Xero and Wave are both popular accounting software, but there are key differences worth noting. Xero is a more sophisticated bookkeeping software, but for small service-based businesses, Wave is a good free option to consider. Unlike Wave, Xero includes automatic tracking of all inventories and the ability to print checks to pay your bills and process payroll.
When to Use Xero
If you are a product-based business with employees, you should choose Xero. Xero can handle all inventory quantity and cost calculations. Xero is also preferred if you have point-of-sale (POS) transactions or need to track time and expenses to bill clients. Xero is an honorable mention in our guide to the best small business accounting software.
When to Use Wave
If you are a service-based business that doesn’t need to track time, Wave might suffice as a good free bookkeeping option. Unlike Xero, you can do bookkeeping for multiple businesses under the same account. If you have employees, you can add Wave Payroll for a monthly fee. Since it is free, it’s the ideal option if your business is on a tight budget.
Xero vs. Wave at a Glance
Xero | Wave | |
|---|---|---|
Who It’s Best For | Business and freelancers looking for an alternative to QuickBooks | Small business owners who need free accounting software for basic tracking of income and expenses |
Pricing Plans | $11 to $62 per month | Free |
Maximum Users | Unlimited | Unlimited |
Bank Reconciliation | ✔ | ✔ |
Invoice Creation | ✔ | ✔ |
Online Payments | ✔ | ✔ |
Expense Tracking | ✔ | ✔ |
Time Tracking | ✔ | N/A |
Unlimited Invoices & Estimates | Growing & Established plans | ✔ |
Inventory Tracking | ✔ | N/A |
Mobile App | ✔ | Limited |
Class Tracking | ✔ | N/A |
Tax Support | ✔ | N/A |
Integrated Payroll Processing | ✔ | ✔ |
Xero vs. Wave Pricing
While Xero has subscription plans with monthly prices ranging from $11 to $62, Wave is available for free. Wave only charges fees for credit card payments and payroll. Both Xero and Wave support an unlimited number of users.
Xero Pricing
Xero offers three different subscription plans. Each package supports unlimited users, but the higher plans include advanced features, such as multicurrency support, expense claim management, and project tracking. Xero also offers payroll through Gusto:
- Early: $11 per month for five bills and 20 invoices
- Growing: $32 per month with unlimited bills and invoices
- Established: $62 per month includes multiple currencies and project tracking
- Payroll with Gusto: $39 per month plus $6 per month, per employee
You can use Xero for free for 30 days before signing up for a paid subscription.
Wave Pricing
All of Wave’s core functions of accounting, invoicing, and receipt tracking are free. You will only pay for processing credit card and bank payments and payroll transactions:
- Accounting, invoicing, and receipt tracking: Free
- Credit card processing: 2.9% + 30 cents per transaction (for most cards) and 3.4% + 30 cents (for American Express)
- Bank payments: $1 per transaction
- Payroll:
- $35 per month plus $6 per employee or independent contractor for users living in tax-service states (Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin). If you live in one of these states, Wave can process your 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. These states are self-service, which means that Wave only calculates payroll taxes, but you have to pay and file the required paperwork yourself.
Takeaway: If you are a very small business, and you only need basic tracking of income and expenses, Wave is the better option. Xero’s pricing structure is much more suitable for established small businesses with moderate activity.
Xero vs. Wave Features
Xero Tiered Features Table
Early | Growing | Established | |
|---|---|---|---|
Maximum Number of Invoices | 20 | Unlimited | Unlimited |
Maximum Number of Bills | 5 | Unlimited | Unlimited |
Receive Online Payments | ✔ | ✔ | ✔ |
Bank Reconciliation | ✔ | ✔ | ✔ |
24/7 Online Support | ✔ | ✔ | ✔ |
Inventory Tracking | ✔ | ✔ | ✔ |
Financial Reports | ✔ | ✔ | ✔ |
HubDoc Integration | ✔ | ✔ | ✔ |
Multicurrency Accounting | ✔ | ||
Project Tracking | ✔ | ||
Expense Claim Management | ✔ | ||
Read our Xero review | |||
Wave General Features Table
Features | |
|---|---|
Bank Reconciliation | ✔ |
Unlimited Invoices & Estimates | ✔ |
Multi-Currency | ✔ |
Inventory Tracking | |
Mobile App | Limited |
Class Tracking | |
Tax Support | |
Integrated Payroll Processing | ✔ |
Project Tracking | |
Read our Wave review | |
Takeaway: Xero and Wave may look similar on the surface, but Xero wins the battle hands down. While Wave has an impressive list of capabilities, Xero’s features are more extensive and developed. It is full of features like invoicing, contact management, inventory tracking, and class tracking. If you value functionality over pricing, Xero is the more suitable option.
Xero vs. Wave Features: Ease of Use
Both Xero and Wave are extremely user-friendly. While Xero might be on the moderate side when it comes to setting things up, it is very easy to navigate the program. Xero also does a great job of using simple language like “invoices owed to you.” Wave is a lot simpler to set up than Xero and similar in its ease of navigation. Check out the snapshots we have provided below to see for yourself.
Xero Ease of Use
Xero has a user-friendly interface with an interactive dashboard that includes movable cards for easy viewing. Your dashboard provides quick links to essential tasks, such as tracking your cash flow, creating invoices, adding and managing bills, tracking time and cost on jobs, and more. Once you set up your Xero account and you enter your financial data, your dashboard will display a snapshot of your business transactions and financials. You can edit your dashboard by moving the panels or hiding them. Below is a screenshot of Xero’s dashboard:
Xero’s dashboard.
