Wave accounting software is a great choice for small businesses and entrepreneurs. It offers a variety of features, including invoicing, tracking expenses, and creating reports. Wave also has a very user-friendly interface, which makes it easy to navigate. Here we provide a Wave accounting review and insights that can help you decide whether to try it yourself.
The most impressive thing about Wave accounting software is that it’s free to use. There are no fees, period. Where Wave makes its money is through facilitating payments and their payroll offerings, both of which can be added seamlessly onto the accounting function.
As far as what makes it such a comprehensive product to use, let this Wave accounting review begin with the software’s robust list of features:
- Multiple businesses: create and manage different businesses from your one Wave account.
- Real double-entry accounting: access your general ledger and journal transactions.
- Search descriptions: use the search feature to find specific text within transaction descriptions, simplifying the transaction identification process.
- Automatic reconciliation of payments received from Payments by Wave.
- Chart of accounts: completely customizable chart of accounts with adjustable account IDs and descriptions.
- Exchange rates automatically calculated.
- Sales tax customization.
- Bulk transaction uploads: upload your bank statement in PDF or CSV format or import popular file formats from software like QuickBooks.
- Reports: generate, view, and export basic financial statements like profit and loss, cash flow, sales tax, etc.
- Bill and invoice reminders.
- Invoicing: unlimited customizable invoicing and receipt scanning.
- Income and expense tracking.
- Unlimited connections with bank accounts and credit cards: manage all your company-related finances from a single dashboard.
- Third-party connections: integrate Wave with third-party platforms like Etsy, eBay, or Amazon.
Upon logging into the Wave accounting software, you are greeted by your dashboard. The dashboard shows a list of your connected accounts, graphs of your cash flow and profit and loss, payables and receivables, income by year, and an expense breakdown.
The sidebar along the left hand side is where the bulk of the navigation takes place. Most of the core functions, specifically transaction identification and categorization and account reconciliation, are available on the left under Accounting.
There were two issues that persisted throughout the time we spent reviewing this software. The first involves banking connections and the second involves automatic transaction categorization.
We connected the Wave accounting software to business accounts at SunTrust (now Truist), Chase, and Novo. The SunTrust connection was to two different accounts, as was the Chase connection.
When we first made the connections, there were no issues and all previous transactions were imported. It took a little while for all transactions to show up, but the wait was minimal. This was the same for all connections with the exception of our SunTrust tax account connection.
On that one, the software insisted we were beginning with a starting balance of -$5.00, even though there were no transactions previous to the balance start date. It still insisted on this -$5.00 starting point even when we deleted all transactions and manually added them back in by spreadsheet upload.
This means that, no matter what we did with this account, it never could reconcile. All future reconciliation periods had to account for that missing five dollars, to which a transaction could not be associated.
We didn’t have this problem with any of the other connections. In all other cases, after the import date, all new transactions seemed to be updated automatically within about 2-3 days of posting to the account.
That would have been great if the bank connections were a bit more stable. We lost our connections to Novo and both SunTrust accounts several times and had to reconnect them to get things to auto-import again.
It was equally effective to allow the transactions to import versus importing them manually by statement upload. The only difference is the statement upload was instant.
The other issue that stood out was the lack of functionality of the auto-categorize feature. It is supposed to detect frequent transactions and offer to automatically categorize them, but it wouldn’t detect all the applicable transactions as being frequent.
For example, it would offer to auto-categorize our weekly shipping provider payments because those transactions happened at least once per week. However, payments that we received frequently from our merchant account, all of which were coming from the same name and account, were never identified by the auto-categorize feature.
We had to categorize every such transaction manually, and these made up the bulk of our income transactions so this represented a lot of time that could have been saved. It isn’t clear why this was occurring.
It could be worth noting that the merchant account payments were not on set intervals like the weekly shipping expenses were. Maybe the Wave accounting system attempts to detect patterns, which would explain the issue.
Despite the length of the above section, the overall experience with Wave accounting is a positive one. One major strength is Wave’s community of users whose experiences can often provide valuable feedback when dealing with the occasional issue.
The Wave accounting administrators are human, not bots, and they actually stay active on the forums. As mentioned above, we did have some questions related to the bank connection feature, but the Wave admins were quick to answer our inquiry and begin providing possible solutions.
In our particular case, it wasn’t worked out right then and there, but the representative informed me he had created a higher level ticket and passed it along to one of their engineers. Since you normally never get any followup in a situation like that, we pretty much forgot about it.
A couple of weeks later, I did end up getting an email directly from one of their engineers who offered to walk me through some troubleshooting. We were never able to get the problem fixed indefinitely, but they mentioned that they would work on it until a resolution was discovered.
Another thing we really liked about Wave was how you can access and modify your full chart of accounts and access journal transactions directly. With a lot of software these days, there is a lot of hand-holding and there are often limitations in place that keep you from having full control over your bookkeeping.
Overall, here are the best elements of Wave accounting:
- Price: for basic accounting needs, you literally can’t get any cheaper. For payment processing, you will pay 2.9% plus $0.30/transaction for Visa, MC, and Discover. American Express transactions cost 3.4% + $0.30 per transaction. These rates are average, but remember that interest rates will be rising this year.
- Payroll: Wave provides fully automated payroll services for $35/month plus an additional $6 per employee or independent contractor. The catch is that it’s only available in 14 states. If you’re outside of these states, they offer a self-serve payroll “service” for $20/month plus $6 per employee or contractor paid.
- Reports: Wave offers reports for profit and loss (income statement), balance sheet, cash flow, sales tax, payroll wage and tax, payroll benefits and deductions, income by customer, aged receivables, purchases by vendor, and aged payables. It also gives you access to balances by account, trial balances, and your general ledger.
- Multiple businesses: we were able to keep track of two separate businesses through one account.
- Integrations: there is built-in Google Sheets integration, but the software really shines with its integration with Zapier. With Zapier, you can create integrations and automated workflows with over a thousand pieces of third-party software like Square, Stripe, Shopify, WooCommerce, HubSpot, MailChimp, and more.
There are understandably limits with free software. That said, it would be nice to see a bit more tax capabilities with Wave accounting. As it stands right now, there was no way for us to keep track of quarterly and annual business tax reports and payments since we weren’t using the paid payroll function. It would be nice to see a bit more tools available for those doing payroll themselves.
Free (functionality may vary):
- NCH Express Accounts
- QuickBooks Self-employed
- AccountEdge Pro
Wave accounting is the best free accounting solution available for small business owners who like to be able to access the books from anywhere. If you require automated payroll services, you won’t find them here, but none of the free alternatives offer it either.
The only negatives we experienced seemed to be isolated technical issues and these were addressed by support. Overall, we would rate Wave accounting a solid 4.5 out of 5 stars with a full five-star rating if weighing price as a metric.