What We Recommend Wave For
Based on our extensive case study, presented later in this review, Wave performs well in tracking sales tax, reporting, banking, and invoicing. From these results, we conclude that Wave is an ideal choice for small service-based businesses that struggle with chasing payments and monitoring expenses.
Wave Is Especially Good For
- Businesses looking for free bookkeeping software: The best thing about Wave is that its accounting, invoicing, and receipt scanning services are free to use for an unlimited number of users and companies. It makes money through its payment processing and payroll services. Wave is the pick for best overall software on our best free accounting software list.
- Businesses looking for an alternative to QuickBooks: Small businesses and freelancers who want to opt out of QuickBooks or find it expensive turn to Wave because it provides comprehensive accounting for free, without limitations on transactions or users. To help find other better-fitting accounting solutions, check out our article on the best QuickBooks alternatives.
- While Wave doesn’t offer industry-specific features, it’s flexible enough to be included in our best software for the following industries:
Wave Is Not a Good Fit for
- Product-based businesses: While Wave offers basic inventory features, you can’t track your stock within the software. If you need robust inventory accounting, we recommend Xero.
- Businesses that need comprehensive bank account reconciliation: Bank reconciliations in Wave are automatic and don’t allow for any outstanding checks or deposits in transits. QuickBooks Online has advanced features for bank account reconciliation.
- Construction firms: While Wave has good basic accounting features, it doesn’t have an advanced job costing system like QuickBooks Premier Contractor Edition. Wave doesn’t enable you to assign labor and equipment hours, revenue, materials, and other costs to jobs. To help you find the proper solution for your construction business, we have compiled a list of the best construction accounting software programs.
- Law firms: If you’re managing trust accounts, then Wave isn’t for you. It doesn’t support three-way reconciliation, which means that there’s no way to balance your trust account bank statement, internal books, and the client ledger balances. If you’re looking for a suitable accounting tool for your law practice, check out our review of the best law firm accounting software.
- Restaurants: Wave has no built-in or integrated point-of-sale (POS) system, a key feature that helps restaurants and retail businesses automate their daily operations. If you’re interested in accounting software with an integrated POS system, read our article on the best restaurant accounting software.
Are you looking for something different? Read our guide to the best small business accounting software and check out our top picks.
Wave Accounting Pros & Cons
| PROS | CONS |
|---|---|
| Accounting, invoicing, and receipt scanning services are free | Not a good fit for large businesses |
| Pretty straightforward to set up | Can’t set up separate income and expenses by classes or locations |
| Easy to record a bill and manage unpaid bills | Can’t reconcile bank statements when timing differences exist |
| Generates different types of accounting reports | Poor customer support |
Visit Wave Accounting Software
Wave Case Study Results
At Fit Small Business (FSB), we believe the only way to truly evaluate software is to use it. We’ve developed a case study to evaluate accounting software across 11 different categories based on a common set of facts and functions.
The graph below shows how Wave scores across each category compared with two of its competitors, Sunrise and QuickBooks Online Plus. We provide a detailed explanation of the scores in the Features section.
Case Study Results for Wave Accounting Software
Wave did great in terms of general features, sales tax, and reporting. Wave and Sunrise are both free software and score similarly, except for customer service, where Sunrise has a distinct advantage. At $80 per month, QuickBooks Online Plus dominates the free software, especially in banking and inventory. If you want to print checks or hold inventory for resale to customers, QuickBooks Online is worth the money.
Wave Accounting Software Pricing
Wave’s accounting, invoicing, and receipt scanning features are completely free to use. However, Wave charges fees similar to paid software for credit card payments and payroll. See the detailed pricing below.
Services | Pricing |
|---|---|
Accounting, Invoicing & Receipt Scanning | $0 |
Credit Card Processing | 2.9% plus 30 cents per transaction (for most cards) 3.4% plus 30 cents (for American Express) |
Bank Payments | $1 per transaction |
Wave Advisors | Starts at $79 per month |
Payroll | Varies by state* |
*Wave Payroll charges:
- $35 per month plus $6 per employee or independent contractor for users living in tax-service states: Florida, New York, Georgia, Illinois, Arizona, California, Indiana, Virginia, Washington, Minnesota, North Carolina, Texas, Tennessee, and Wisconsin. Users from these states can process tax payments and file the paperwork with state agencies and the IRS.