Wave Ease of Use
Like Xero, Wave has a dashboard that you will see once you have logged into your account. Once logged in, you will see different tabs, such as Launchpad, Sales, Purchases, Accounting, Banking, Reports, and Payroll. There are also drop-downs to each main tab, so you can find the feature you need easily:
Wave’s dashboard.
As you scroll down the dashboard page, you will see charts showing your income and expenses for the last 12 or 24 months, invoices and bills payable, net income, an expenses breakdown, and shortcuts to adding a customer, vendor, inviting a collaborator:
Xero’s dashboard showing financial information.
Takeaway: Since Xero is more detailed and complete, it is more difficult to learn and set up as compared to Wave.
Xero vs. Wave: Integration
Both Xero and Wave have a strong range of integrations with other applications in the marketplace. They integrate with payment processors, such as PayPal and Stripe, POS systems like Vend and DEAR Inventory, and document management tools like Proposify.
Xero Integrations
Xero integrates with more than 800 applications, including your favorite tools like PayPal, Stripe, BigCommerce, Shopify, Gusto, HubSpot, Mailchimp, WorkflowMax, and simPRO.
Wave Integrations
Wave connects with tools like PayPal, Etsy, Stripe, and Shopify and plenty of customer relationship management (CRM) software. There are also more than 3,000 apps that integrate with Wave through Zapier.
Takeaway: While both programs connect with multiple software, we recommend Xero if integration is important to you.
Xero vs. Wave: Mobile App
Xero has a mobile app version that you can use to create invoices, reconcile bank transactions, manage contacts, track expenses, and generate reports on the go. Xero’s mobile app is available for Android and iOS users but doesn’t include all of the features found in the desktop version.
Wave doesn’t have one comprehensive mobile app but rather relies on two separate apps. Wave Invoicing allows you to track, edit, and send invoices wherever you are. With Wave Receipts, you can take pictures of receipts and upload them to your Wave account. Both apps are available for both Android and iOS devices.
Takeaway: While both Xero and Wave have mobile apps, Xero allows you to perform far more bookkeeping tasks. Wave’s mobile app is limited to invoice and receipt scanning. If you often manage your business on the road, Xero is the way to go.
Xero vs Wave: Assisted Bookkeeping
Xero and Wave both offer assisted bookkeeping solutions for an additional monthly fee. While Wave has an in-house accounting service called Wave Advisors, Xero users can contract with third-party online bookkeepers, like Bookkeeper360, to provide bookkeeping services via Xero.
Xero Assisted Bookkeeping
Xero integrates with Bookkeeper 360 to provide professional bookkeeping assistance to its users. With Bookkeeper 360, you get on-demand access to a team of in-house bookkeepers and certified public accountants (CPAs) who can help you with your bookkeeping tasks. Prices start at $19 per month plus $99 per hour for support for businesses with up to $20,000 in monthly expenses.
Wave Assisted Bookkeeping
Wave offers professional bookkeeping assistance in the form of paid Wave Advisors. Wave Advisors are trained, in-house professionals who can help with bookkeeping, accounting coaching, or taxes. A Wave Advisor handles your bookkeeping duties, including bank reconciliation, categorizing transactions, financial planning, and more. A Wave Advisor’s service starts at $79 per month with payroll support included.
Takeaway: If you don’t have accounting experience or want to outsource your bookkeeping, you will find assisted bookkeeping useful. If you want simple one-on-one accounting coaching, you can go with Xero. If you need extensive coaching and other services, such as human resources (HR) solutions, tax filing, and chief financial officer (CFO) advisory, Wave might be a better option.
Xero vs. Wave: Customer Service
Neither Xero nor Wave offers live customer support. However, both include email support which should respond within a day or two. In addition, they both offer video tutorials and detailed help guides to assist you if you get stuck or have a question.
Xero Customer Service
As mentioned, Xero does not have the option to speak to a live person. However, there are some great self-help options, including the Xero Business Help Center, Xero University, and a free Xero Course by Fit Small Business.
- Xero Course by Fit Small Business: This course includes 30 video tutorials with an average length of 4 minutes that cover how to set up your business in Xero, how to record sales, pay bills, and run financial reports.
- Xero Help Center: A robust help center with video tutorials and step-by-step how-to articles on both basic and advanced Xero topics.
- Xero U (University): Xero University includes video tutorial courses that you can take to learn how to use Xero. The topics are broken down into three user types―accountants, bookkeepers, and small business owners―and are ideal for beginner, intermediate and advanced Xero users.
Wave Customer Service
To get assistance from Wave, you will have to send an email or submit a support ticket by clicking on the help link within your Wave account. In general, you should receive a response within one business day. In addition, you can check out the Wave Help Center, where you can find how-to guides, video tutorials, and answers to frequently asked questions (FAQs) about Wave. Customers have access to chat support 60 days after purchase to assist them with setup and implementation.
Bottom Line
By now, you should be leaning towards either Xero or Wave. If you can’t afford to invest in premium accounting software right now, go with Wave. Meanwhile, if you’re looking for accounting software with few limitations that will easily grow with you when you hire employees or add new users, you should go with Xero.
