Wave is a cloud-based online accounting app tailored specifically to the needs of small businesses. It has provided service to more than 1.7 million small businesses and has handled $80 billion in income and expenses for those businesses since Wave began operations in 2010.
The basic app enables the user to engage in accounting, invoicing and payments, and is generally free to use. (There is a monthly charge for payroll processing, credit card processing and premium service packages.) It is designed specifically for businesses that have fewer than 10 employees, which means you will eventually need to go to a different accounting app if you plan to grow a larger staff. But that also makes the app perfect for small businesses, entrepreneurs, freelancers and contractors.
For now, Wave plans to continue servicing the small business market and leave the medium- and large-business markets to other providers.
How Does Wave Work?
Being that it’s in “the cloud” and web based, Wave is compatible with Windows, Linux and Mac, as well as iOS and Android devices. The Wave app provides three primary functions:
This is an accounting app for non-accountants. You link your bank account, PayPal account and other data sources to the app, and the transactions appear automatically. The app then generates accounting reports, such as balance sheets, income statements, and accounts receivable and accounts payable reports. One limitation however is the app can perform only accrual-basis accounting, and not cash basis.
Invoicing and Payments
Wave offers unlimited invoicing, and your data is synchronized throughout the app. That includes creating and sending invoices, receipt scanning, personal finance and email support.
Invoicing is available on your iPhone, giving you instant access to credit card processing. This enables you to create professional invoices no matter where you are. In addition, the app will notify you as soon as invoices are viewed, paid or become overdue.
Wave is certified PCI level 1 compliant for credit card processing. That’s the most stringent level of certification available. You can accept credit cards from your invoices, and the app provides seamless integration with the accounting function. Payments are transferred to your bank in two business days.
Receipts can be directly uploaded on the web app, as well as on the Mobile app for both iOS and Android.
Payroll processing is a paid service, with a base rate of $10 per month, plus $4 per employee, up to 10 employees. For the 11th and more employees, the per-employee rate drops to $2 (though this availability flies in the face of Wave’s claim to be limited to businesses with fewer than 10 employees). It includes direct deposit and an employee portal to check pay stubs and pay history, and can work with either salaried, hourly, full-time or part-time employees.
The payroll function includes seamless integration with the rest of the Wave app and comes with free (included in subscription price) email, phone and chat support. It offers streamlined yearend filing and easy-to-understand tax liability tracking. The app will send you payroll reminders and provides direct deposit and check printing.
Features and Pricing
- Personal Finance Software — In addition to accounting for small businesses, Wave offers personal finance software, and it’s also free. This enables you to track your personal finances, to create a budget, and to track your investments in real time.
- Credit Card Processing — Wave offers this feature with competitive pricing. They charge 30¢ per transaction plus 2.9 percent of the transaction amount, a rate that is consistent with other providers. It enables you to accept Visa, MasterCard, American Express and Discover cards. There are no minimum required receipts for the service.
- FAQs and Community Support — Wave has an extensive FAQ page that will address most of the concerns and questions you have. There are also forums available at Wave’s Community Space where you can swap ideas with other users of the system.
- Annual Fee — Wave is a free service. But in exchange, you’ll have to accept the existence of paid advertising that appears in the app. That’s hardly an unbearable tradeoff if you’re a small business looking to contain costs.
- Premium Plans — Most of what’s available on the Wave app is free (except payroll and credit card processing), but they also offer premium service plans. In fact, there are three monthly fee packages.
- Security — Wave uses 256-bit encryption and stores your data on servers that are physically and electronically protected. App protocols are certified by TrustE.
- PayPal Integration — Wave can automatically import activity from your PayPal account into the app.
The service doesn’t offer a mobile app for the full accounting software. They do however offer invoicing, receipts, and payroll on iPhone, as well as receipts on Android. The iPhone app requires iOS 7.0+, though the Payroll function can work on iOS 5.0+.
- Free to Use — This makes it a logical accounting software choice for new businesses and for those looking to cut costs.
- PayPal Intergration — Wave can automatically import activity from your PayPal account into the app. This will be a major advantage to businesses that transact a significant portion of their business on the Internet, where PayPal is a preferred payment method.
- No Software Installation — If you’ve ever worked with accounting software packages, you know what a hassle this can be (usually requiring multiple phone calls to customer service to remedy certain compatibility issues). Since Wave is web hosted, you won’t have to concern yourself with installation issues.
- Connect Anywhere — Paid accounting software is downloaded to a limited number of computers. But since Wave is web based, you can access it anywhere there is an Internet connection. That means you will not be tied down to a specific computer in order to perform accounting functions. This can be an especially valuable feature if your business involves a considerable amount of travel. Access the app from your laptop computer without having to take up memory with a downloadable program.
- No Cash-Basis Accounting Capability — This is a non-problem if you’re on accrual accounting basis. But if yours is a cash-basis business, and many businesses are, Wave is not the accounting platform for you.
- Advertising in Free Version — Most of us have learned to gracefully ignore advertising on websites. That may be more difficult when the site you are working with represents a critical function, like accounting and payroll.
- Not for Businesses With 10 or More Employees — Wave is designed to work for companies that have fewer than 10 employees, which will doom the business to seek another accounting software application as the business grows.
- Weak User Permission Options — The app does not provide the ability to limit user permissions. Access is limited to two choices, view only and view and edit, which you’ll have to enable for any employee who will be working with the app on your behalf. That means anyone who has access to the app, including your employees, will be able to view all of the information it contains.
Due to the wide range of free services and the fact the app is so readily accessible, Wave rates highly as an accounting platform for new and small businesses, as well as for entrepreneurs, freelancers and contractors. It can perform most any accounting or financial function that is needed by a very small business. The simplicity of the app is another plus. As a small business person, you have enough on your plate running your business without having to get tied up with a complicated accounting app.
Keeping Wave from getting a perfect score is the fact the app does not accommodate cash-basis accounting. While it may be true the majority of large businesses use accrual-basis accounting, cash basis is much more common among very small businesses — the very type most likely to use the Wave app.
There’s also the fact that the very nature of Wave — catering to micro businesses — dooms you to eventually trade up to a paid accounting system, such as Quickbooks. And if you have ever had the experience of migrating from one accounting system to another, you know this can be a nightmare in waiting if you plan to grow your business beyond Wave’s client profile.