This article is part of a larger series on Payroll Services.
Wave Payroll is a highly intuitive payroll software add-on to Wave’s free accounting system. Best suited for small businesses, it lets you pay employees and contractors, includes workers’ compensation, and has an employee portal. It’s quick to set up and easy to use, but it files taxes only for 14 states and has limited reporting and HR features.
*Wave Payroll’s tax service states cover Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin
What We Recommend Wave Payroll For
We compared Wave Payroll against several payroll systems and found it a good option for very small businesses with simple payroll needs. It offers a solution that’s easy to learn and use. The tool lets you run payroll in a matter of minutes and provides you the information you need for filing taxes—or, if you are in one of the 14 states it services, it files them for you. It has an employee portal for viewing pay stubs and tax forms (if applicable). However, it’s not optimal for managing benefits and HR.
In short, Wave Payroll is best for:
- Small businesses using Wave’s free accounting software: If you already use Wave Accounting or are looking for free accounting software that handles invoices and more, this program integrates natively with the payroll software. Small businesses that don’t have complex payroll needs and haven’t yet purchased accounting or invoicing software will find this to be a good starter option.
- Companies that hire seasonal staff: Changing the status of an employee (from active to inactive) is a straightforward process in Wave Payroll. You also don’t have to pay during months when employees don’t work, making it a good choice for businesses that hire seasonal employees, such as restaurants and retailers at beach towns and ski resorts.
- Small startups experiencing volatile demand: With Wave Payroll, you can opt to temporarily pause your payroll subscription. Its Limited Access plan comes with a discounted monthly fee, plus you can still access its self-service portal, view previous payroll journal entries, and even enter direct deposit details for new hires.
When Wave Payroll Would Not Be a Good Fit
- Businesses that need HR tools and benefits options: Wave Payroll doesn’t have HR features like hiring, onboarding, and time tracking. Plus, as your business grows, health insurance plans become essential. If you need any HR services and benefits, check out our top picks for the best HR payroll software.
- Companies that rely on labor and job costing reports: Wave Payroll only offers basic reports and does not provide data breakdowns for job costing or dividing payroll by departments. This makes it a poor option for companies that heavily rely on this data, like manufacturers. Rippling would be a better option because its reporting and analytics tools are pretty robust and easy to customize.
- Multistate employers: Wave Payroll’s tax filing service is very limited (only covers 14 states). If your employees are in more than one state, it will become difficult to manually keep track of multiple payroll tax payments and filings. Check our guide to the best payroll software for alternatives.
Wave Payroll Pricing
Wave Payroll’s pricing is based on your business’ location. If your company is in one of the 14 states where it offers automated tax services, then you get full-service payroll. If not, then you’re under its self-service option, in which you handle tax payments and filings yourself. Both packages come with the same payroll features, like multiple pay schedules, free direct deposits, and tax payment reminders.
- Payroll with automated tax filing services: $35 per month plus $6 per active employee or contractor paid
- Self-service payroll with do-it-yourself (DIY) tax filings: $20 per month plus $6 per active employee or contractor paid
Wave Payroll’s tax filing services are available only in the following states:
- New York
- North Carolina
If you want to switch from a full-service payroll into a self-service option with DIY tax filings, Wave Payroll will allow you to downgrade your plan. Unfortunately, there won’t be any change to your monthly fees. You still have to pay the $35 base fee per month (plus the per-employee costs) even if you opt not to get the provider’s automated tax filing services.
“Pause Payroll” Subscription Option
Wave Payroll offers a “Limited Access” option if you need to temporarily pause your plan. It allows you to continue accessing previous payroll journal entries and generating reports without having to run payroll. Also, you’re still covered by its automated tax payments and filings (Wave reports $0 on filings during the “pause payroll” period)—provided your business is located in one of the 14 states it services. You can even input your new hires’ direct deposit information into its system for future payroll runs, plus your employees can still view their previous pay stubs and tax forms. However, you have to pay a minimal amount each month.
- For states covered by Wave Payroll’s tax services: $17 monthly
- For other states: $10 monthly
If you decide to resume pay processing, simply go to Wave Payroll’s billing menu to activate your subscription and immediately start using the software’s payroll tools. Note that Wave Payroll’s pricing will automatically switch from “Limited Access” to either its full-service or self-service option, depending on the plan you selected before pausing payroll.
Wave Payroll’s monthly billing cycle starts on the first day of every month. If you unpause your subscription in the middle of the billing cycle, then you’ll be charged a prorated amount.
