Wave accounting review: why this solution is great for small businesses

Serine Alejandro

November 24, 2020
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A growing number of small businesses and entrepreneurs are utilizing automation to manage their company’s accounting and finances more efficiently. However, many of the available digital software tools that offer advanced features beyond the basics are costly. Small businesses – especially those just getting off the ground – may not have room in their budget for this.

Wave is a financial software designed specifically for small businesses and entrepreneurs and is completely free. In this article, we’ve gone ahead and reviewed Wave’s apps and features to help small business owners determine if it’s the right accounting solution for their company.

Wave Apps at a glance

Wave Apps at a glance

Source: Wave App

Wave Apps is an award-winning, free and integrated business platform that combines accounting, invoicing, and receipt scanning into one concise and straightforward package. It was created with the goal of helping small businesses simplify their accounting processes.

One of the platform’s co-founders had previously owned two successful tech companies and always hated dealing with accounting. He helped conceive of Wave as a way to ease this burden for small businesses and entrepreneurs in particular. In fact, Wave’s website touts that 55% of the company’s staff (now over 250) have previously owned a business. Wave is a great tool for small businesses and start-ups in their infancy – ten employees or less – as well as self-employed individuals like entrepreneurs, freelancers, and consultants.

Here we’ll break down the various features offered through the platform:

Features of Wave Accounting (Free)

  • Track sales taxes and expenses
  • Track income as well as costs
  • Supports double-entry bookkeeping for easy generating of financial statements
  • Allows users to create reports on overdue invoices and bills, cash flow, profit and loss, etc.
  • Bank account and credit card integration
  • Supports multiple businesses in one account
  • Allows multiple users in one account

Features of Wave Invoice (Free)

  • Customizable invoices
  • Send invoices to customers in seconds
  • Set up recurring invoices or automatic credit card payments for repeat customers
  • Easily switch between automatic and manual billing
  • Send invoices via iOS or Android app
  • Get payments online in two days

Features of Wave Receipts (Free)

  • Scan receipts via iOS or Android app
  • Offline capturing of receipts
  • Send receipts from e-mail to Wave account

Given these functionalities, let’s now analyze how the platform works to help new entrepreneurs decide if it’s the right tool for them.

Wave Accounting Software Review

1. Is Wave Accounting Safe?

Wave is safe for users with different data storage requirements. Its servers are protected both on the physical and online aspects and 256-bit SSL encryption for more robust data security.

Wave also passed the Payment Card Industry-Data Security Standard (PCI-DSS) Level 1 compliance requirements. This means that Wave, as a PCI-DSS Level 1 Service Provider, is capable of carrying more than 6 million Mastercard or Visa transactions annually, most safely and securely.

2. Is it really free?

The core functionalities – accounting, invoicing, and receipt capturing and management – are 100% free.

However, there are instances where users may be required to pay for online payment processes. First is dispute fees. Should the user dispute a payment transaction, Wave charges the user with a one-time chargeback fee of $15. Wave also charges a return fee of $15 per returned bank payment, either for reasons of account closure or insufficient funds.

There are costs for utilizing add-on benefits like Wave Payroll and Payments by Wave. With Wave Payroll, there is a base fee of $35 per month, plus $6 for every employee or contractor enrolled in the system. Payments by Wave includes payment charges for credit card processing of transactions. According to usage, these add-ons are on a pay-as-you-go model, so users will only pay for these additional features if they choose to use them.

3. What credit cards does Wave support?

Payments by Wave accepts all major credit cards. It accepts customer payments, whether online or over the phone. Users can also prepare recurring bills with automatic payments and set up alarms to remind them when payments are due. All transactions reconcile within the Wave account.

4. How fast can the business receive payments?

It takes between two and seven days before users can receive their customers’ payments in their company’s bank accounts. Credit card payments are transferred to the company’s bank accounts in up to two days, but it may take up to seven days for bank transactions to process.

5. Can large businesses use Wave?

Wave is not an advisable tool for large companies because it only offers basic accounting capabilities. Bigger companies likely need more advanced features to supplement their accounting processes.