- $20 per month plus $6 per employee or independent contractor for users living in the remaining 36 states. Users living in these self-service states can use Wave to calculate payroll taxes, but they have to file the paperwork by themselves.
Wave Features
Wave doesn’t skimp on basic features for small businesses, but it also has some limitations, considering it’s free software. In our internal case study, we examined Wave up close across 11 categories and achieved the following scores and results. You can learn more about the features by watching the video of our accounting expert as he assesses Wave based on the case study criteria.
Wave has an excellent usability rating. It took very little time to set up our new Wave account for FSB, and it’s pretty straightforward when adding business information, including company name, type of business, address, and contact details. By default, Wave sets up your chart of accounts based on common accounts and categories, but you can add other accounts if you need to. To add an account, go to the Chart of Accounts page under the Accounting menu, and choose from the tabs on the top of the page for the account or category you wish to add:
Adding a New Account in Wave
While it’s easy to use, we encountered several issues with its general features. There’s no option to set up two separate classes or locations, which can be an irritation if your company has different locations or offers several classes of products or services. We were able to successfully add a new user, but custom user permission is very limited. Some other inconveniences we found include the inability to use account numbers in your chart of accounts, import bank balances, and import your chart of accounts. Another feature of good accounting software is the ability to close a prior year to lock previous transactions, but Wave also falls short on that.
Wave General Features Video
One of Wave’s biggest strengths is managing unpaid bills, which is critical in the accounting process. Your A/P transactions can be conveniently managed from the Purchases menu, which consists of all the features you need to record your purchases: Bills, Vendors, and Products and Services. We like how easy it’s to record a new bill and enter an expense without paying. You can snap a photo of your expense receipt and upload it to Wave through the mobile app. Check out our other choices for the best receipt scanner apps.
To record a bill in Wave, click on the Create a Bill button, and then the Add bill screen appears:
Add Bill Screen in Wave
Unfortunately, you can’t create a recurring transaction directly from the bill, which is something you can do in other software like QuickBooks. You can’t also create recurring expenses and create and send purchase orders in Wave.
As a free software program, it’s surprising that Wave can also perform the following:
- Track 1099 independent contractor payments
- Create products or services to auto-fill bills
- Record partial payments to a vendor
Wave Accounts Payable Video
Wave’s ability to manage sales taxes and invoices is impressive. There are different ways to customize your invoice, including the ability to choose from different templates, add your logo, change colors, and include a personalized message. You can add a new customer while creating an invoice and add inventory to your invoice before emailing it to your customer:
Sample Invoice in Wave
Other tasks you can perform in Wave’s A/R system include:
- Set up recurring invoices
- Create a product or service item to auto-fill invoices
- View outstanding invoices without generating a report
- Track sales tax collected and remitted by jurisdiction
- View detailed tax reports
While Wave has a good invoicing capability, it still comes up short in terms of other features. For instance, you can’t combine multiple checks in a single deposit, issue a credit memo to a customer, or add tracked expenses to an invoice.
Wave Accounts Receivable Video
You can connect your bank account to Wave and upload bank statements to synchronize your transactions. Instead of establishing a live connection with your bank, you can import QuickBooks Online files, which is very convenient. If you’re looking for accounting software with a good bank reconciliation feature, look elsewhere. Bank reconciliation in Wave is very limited. While Wave has an automatic reconciliation feature, it doesn’t allow for any reconciling items, such as checks written but not yet processed by your bank. If you need to print dozens of checks, you’ll prefer QuickBooks Online to Wave. Wave users have to write checks by hand.
Wave Banking and Cash Management Video
You can’t count on Wave for managing fixed assets, which isn’t surprising from a free software program. In our case study, Fit Small Business purchased a job trailer with a bank loan. Wave will record the purchase price in the fixed asset and note payable accounts, but that’s the only thing it does. There are no options to track or view your list of fixed assets. You can’t set up separate depreciation for fixed assets or create loan amortization schedules. If fixed assets are a big part of your business, consider QuickBooks Accountant Desktop, one of the few general bookkeeping programs with a comprehensive fixed asset manager.
