Wave’s developers like to tinker under the hood. The company occasionally rolls out a major feature update for its online accounting service, but it’s always making smaller internal changes that can affect your daily accounting workflow for the better. Since we last reviewed Wave, the service has added new tools, such as Cash Flow Report, faster ACH payments, and a revamped transaction screen. Even better, Wave is priced for the freelance market, but its features also make it a decent choice for small businesses with employees. Last year, the service was our Editors’ Choice for sole proprietor accounting software, but this year the award goes to FreshBooks for its more-targeted set of tools, exceptional user experience, and terrific mobile app.
Whereas other companies charge for their services—from $3.99 per month for GoDaddy Bookkeeping to $50 per month for FreshBooks’ top tier, Wave’s accounting features are absolutely free. That’s a good selling point at any level of business, and it’s especially for freelancers and the like, for whom every dollar matters.
Great Setup Tools
If you sign up for a new Wave account, you see an improved group of setup tools. You also get access to all the site’s recent updates, which are only being rolled out slowly to existing customers. You can choose which direction to go first in the setup process: invoicing, general bookkeeping, or payroll. We chose bookkeeping, which was broken down into several types of early tasks, such as connecting your bank, adding customers, and defining sales tax. Once you’ve done all the desired work in one area, you can click the Launchpad button to return to these setup options.
You can set up Wave by visiting the site’s toolbar and Settings menu, but you’re less likely to miss something important if you use the dedicated setup feature. The Settings menu is always available, so you can add and edit information here as you go along, but by at least browsing through them before you begin, you can learn more about the site’s capabilities.
Connecting to your financial accounts is an especially important task, since Wave is built on this exchange of data. You can download both business and personal transactions, separating them for bookkeeping purposes and reconciling the accounts. You can import customer and vendor data via CSV files downloaded from your email service.
All online accounting services claim to be easy to use. Wave actually lives up to that claim. It’s one of the cleanest, most understandable, and best-looking business services I’ve seen, topped only by FreshBooks and Zipbooks in this regard. Wave adheres to double-entry accounting standards (FreshBooks doesn’t), but it does the grunt work in the background. What you see is never confusing.
Wave’s user interface and navigation system are set up in a fashion similar to its competitors’. The main workspace sits in the right two-thirds of the screen. Ads that used to appear on the right side are now gone, which is another big improvement. Wave now makes its money by suggesting and selling related financial services. The left vertical pane displays a series of tabs representing the application’s sections: Launchpad, Dashboard, Sales, Purchases, Accounting, Banking, Payroll, and Reports.
As you click on each section icon, a submenu of options for that area appears. Click Sales, for example, and you can click again to go immediately to screens such as Estimates, Invoices, Customer Statements, and Products and Services. Wave is not as good as FreshBooks at tucking away its features, but it also offers many more of them. Every screen looks great, and all are easy to understand.
Good Data Overview
The site’s simplicity begins with its dashboard. All of the online accounting services I’ve tested offer a dashboard, and they all display similar types of information, but Wave’s is the best I’ve come across for freelancers and sole proprietors.
The new Cash Flow report appears at the top of the screen in graph form, followed by Profit & Loss. Below that is a list of outstanding invoices and bills—mini-aging reports. You can click on any of them to view the underlying transactions; you can also send a reminder to customers with overdue accounts. The Dashboard also displays account balances and income/expense numbers and charts.
The Transaction Table
Wave manages to include everything you need to know about transactions on one page. Most of this screen is taken up by a current list of the transactions you’ve imported from financial institutions (or added manually). This table’s columns display each transaction’s date, description (such as Taxi Receipt or Payment to Paper), amount, and category (which you can edit if Wave has incorrectly assigned a transaction). To the right of each is a check mark, which you click to verify that the transaction is complete and correct.
When you’re creating a transaction manually or editing one that’s been imported from your bank account, you can modify its details in a pane that appears on the right. If it’s an expense, for example, you can add a vendor and a customer if that’s appropriate, match it to an existing bill, add sales tax, and split it between categories. You can also classify transfers, process refunds, and earmark sales tax payments.
Wave lacks functionality in several areas, many of which wouldn’t be as useful to the freelance market as they would be to larger businesses. While you can create product and service records for use in sales and purchase forms, you can’t track inventory stock levels (more on this in a moment). Nor does Wave support time- and project-tracking, which would be helpful to sole proprietors and independent contractors.
Like BQE Core, Wave doesn’t provide any inventory management capabilities. Nor does it integrate with Inventory from another vendor. You can enter inventory items in a generic Add Products and Services screen. This screen is used for both items and services you sell and those you buy. You differentiate between the sales items and purchase items with one or two small checkboxes on the screen labeled Buy This or Sell This. This screen also has a field for description, price, rate, and sales tax.
