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Wave Accounting Software for Small Business Owners

Last updated: July 18, 2019
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As a small business owner or self-employed individual, it’s crucial that you use accounting software to manage your finances. Keeping business accounting separate from personal accounting will make it easier for you to track business-related income and expenses, which you’ll need come tax time.

However, when browsing online, you’ll find dozens of different types of accounting software available. Which one should you choose for your business accounting needs?

The answer depends on what you’re looking for. If you’re interested in free software, one of the services you’ll want to look at is Wave Accounting. Below, you’ll find an extensive Wave Accounting review so that you can determine whether it’s the best online accounting software for your business needs.

What Is Wave Accounting Software?

According to the company website, Wave is an “award-winning financial services software company.” Co-founder and CEO Kirk Simpson founded the Canadian-based company in 2010 because he “hated everything to do with accounting, invoicing, and payroll.”

Within a year of release, Wave had more than 100,000 customers. Additionally, Wave made Deloitte’s “100 Companies to Watch” list in 2011. A year later, in 2012, Wave had more than 500,000 customers. The company continued to grow over the next few years, and in 2019, H&R Block acquired Wave. There are now more than 3.5 million users on the site.

A majority of Wave’s current employees were once small business owners themselves. Wave says that because its employees have themselves owned a business, it’s easier for them to put themselves into an entrepreneur’s shoes. In fact, Wave says that it’s “on a mission to empower entrepreneurs,” and that it believes in an entrepreneur’s “journey and their ability to change the world.” Wave’s five core beliefs are:

  1. Building for small business owners
  2. Removing barriers to success
  3. Bringing software and banking services together
  4. Reinvesting in their products
  5. Celebrating successes

Wave uses 256-bit encryption to ensure that your information is secure. The company houses its servers under electronic and physical protection as well. Wave is PCI Level-1 certified, meaning that it safely processes more than six million credit card and bank transactions annually.

What Features Does Wave Offer?

Wave Accounting: One woman works on a cell phone while another works on a tablet

Will Wave meet your small-business accounting needs? The accounting platform offers a host of features that freelancers and small business owners can benefit from.

Accounting Software

Wave primarily acts as your own personal bookkeeper, allowing you to track expenses in a user-friendly way. Wave places no limits on the number of bank and credit card accounts that you can connect. When a transaction occurs, it will upload automatically into the Wave system. Wave allows you to connect with more than 1,500 apps thanks to its integrated Zapier platform, including your PayPal, Etsy, and Shoeboxed seller accounts.

The software uses double-entry accounting, meaning that every entry into the chart of accounts requires a matching entry into a different account. Double-entry accounting systems streamline the process and provide greater ease of use for business owners, making it easier to process financial statements and file taxes. Wave provides real-time updates so that you can see changes to your balance sheet and other areas of your accounting journal.

Additionally, Wave allows business owners to run sales tax reports. When using these reports, owners can calculate how much sales tax they owe to the state government for the states in which they’re conducting business. This feature is particularly useful if you sell goods in more than one state.

Payments

Wave allows you to accept credit card and bank payments, providing your customers with the ability to make online payments instantly. Customers also have the option of making payments over the phone or in person if they so choose. Wave currently does not allow customers to make PayPal payments.

With Payments by Wave, you’ll receive funds in as little as two business days. You can send a customer statement, which comes complete with a “Pay Now” button that they can use to send their payment.

Customers can make a credit card payment using the following major credit cards:

  • Visa
  • Visa Debit
  • Mastercard
  • Mastercard Debit
  • Discover
  • American Express

If a customer elects to provide a credit card payment, you’ll see the funds in your bank account within two days. There is a slight credit card processing fee deducted from the total payment amount. The price is 2.9%, plus 30 cents per transaction. If you do not want to pay this fee, you can pass it along to your customer by building it into the invoice that you send them.

If a customer elects for bank payments, you’ll see the funds in your bank account within seven business days — these ACH payments route funds from the customer’s bank account to yours. There is a 1% processing fee per transaction with a minimum charge of $1.

When using Wave to accept payments, the software will automatically track the funds in your accounting records, making it easy to analyze your cash flow. You can also set up recurring invoices for customers who you bill regularly. Wave Payments are secure and safe.

Payroll

Another feature of Wave is its payroll system. This system allows you to pay your employees in minutes. The company offers 100% guaranteed accuracy with this system. You can deposit wages for both employees and independent contractors directly into their bank account. Additionally, employees can log in to the system to access their pay stubs. The Payroll system integrates with your journal so you don’t need to engage in manual bookkeeping.

If you conduct business in California, Florida, Illinois, New York, North Carolina, Texas, Virginia, or Washington, you’ll need to sign up for Wave’s tax service plan. Once you do so, Wave transfers tax payments to your state’s tax office and the IRS. This plan costs $35 per month, plus $4 per active employee, plus $4 per independent contractor paid.

If you conduct business in one of the other 42 states, you’ll need to file your own payroll taxes. Wave simplifies this process as much as possible, showing you which forms you need to submit. The company is also working to integrate more states into its “Tax Service States” package. If you use the “Self-Service States” feature, you’ll pay a $20 monthly base fee, plus $4 per active employee, plus $4 per independent contractor paid.

How Much Does Wave Cost to Use?

The cost of using Wave depends on which features you use. There is no cost to use Wave for accounting, invoicing, and receipts. There are no set-up fees or hidden charges.

If you’re going to use Wave to process online payments, there is a “pay-per-use” fee, which depends on how the customer elects to pay. The credit card processing fee is 2.9%, plus 30 cents per transaction, while the bank payments (ACH) fee is 1% per sale with a $1 minimum.

If you want to use Wave to run payroll, you’ll need to pay a monthly fee. In tax service states, the cost is a $35 monthly base fee, plus $4 per active employee, plus $4 per independent contractor paid. In self-service states, the price is a $20 monthly base fee, plus $4 per active employee, plus $4 per independent contractor paid.

How to Get Started With Wave

Wave Accounting: the websites launchpad with service options

Getting started with Wave is easy. You can either use your Google account to log in or create a profile using your email address and password. Upon doing so, you’ll enter the name of your business and the industry that you’re a part of. Then you’ll gain access to your Dashboard, as shown in the image above. Once in the Dashboard, you’ll select a starting point so that Wave can better-fit your needs. The starting points are:

  • Professional invoicing
  • Better bookkeeping
  • Reliable payroll

In addition to using waveapps.com, you’ll also want to download the software for your mobile device. You can download the mobile app to your Android and iOS devices, including your iPhone and iPad. Having Wave available on your mobile device allows you to perform tasks like expense tracking and receipt scanning in real time.

If you run into trouble along the way, you can contact Wave Customer Support. The company offers email support for all of its software. If you use a paid service, such as Payments and Payroll, you will also have access to Live Chat Support.

Comparing Financial Software

Wave Accounting: A man looks at charts on a tablet

Whether you’re an independent contractor or a small business owner, it’s time for you to move away from basic Excel spreadsheets and upgrade to comprehensive account software. When doing so, you’ll want to make sure you choose the accounting system that best fits your needs. Trying to decide between services like Intuit QuickBooks, Stripe, Xero, and Freshbooks can be overwhelming, especially when factoring in things like whether you’ll need payment processing and payroll services.

If you’re looking for basic accounting software that doesn’t break the bank, Wave Accounting is an option worth considering. Head to waveapps.com to learn more about how this free accounting software could help your business. Also, be sure to check out our list of the 100 Must-Have Tools for Digital Freelancers to arm yourself with programs and apps that can help your freelance business.

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