Canceling your Wave Payroll plan is very easy—go to the “Payroll” menu, choose “Billing,” and then click “Cancel Payroll Subscription.” Your plan will remain active until the end of the monthly billing cycle.
For businesses located in the 14 states covered by Wave Payroll’s tax filing services: Given the quarterly tax payment and filing deadlines, consider canceling your payroll subscription within the quarter-end months (April, July, October, and January) to enjoy Wave’s tax services. Aside from remitting and submitting taxes due for the quarter you end your subscription in, Wave will refund you taxes that have been withdrawn but will not be paid by the provider.
However, if you need to cancel your payroll plan outside of the quarter-end months, Wave will only pay the tax liabilities due in the month you cancel and refund taxes that have been deducted but not yet remitted. It will be your responsibility to ensure that taxes after the month you cancel are submitted and filed to the applicable agencies.
For businesses located in other states: To generate W-2 and W-3 tax forms, you will need to temporarily reactivate your Wave Payroll account. However, the provider will charge you subscription and per-employee fees for that month.
For example, if you cancel your Wave Payroll plan in September, you should reactivate your subscription the following January to generate year-end tax reports.
Wave Payroll Features
While Wave Payroll has limited HR features and lacks the benefits options most small business payroll software offers, it has efficient payroll tools to help you pay both employees and contractors accurately and on time. Here are some of its essential features.
Employee Payroll Information Management
With Wave Payroll, you can maintain a simple employee database that contains your workers’ basic information, salary and tax details, paid time off (PTO) balances, and benefits deductions.
In addition to changing personal information, you can update their employment status from active to inactive. This is helpful if you have employees that work seasonally—you can exclude them from your pay runs if they’re not working by tagging them inactive and then switching them back to active status as needed.
For contractors: While Wave Payroll can help you pay contractors, the process of adding independent contractors into its system is slightly different. Unlike employees, with online profiles created in its Payroll module, contractor profiles are set up in the Purchases module because Wave considers these workers as vendors.
New Hire Reporting
Wave Payroll will file state new hire reports for you, provided your business is located in one of the 14 states covered by its tax filing services. The process is also seamless—after adding the new employee’s details into its system, the provider will automatically generate and file the report to the applicable state agency.
Online Time Sheets
Wave Payroll doesn’t have time tracking functionalities, so you need to input the hours into its online time sheet manually. It has separate tabs for hourly workers and salaried employees. For your hourly staff, you use it to enter their total hours worked, overtime hours, and PTO information. For salaried employees, you can add in their overtime and PTO details, if any. Overtime pay is also automatically calculated at either time-and-a-half or double time, depending on when employees are eligible for it.
Leave Accruals & Policies
Unlike most small business payroll software, which streamline the process of managing PTO applications, Wave Payroll doesn’t have the capability to request and approve leave transactions online. You have to separately track PTO and input the number of approved leave hours into its online time sheets for pay processing.
However, it does have paid sick leave policies for California, Oregon, Massachusetts, and Vermont already loaded into its system to keep you compliant, and you can add other paid state sick leave laws. It also supports paid COVID-19 sick leave and COVID-19 family and medical leave, allowing you to claim tax credits for these transactions. It even helps you calculate the vacation leave accrual credits that employees should earn weekly.
With Wave Payroll, you can set up multiple pay schedules—from weekly to semimonthly and monthly. It supports paycheck printing and even offers free direct deposits, but the standard timeline is three days (many payroll companies have a two-day processing time). Pay stubs are available online via its employee portal, which is where your staff can view their personal information and access tax forms.
Since our last update:
Given how the COVID-19 pandemic has affected many businesses and workers, Wave Payroll has temporarily shortened its direct deposit timelines—from three days to two days, but only for eligible clients. Wave Payroll automatically reviews its customers’ accounts to check if their direct deposit timelines can be reduced. It will also notify its clients before returning the standard processing time to three days.
In addition, Wave Payroll has a dashboard where you can see important payroll and tax filing dates, including holidays. It even shows your total payroll costs for the pay period. If you’ve yet to set up your direct deposits, a task reminder will appear on the dashboard that includes a link to the system’s direct deposit setup page.
Payroll Tax Management
Wave Payroll is committed to providing accurate tax calculation services. Its platform has a robust tax engine that automatically computes federal, state, and local taxes. And, to help ensure that all tax computations are correct, Wave Payroll regularly updates its system with the latest tax tables and regulatory changes.