Sales tax rates (or VAT taxes) can be added to the invoice on the fly. The site only accommodates two sales tax levels and doesn’t integrate with a related third-party app to add more. In fact, the only integrated solutions are PayPal, Etsy, and Shoeboxed. It also lacks two features offered by QuickBooks Self-Employed that would be especially helpful to independent contractors: the ability to estimate quarterly taxes and to record mileage as you drive by using the iPhone’s Location Services.
Payroll aside, Wave’s reports are sufficient. It now contains templates for the three financial reports that are a must in small business accounting solutions but rarely found in freelancer applications: Profit & Loss (Income Statement), Balance Sheet, and the new Cash Flow.
Payroll processing is not something that sole proprietors would need, but Wave offers it for all states. Most states are self-serve, meaning Wave calculates payroll taxes, but users must pay and file them themselves. If you live in one of the six full-service states, though, Wave can make your payments and file the required paperwork with state agencies and the IRS.
For those concerned with billing and invoicing, you’ll be happy to know that Wave makes this a simple task (though actually getting the money out of the customer may require finesse not supplied by the app). Creating the invoice is as easy as pulling down a list of customers, items, services, taxes, and the like, from the available fields. You can add new customers, items, and taxes on the fly if they haven’t already been defined. You can preview the invoice before you save and send it. Only Billy had a comparably simple UI.
A Preview option lets you see what the invoice will look like before you actually save and send it; you can toggle between desktop and mobile device views. If your Wave account is connected to a payment processor, then customers receive information on the invoice about how to pay via credit card or e-check. Completed invoices look great—better than those produced by competitor Less Accounting—and are customizable.
Recurring Invoices have a separate menu choice on the Sales menu and are just as easy to use. After you create the invoice, you save it, and then proceed to a second screen on which you can specify the invoice frequency. This can be daily, weekly, monthly, yearly, or some custom setting you define. You can also specify the time of day you want the invoice sent and the customer’s time zone. This is a helpful feature as you can create the invoice at your convenience and set it to be sent at any time during the day. This way, it won’t get lost in a pile of overnight emails in the recipient’s inbox.
Statements are produced within the same left-hand menu under the Sales entry. You can specify whether you want all invoices for a period shown or just the unpaid ones. Wave lets you generate an estimate and, when it’s accepted, let’s you convert it into an invoice. However, one thing Wave doesn’t offer is the ability to apply payments against a retainer.
When invoices have been sent, you can track their status and easily see how overdue a particular invoice might be. The Sales dashboard points out overdue invoices and asks if you want to send a reminder. The reminder is preformated and not customizable. However, the invoices and estimates provide a moderate amount of customization options, including the ability to define one of three general formats and what columns and items to include on an invoice. Reports in the invoicing area are rather sparse and limited to an Aged Accounts Receivable report. But there are numerous areas of the app, such as the Sales Dashboard, where receivable status and overdue invoices are shown.
There are two fields for taxes that you can use to enter state sales tax and local sales tax if you wish. Doing this makes it easier to file sales tax returns if you do business in locales with multiple tax rates that you have to break out and account for. Unlike competitors such as Zoho Invoice, Wave doesn’t integrate with a sales tax calculation service, such as Avalara Avatax. This can be bothersome if you do business in an area in which the sales taxes greatly vary or if you work in multiple tax jurisdictions.
Wave is a capable service, but its numerous features don’t translate to the mobile app as a whole. There’s no comprehensive remote solution, but rather two smaller ones that contain subsets of the browser-based version’s features.
Invoice by Wave does just what it sounds like. Its tools let you create and send invoices, view their status, and send reminders. Receipts by Wave uses OCR technology to read receipts after you’ve taken a photo of one or more with your smartphone. The relevant details are then stored as expenses. These subsets of Wave are both available as iPhone apps and Android apps, and they’re all good at what they do.
Ride the Wave
Wave’s user experience and its smart choice of feature options should accommodate freelancers and sole proprietors who need an online accounting service and may want room to grow. Whether you use it a little or a lot, you still don’t pay anything for the core accounting tools. But Wave’s lack of a dedicated time-tracking tool is an unfortunate deficit, since there are many service-based freelancers in this gig economy.
Still, Wave offers two excellent mobile apps for the most often-used functions, Invoices by Wave and Receipts by Wave, but it doesn’t have an all-encompassing remote solution. Those two missing pieces are critical ones, important enough that the Editors’ Choice for accounting for freelancers and sole proprietors this year goes to FreshBooks, a service with an user experience and targeted set of freelancer tools can’t be beat.
Businesses that need more reports and forms, better contact management, comprehensive electronic payroll coverage, and so on, should consider our Editor’s Choice for small business, QuickBooks Online.