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Wave Accounting - Best Free Small Business Accounting Software

Wave Financial app
Credit: Wave Financial

After much research and analysis of accounting software, we recommend Wave Financial as the best free accounting software for small businesses in 2018.

Yes, Wave Financial's accounting software really is free, as advertised. It includes a good mix of features and is well suited for service-based businesses that are just starting out or plan to remain small. Specifically, it's a good fit for the self-employed – entrepreneurs, freelancers and consultants – and very small businesses with 10 or fewer employees that have limited or no inventory.

In the past, you had to pay extra to receive prioritized customer service, but that program has been eliminated, and all customer service is now ticket-based and provided for free. Like other accounting software, if you add ancillary services, such as credit card processing and payroll, those cost extra. Here's more detail on these factors:

  • Credit card processing. If you want to accept invoice payments online, you need to use Wave's credit card processing service. It charges a flat rate of 2.9 percent plus 30 cents per transaction, and there are no additional fees and no contracts. This rate is the same as FreshBooks and is comparable to the 2.9 to 3.4 percent plus 25 cents that QuickBooks charges for processing. However, other accounting software providers give you the option of using other processors, which may be an important consideration if you're already working with a processor.
  • Bank payment processing. You can accept ACH payments from your customers. It costs 1 percent per transaction with a $1 minimum fee.
  • Payroll. Payroll services aren't included with the software, but you can add it to the program for $20 or $35 per month (depending on your state) plus $4 per employee per month. This price is comparable to QuickBooks Online's Enhanced Payroll service, which costs $19 per month plus $2 per employee per month. However, some accounting software programs include payroll services in the subscription price. For example, Xero's $30 plan includes payroll services for up to five employees.
  • Small business loans. Wave has partnered with OnDeck to offer business lending to customers that annually generate more than $100,000 and have been in business for over a year. Repayment rates and terms aren't posted online and may vary depending on the specifics of your business, so you'll need to contact the company for details.

It's easy to use Wave Accounting, and it's even easier to get started. You can create an account in seconds by entering your email address and desired password (or you can register using your Google account).

After signing up, you can customize your account by filling out your company name and business type, which Wave uses to create a dashboard that suits your needs. In addition, you'll enter your contact information, such as your business address and phone number, so that this information automatically appears on invoices and other documents.

When you log in, you're greeted with a simple dashboard that uses a sidebar menu divided into categories: Sales, Purchases, Accounting, Banking, Payroll and Reports, so you can quickly find core functions without difficulty. With Wave's user-friendly interface, we found our way around the program and easily created invoices, ran financial reports and performed other basic accounting tasks.

The dashboard displays at-a-glance views of your income, expenses, bank and credit card accounts, payables, receivables and recent activity. You can find out more about this software or experience Wave yourself by signing up for a free account.

The small business owners we spoke with noted that the main thing they look for in accounting software are features that save them time. Wave provides several automated features that fulfill this requirement.

Invoicing. This online accounting software has several time-saving tools for invoicing, including recurring billing, that allows you to schedule and send invoices to customers, such as for regularly scheduled services or a subscription. You can also set up automatic payment reminders to encourage customers to pay their bills on time. If your business sends estimates or quotes to your customers, you can convert them to invoices in two clicks, saving you the time of re-entering or copying data.

Bank feed. Wave automatically syncs your data, so you don't have to manually input transactions yourself. For instance, the service securely connects with your bank, credit card, PayPal and 10,000 other financial institutions to automatically download and import expenses, deposits and other financial data in real time.

Automatic backups. Your data is stored in the cloud and is automatically backed up, so you don't have to worry about losing your information or redoing everything in the event your internet connection goes down or your computer is lost or stolen.

Mobile apps. Wave has two apps: Receipts and Invoice, and both are available for iOS and Android phones. Using Receipts, you can take photos of receipts, which it then translates into an expense transaction using optical character recognition (OCR) technology, saving you the time of manually entering data for your expenses. The image of the receipt is then attached to the transaction so you can review it for accuracy. With Invoices, you can create, customize, and send invoices and payment reminders; check invoice statuses; and accept payments.

  • Wave can easily and quickly create accurate financial reports, such as balance sheets, sales tax reports, P&L, a general ledger, an aged-receivables report and more.
  • You can invite an unlimited number of collaborators, such as accountants and business partners, to the program, but you need to be selective because there are only three user controls: view only; view and edit; and view, edit, and send.
  • You can use Wave for multiple businesses.
  • Integrations are available for Shoeboxed, Etsy, PayPal, Zapier and ADP.

Although Wave is excellent free accounting software for small businesses – especially new, service-based businesses with very tight budgets – and it includes a good selection of features, it's missing a few that some businesses may consider necessities. For example:

  • It doesn't track billable hours, and although you can track expenses, you can't automatically attach them to invoices, so you'll need to figure out a workaround if you need these features.
  • It doesn't track inventory or create purchase orders, making it less than ideal for companies that carry more than just a few products.
  • It's missing fixed asset-management tools, which may be problematic if you need to calculate depreciation on computers, equipment and office furniture for taxes.
  • It doesn't provide phone support; customer service is now email-based. If you prefer to speak with a customer service or tech support agent when you experience an issue, this isn't the accounting software for you. However, if you prefer to troubleshoot issues yourself, Wave provides several resources, including getting-started guides, video tutorials, how-to articles, FAQs, tips and a blog.

Ready to choose accounting software? Here's a breakdown of our complete coverage:

Additional reporting by Sara Angeles.

Lori Fairbanks

Lori Fairbanks has years of experience writing and editing for both print and online publications. After graduating from Brigham Young University with a Bachelor of Arts in English, she worked as an editor for Creating Keepsakes magazine and then as a freelance writer and editor for a variety of companies, including marketing firms and a medical university. She joined Purch in 2014 as a senior writer for Top Ten Reviews and now writes for Business.com and Business News Daily.