It even provides automated tax payment and filing services, including year-end reporting, but only in 14 states (Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin). It will also file new hire reports for employees in these states. However, you need to complete Wave Payroll’s tax payment information requirements before you can enjoy this service.
If your business is located in a state not covered by its tax services, Wave Payroll will calculate the applicable tax deductions from your employees’ pay. It will also generate Form W-2s that you can use to file year-end tax reports.
Wave Payroll’s partnership with AP Intego allows you to provide workers’ compensation insurance in all US states. You can sign up directly from Wave Payroll—go to “Payroll,” then “Run Payroll,” and click “Get Insured” to create your profile. From there, an AP Intego representative will call to help you complete your setup.
Payroll Schedule Reminders
You can check your pay schedules directly in its system and get email notifications about upcoming pay runs. You can even export payroll dates into a calendar app—simply download your Wave pay schedules as an ICS file and then upload it to calendar programs like the Apple Calendar and Google Calendar. This helps you get extra reminders, plus you can easily see payroll timelines without having to log in to Wave Payroll.
Integration With Wave Accounting
Every time a payroll run is approved, the applicable bookkeeping information is logged in to Wave Accounting. The gross payroll amount is recorded in the expense category of your Account Mapping and included in the Profit and Loss report, as is the amount of taxes you owe as an employer.
Wave also creates a holding account, called “Wave Payroll Clearing,” to hold payroll and tax payment funds. As payroll and tax payments are paid out and you replenish your account, these are reflected in the “Wave Payroll Clearing” account. The system categorizes the transactions (i.e., “Payroll Liabilities” or “Transfer to Wave Payroll Clearing”) for easy payroll bookkeeping.
Third-Party Software Integrations
Wave integrates with Google Sheets, BlueCamroo, and Zapier, which allows it to connect with several business solutions like email marketing, appointment scheduling, customer relationship management (CRM), and payment tools. However, it doesn’t have integrations with HR-related software, such as time-tracking and employee scheduling solutions.
Wave Payroll Ease of Use
- User-friendly interface
- Online setup wizard
- Preloaded sick pay policies for some states
- 24/7 support via chatbot
- Live chat and email support
- Help center and community forum
Wave Payroll’s strongest feature is its ease of use. With simple menus and straightforward processes, payroll can be set up and run quickly. And, because it doesn’t have a lot of extra features, the interface is straightforward and features are easy to find. While it only handles payroll tax payments and filings in 14 states, it provides the necessary information for filing in the other 36. It also has sick pay policies preloaded for several states.
For some of its features, the software will walk you through the process (such as setting up your account). Wave Payroll also has help buttons, a 24/7 chatbot, and a community forum where you can communicate and consult with other Wave users. It even has a library of help articles, plus it provides live chat and email support.
However, some of Wave Payroll’s online tools, while simple, take more steps or clicks than with other payroll software. While it has an online help center, not all of the articles contain step-by-step details.
What Users Think About Wave Payroll
Users Don’t Like
Simple to use, easy to manage
Reports not as detailed
Software runs slow at times
Works with the free version of Wave Accounting
Customer support isn’t responsive; has long wait hours
Users who left Wave reviews online raved about its intuitive interface and ease of use. They also appreciate its affordable plans and seamless integration with Wave Accounting. However, others wished that it offered more features and robust reporting. Some said that its software runs sluggishly from time to time and that its support team isn’t helpful and responsive—with wait hours that can be quite long.
At the time of publication, Wave Payroll earned the following scores on popular user review sites:
Top Wave Payroll Alternatives
Best for: Small businesses wanting full-service payroll
Best for: QuickBooks accounting small business users
Best for: Retailers and restaurants
Base monthly fee from: $39–$149
Base monthly fee from: $45–$125
Base monthly fee from: $35
Per-employee monthly fee from: $6–$12
Per-employee monthly fee from: $4–$10
Per-employee monthly fee from: $5
If you’re unsure Wave Payroll is right for you, see how it compares with our top payroll services. And if you need help deciding which is right for you, visit our guide to choosing the best payroll software.
Wave Payroll is best for small businesses with very simple payroll needs. As a Wave add-on, it integrates all the information into your Wave Accounting software, making bookkeeping and payroll accounting a breeze. Users love its intuitive and simple-to-use interface, even if some features take a few more steps to complete. And while it offers workers’ comp and an employee portal, it lacks benefits options and HR tools that similar providers offer. However, it’s still a good option for Wave Accounting users who need efficient payroll tools.
Sign up for a Wave Payroll plan today.