Wave’s features cater specifically to freelancers, new entrepreneurs, and small companies who don’t need to track, monitor, and manage huge amounts of transactions. Small business owners will enjoy using Wave accounting integration because it’s simple and easy to use. It requires no accounting and bookkeeping backgrounds so first-time users of accounting solutions won’t feel intimidated by it.

6. Is Wave easy to set up?

Signing up for a new Wave account is undoubtedly easy. New users will simply need to create an account on Wave’s website, selecting a username and password, after which you’ll be redirected to the onboarding page.

At the onboarding page, the user will be prompted to provide their name, the name of their business and the industry they work in. The next step is to choose a starting point: send professional invoices or manage accounting. There is an, “I don’t know” option if the account owner is unsure which to start with, and this will prompt additional questions to help the platform learn more about the business.

7. Is the software easy to use?

Wave recognizes that most entrepreneurs and small business owners don’t have any accounting or bookkeeping background, and it’s designed so that users don’t need it. There are many Wave accounting reviews that give this software an excellent rating for its beginner-friendly, straightforward user interface.

The platform did take into account that users may have various accounting questions that arise as they navigate through it. For that reason, Wave offers personalized help from its Wave Advisors, which is the company’s team of in-house accounting coaches, bookkeepers, and tax professionals. Users can set up calls with these advisors, or book consultation appointments (for a monthly fee). The website also features a support tab filled with resources and featured articles on how the various functions of the platform work.

There is one flaw to the website’s workflow. It does not have a back button so users have to rely on their web browser’s back button or return to the menu section whenever they want to visit a new section of the site. That said, all functionalities are easy to find in the dashboard.

8. Can reports be generated quickly?

Wave is capable of generating different kinds of reports. These include, but are not limited to, the following:

  • Profit and loss statements
  • Cash flow
  • Balance sheets
  • Sales taxes
  • General ledgers
  • Accounts payable and accounts receivable
  • Vendor purchases

All reports can be generated in hindsight. Wave supports multiple currencies, and this setting is automatic upon account creation. Unfortunately, the currency can’t be changed once the Wave account has been created.

Wave will show users their company’s income, cost of goods sold, operating expenses, and net profit in one summary report from the dashboard. Users can click ‘Show Details’ to see where the financial information comes from. Here’s an example, using a profit and loss statement.

Profit and loss statements

Users can select the date range they want to create a report. They can set the options for monthly, quarterly, or annually. They can also compare existing information to the same period of last month, quarter, or year. Furthermore, users can export the report in PDF and CSV formats to easily submit it to people who need a copy.

9. Can Wave help with business taxes?

Many small business owners need help sorting their business expenses to file taxes. In addition to tax compliance, owners also need to be weary of any flaws in their tax reports as they could lead to an audit on the company.

Wave accounting software can help organizations see how much taxes they were able to collect from their sales, which is a fundamental feature of any accounting software. If you need a tool that can go beyond this – for example, if you needed help optimizing your company’s Section C filing, among other requirements critical to tax preparation – you should opt for a more robust accounting solution.

10. What capabilities are not available in Wave?

Wave accounting proves that getting the most critical accounting features doesn’t have to be expensive. Since the software is free, its capabilities are limited (invoicing, receipt scanning, and income tracking). For most freelancers and new small business owners, these tools will suffice – especially in the early stages of their operation.

Others may very well need more advanced functionalities that are not available in Wave. For example, tracking inventory or time management are features not available on Wave, but would be beneficial to independent contractors. Some accounting software, like Sage, allows business owners to oversee their employee’s productivity. If these functions are critical to running your small business, Wave may not be the right solution for you.

Conclusion

Many Wave accounting reviews reveal how powerful the software is for individual contractors, freelancers, and small business owners. The software now caters to four million users, and that number continues to grow as more companies aim for simplicity in generating accounting reports.

Wave is a viable tool for new businesses that require simple accounting processes. Larger-scale organizations with more significant transactions and more critical tax considerations should use a more robust alternative to Wave.

Serine Alejandro
Serine is a graduate of Journalism from one of the most prestigious universities. She has broad experience in public relations and marketing communications for the lifestyle, travel, tech, and banking industries. She is now a co-owner of a growing condiments business, a manager of her family’s pharmacy, and a full-time writer for SMB Compass.

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