
Wave is quite a capable service, but there’s no comprehensive mobile solution. Its apps, for Android and Apple mobile devices, provide only abbreviated elements of its numerous features. Wave Invoicing allows you to create invoices and accept payments. It displays lists of existing Unpaid, Draft, and All invoices. You can send reminders and edit or re-send the original invoice.
Wave’s mobile apps also provide access to your customer and item records, which you can view and edit, as well as invoice customization and defaults. They’re good-looking and easy to use. Icons at the bottom of the screen open individual sections: Invoices, Customers, Items, and More. There’s a search function and limited help. Wave used to have a separate app called Wave Expenses that allowed you to take a photo of a receipt that would be accessible from the browser-based site. It’s been discontinued, though.
If remote access to your accounting data is critical for your business, you should consider QuickBooks Online. Its all-in-one Android app and iPhone app replicate much of what you can do on the web-based version. They’re free, very easy to use, and they offer two-way synchronization with your online data, like Wave does. If you must track a lot of business mileage, you can connect these apps to your vehicle and let them record your mileage automatically as you drive. FreshBooks offers this feature, too, in addition to access to tools and data on its mobile app.
A Budget-Conscious Choice
Wave's user experience, smart choice of feature options, and free status should accommodate sole proprietors and freelancers who need an online accounting service and may want a little room to grow. Integrated payroll makes it a possible option for small businesses with employees. But Wave's lack of a dedicated time-tracking tool and inventory management are unfortunate deficits.
FreshBooks Premium and Intuit QuickBooks Online Plus, our Editors' Choice winners for small business accounting, would be better choices in this regard and numerous others. They both offer unique blends of features, flexibility, and usability. The user experience you get from FreshBooks is superior to that of its competitors, which is so important when you’re trying to manage your finances. Intuit QuickBooks Online Plus has a slight edge over FreshBooks in terms of its overall accounting capabilities. Either would serve a wide variety of small businesses very well.
Wave delivers a free accounting service for very small businesses. Its invoice creation and management tools are capable, as well as its transaction tracking. New features this year add to its effectiveness.
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