Wave Fixed Assets Video
Wave isn’t ideal for contractors and other companies that need project management features. You can create and send estimates, but you can’t assign those estimates to individual projects. You also can’t track actual income and expenses by project. You might find the estimate feature helpful, but if you need project accounting, we recommend you look for other alternatives:
Create an Estimate in Wave
You can check out our list of the best contractor accounting software if you need an accounting tool with a comprehensive project management feature.
Wave Project Accounting Video
Wave allows you to add sales taxes to invoices, bills, estimates, and expense and income transactions. Whenever you enter a transaction with a sales tax, Wave automatically records the amount in the sales tax liability account. While you can track your sales tax in Wave, there’s no way to file your returns or pay your tax liability. This feature is also handy if you’re working with independent contractors and need to generate a 1099 form for tax filing. The sales and income tax features are evaluated across the other categories, so it has no separate video.
As mentioned earlier, Wave’s inventory management feature is very basic, so if you’re a product-based business, you should consider alternatives like QuickBooks Online or Xero. You can add a product or service, but not the quantity purchased or sold. This means that Wave can’t calculate your cost of goods sold, which is important if you deal with inventory. Wave is well suited for service-based businesses, but product-based businesses should consider other software.
We examined Wave’s inventory management feature across the other categories, mostly Accounts Receivable and Accounts Payable.
Wave gains the highest score in this category because of its robust reporting capability. We tried to generate 16 types of reports in Wave, and we successfully generated the following: profit and loss statement, cash flow statement, A/P aging, A/R aging, general ledger, trial balance, transaction list by customer, and expense by vendor. In addition to missing some desired reports, Wave’s reporting feature doesn’t allow for customizing your reports.
Wave Reporting Video
Wave has poor customer service. You can’t talk to a live person, and you can’t contact them over the phone or through email. You can browse through some self-help resources, like set-up guides and troubleshooting tips, from the Help Center or through the chatbot. Wave’s only live support is through a paid Wave ProAdvisor. You’ll get access to unlimited email support for 30 days, live chat with customer support, and a full hour of live coaching. If customer service is important to your business, we recommend FreshBooks, which is known for its excellent customer service.
Wave Customer Service Video
Instead of a single application, Wave uses two separate mobile apps with very limited features. The apps perform pretty basic tasks, like sending invoices, receiving payments, and capturing an expense receipt. You can’t set up and create projects, track time worked, categorize bank transactions, and view reports, which can be a problem if you often do business on the road.
Wave Mobile App Video
Assisted Bookkeeping Options
Wave offers assisted bookkeeping service in the form of a paid Wave ProAdvisor. Wave ProAdvisors are trained, in-house professionals who provide one-on-one bookkeeping, accounting, and tax coaching services for Wave users. Your dedicated Wave Advisor will manage all your bookkeeping duties, including categorizing transactions, bank reconciliations, tax planning, and more.
Wave Integrations
Wave integrates with a wide range of third-party software to expand its functionality and get more work done. You can connect Wave to the following tools: HubSpot, Google Sheets, Shopify, Stripe, Square, PayPal, Etsy, Pipedrive, Harvest, Mailchimp, Slack, SendPulse, and BlueCamroo. Wave also integrates with over 3,000 applications through Zapier.
Wave Alternatives
Best for: Businesses looking for inventory accounting | Best for: Businesses that need bank account reconciliation | Best for: Businesses that need project accounting |
Software from: $9 per month | Software from: $25 per month | Software from: $349.99 per year |
Bottom Line
We hope this case study provides you with insightful information and analysis to help you decide whether Wave is for you. Despite several limitations, Wave still has plenty to offer for small businesses. It contains essential functionality that will help you pay bills, invoice customers, and track your expenses. It doesn’t have the best customer service, but most of its features are easy to use, so you shouldn’t have any trouble setting it up and using it.
