2023 Wave Payroll Review: Is It the Right Payroll Software for You?
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
Juvy has over 10 years of content writing experience and was a licensed teacher. She has evaluated and written about dozens of payroll and HR software solutions for small business to provide the best answers to your software questions.
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, offers workers’ compensation insurance, and has an employee portal. It’s quick to set up and easy to use but files taxes only for 14 states and has limited HR features.
Praised for its user-friendly interface, Wave Payroll scored 3.41 out of 5 in our best payroll software reviews rubric. Just shy of making our list, it took a hit for HR features, as the provider doesn’t support online onboarding, has no expert staff to consult with on compliance issues, and doesn’t offer health insurance.
However, it is a cost-efficient solution, especially if you run payroll in the 14 states where it offers tax filings and payments—you only pay $40 plus $6 for every active employer or contractor monthly. You can also use its self-service payroll with do-it-yourself tax filings for only $20 plus $6 per active employee or contractor per month.
Wave Payroll Overview
Overall Score:
3.41 / 5
What We Like
- Native integration with Wave’s free accounting software
- Free direct deposits
- No setup fees
- Has a robust tax engine that automatically computes federal, state, and local taxes
What's Missing
- Limited integration options with third-party HR-related software
- Lacks benefits options
- Basic HR features only
- Automated tax filing services and state new hire reporting are available only in 14 states*
Deciding Factors
- Tax Service States: $40 + $6 per active employee or contractor
- Self Service States: $20 + $6 per active employee or contractor
Features:
- Tax filing and payments: Only available for certain states
- Employee benefits: Add deductions only; user must purchase and manage benefits
- Workers’ compensation: Offered via third-party partner, Next Insurance
- Employee self-service portal: Available to view member information, pay stubs, and access tax forms
Customer Support:
- Email and live chat during business hours (M-F 9 a.m. to 5 p.m., Eastern time); chatbot available 24/7
*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 with 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 subscription 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.
Looking for something different?
If you need a different accounting software that includes payroll, consider QuickBooks Payroll or one of its alternatives.
Wave Payroll Top Alternatives
 |  |  | |
|---|---|---|---|
Best for | Small businesses wanting full-service payroll | QuickBooks accounting small business users | Retailers and restaurants |
Base monthly fee from | $40–$80 | $45–$125 | $35 |
Per-employee monthly fee from | $6–$12 | $5–$10 | $5 |
Still haven’t found what’s right for you?
Discover more options on our best payroll services guide for small businesses.
Wave Payroll earned a high mark of 4.5 out of 5 for pricing due to its affordability and transparency. It also doesn’t charge any setup fees and offers unlimited pay runs. What kept it from getting a perfect mark in this criteria is its lack of plan options.
The cost of Wave Payroll is based on your business’s 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: $40 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
An active employee is one that’s currently employed and not on leave. To ensure that you don’t pay for inactive employees, update your employee records accordingly.
Wave Payroll’s tax filing services are available only in the following states:
- Arizona
- California
- Florida
- Georgia
- Illinois
- Indiana
- Minnesota
- New York
- North Carolina
- Tennessee
- Texas
- Virginia
- Washington
- Wisconsin
If you want to switch from a full-service payroll to 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 $40 base fee per month (plus the per-employee costs) even if you opt not to get the provider’s automated tax filing services.
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.
Aside from manually navigating through Wave Payroll’s billing menu to unpause payroll, its “Run Payroll” page has a “Go to Billing” button to help you easily update your subscription.
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’s payroll features aren’t as strong as those from competitors like Gusto. You can pay both contractors and employees, and the software lets you file and calculate payroll taxes. However, it only allows you to pay employees via direct deposit and lacks a pay-on-demand option. With it, you can’t run payroll on mobile (providers like QuickBooks Payroll, Square, or ADP Run allow this). Also, its tax services are limited to 14 states, and preparation and delivery of year-end tax reports cost extra.
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.
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.
If resigning employees are nearing their last working day, you can start the offboarding process directly from Wave Payroll’s employee module.
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.
While Wave Payroll has an “Add contractor” option, its system will automatically guide you to its Purchases module to set up vendor profiles for your independent contractors.
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.
Besides overtime, Wave Payroll’s time sheet lets you record PTO for salaried employees.
Unlike most small business payroll systems, 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.
When adding new employees into Wave Payroll, you can specify the vacation accrual rate percentage and whether or not you want it to compute the leave credits.
With Wave Payroll, you can set up multiple pay schedules—from weekly to semimonthly and monthly. It supports pay check 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.
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.
Wave Payroll’s dashboard serves as your hub for running, reviewing, editing, and approving payroll.
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. 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 tax services vary depending on the requirements of each state.
Wave Payroll’s partnership with Next Insurance 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, a Next Insurance representative will call to help you complete your setup.
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.
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.
Wave Payroll automatically creates a detailed journal transaction after each pay run.
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 got perfect marks for reporting because it lets users generate basic payroll reports to help provide meaningful business insights. You can track the wages and taxes you’ve paid or access payroll benefits and deductions report from the dashboard. If you use Wave Accounting, you can view even more reports, such as profits and loss, cash flow, sales tax, and account transactions. You may also use filters and choose the data you need to customize the reports you need.
Wave lets you track your employee wages and taxes from the reports module on the dashboard.
Wave Payroll scored lowest for HR features because it only has an employee access portal. Although you can create deductions for employee benefits, you should purchase and manage their administration separately. In comparison, Gusto and OnPay offer both health insurance and workers’ compensation plans. Wave Payroll also lacks expert compliance advisers and support for online onboarding.
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 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.
You can check new hire report details in Wave Payroll’s employee module.
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.
Employees and contractors can log in to the self-service portal where they can create their profiles, access tax forms, and update their information. They can also update their payment details here. Pay stubs are also available in the portal.
Wave Payroll is easy to use, with simple menus and straightforward processes for setting up and running payroll. 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.
The system is quick to set up, and if you have trouble using it, you can check its how-to guides or consult the 24/7 chatbot. For live support, you can chat and send an email to its customer representatives on Mondays through Fridays from 9 a.m. to 5 p.m. Eastern time. What prevented Wave Payroll from getting a higher score is its lack of integration support to common HR software that small businesses are using.
Here are the things that support Wave Payroll’s ease of use:
- User-friendly interface
- Easy to set up
- Files taxes in 14 states
- Preloaded sick pay policies for some states
- 24/7 support via chatbot
- Live chat and email support
- Help center and community forum
- Automatic integration with Wave Accounting
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 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.
Wave Payroll has an online wizard to help you through the initial setup process.
Wave Payroll received generally good feedback from users based on popular review sites. However, Wave Payroll doesn’t have a lot of user reviews (an average of 40 on Capterra and G2), bringing its score down.
| PROS | CONS |
|---|---|
| Simple to use, easy to manage | Reports not as detailed |
| Affordable | 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 Payroll 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 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:
- Capterra: 4.1 out of 5 based on about 60 reviews
- G2: 4.2 out of 5 based on more than 20 reviews
In our expert review, Wave Payroll scored a modest 2.88 out of 5. The system is easy to explore and master, plus it is cost-effective for businesses located in states where it offers tax filings and payments. However, it didn’t score well for the payroll features criterion because of its location limitations. Also, its HR tools are only limited to its self-serve employee access portal; it files new hire reports in 14 states only.
If you’d like strong pay processing tools along with affordable plans, we suggest Gusto because of its feature-rich system that not only lets you manage payroll and payroll taxes but also has useful HR tools such as time tracking, hiring, performance reviews, and even benefits administration.
Bottom Line
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.
