In order to keep this site going (at no cost to you!) this guide may contain affiliate links. All of the products mentioned have been used and personally tested by me!
When I first started my freelance business, I didn’t have money to hire an accountant. I also didn’t want to spend a lot of money to buy accounting software like QuickBooks. I was looking for free accounting software for small businesses.
What I needed was a comprehensive tool that could help me manage expenses and income, and help keep my finances tidy for tax time. Plus, it needed to come at no cost — and that’s what Wave Accounting provides!
If you’re just starting out, or looking for ways to cut back on business expenses, Wave is free accounting software you need to check out.
It’s perfect for small businesses who want to manage finances and make better financial decisions, all on an easy-to-use platform. Best of all, it’s free and you don’t need accounting experience or a college background in finance to use Wave (although it helps to hire someone at tax time).
What is Wave Accounting?
Wave is small business accounting software that allows you to manage income and expenses, send invoices, create balance sheet reports, and see trends that can help you make better financial decisions for your business.
Wave has features that can be of great will benefit you, whether or not you have employees. It’s free for basic accounting and features like accepting credit card payments, managing a payroll or getting help from a live accountant cost extra, but you’re never paying for features you don’t need.
I love how you can use Wave to track multiple businesses along with your personal account all in one place. No more signing out of one app and into another.
Here’s a quick video about how Wave Accounting software works:
How to get started with Wave
Signing up for Wave takes less than 5 minutes. However, setting up customer/client information, products and services information, or expense information will take more time.
If you don’t have payroll and you’re not looking to create invoices, then you only need to link your bank accounts, which doesn’t take much time.
Enter your email address and a secure password, or sign up with your Google account.
Enter the name of your business and choose from the 60+ business categories listed in the drop-down menu. Sorry, there’s no category for freelancing, but there is one for the designer, writer, and other creative. I signed up as a writer.
Now you’re in! Wave gives you the option to start from one of three sections:
- Invoicing – where you can set up invoices and customers.
- Organize finances – where you can link your bank accounts to Wave.
- Set up payroll – you can pay yourself as the owner or pay multiple employees.
It doesn’t matter which one you pick, all three will take you to the dashboard. So if you choose “organize finances” first, you can change your mind and work on setting up invoices instead.
Once you’ve linked your bank accounts and familiarized yourself with the dashboard, start adding product and services information into the Wave database. This information is needed to create and manage invoices.
If you ever get lost setting up, you can get help by referring to the getting started page or the support page, or by using help button at the bottom of your dashboard.
Emails I’ve sent to customer service were returned within 24 hours during the business week. (See example below!)
How to use Wave Accounting as a freelancer
Some freelancers use Wave to manage income and expense ratios, keeping an eye on how the business is doing month-to-month. Some use it to generate reports for their accountant or during April tax time. And others use it for invoicing and managing payroll.
Wave offers a comprehensive list of accounting features for you so I’m including a breakdown of all the things you can do with Wave:
The Sales tab allows you to do the following with ease:
- Create estimates for customers
- Create single invoices and recurring invoices
- Manage credit card payments, customer statements, and customer information
- Keep track of your products and services.
It’s important to note that for you to create an invoice or service estimate, you must have customer and product information already set up in your database.
I’ve been using 17hats for invoicing so I can’t properly compare Wave to other popular invoicing apps like FreshBooks, Harvest, or PayPal Invoice. Compared to 17hats, Wave’s invoicing is easier to use and has a simpler layout (although, you only get three Wave templates to choose from).
Under the Accounting tab you can easily manage accounting tasks, like:
- All of your banking transactions
- A chart of accounts where you can add or delete expense and income accounts
- Journal entries for all transactions
- Starting balances so you can properly keep track of accounts during a specific time frame
For example, say you start using Wave this month, and you want track all income and expense accounts only as far back as January 1, 2017. The starting balances tab is where you can input the balance for accounts as they were on January 1st, so the numbers you’re tracking are correct.
At first, it was a little bit complicated to understand, but Wave’s support section does a good job of explaining how to use starting balances.
Under the Purchases section, it allows you to:
- Track bills
- Keep digital copies of receipts
- Manage vendors and the products and services you use from those vendors
Products and services you buy from vendors (or other contracted freelancers) are used as items on the Bills tab to record those purchases.
For instance, I often hire iMark Interactive to help with my WordPress site. In my Wave account, I’ll track this company as a vendor with the WP Audit package as a product. When I input an expense, I can use the drop down menu to pick the vendor and product.
The Banking tab is where you’ll conduct business transactions, like:
- Connecting business (or personal) bank accounts
- Managing bank transfers when Wave invoices get paid
- Linking to Wave Lending where you can apply for business loans and lines of credit
Wave is currently working on the ability to help business owners manually import account transactions. But, I’ve had no problems linking my PayPal Business account and other checking accounts.
If you have employees, Wave Accounting software now offers payroll features for a low monthly price. With your Payroll feature activated you can manage:
- Employee’s records
- Tax forms and payroll tax information
- Payroll direct deposit
When working under the Reports tab you can do the following:
- Reference financial statements for balance and income
- Taxes (sales tax paid and payroll tax only)
- Track income by customer and aged receivables
- View expense by vendor and aged payables
- Access a general ledger to see an all accounts summary detail
- Monitor account transactions
- Look at trial balances that show your balance on certain dates
- Track gain/loss on foreign currency exchange
All reports can be downloaded as Excel, CSV, or PDF reports that you can keep or share with your tax person or accountant.
As of this writing, Wave accounting allows the following third-party integrations with your account:
- Etsy Shop
- PayPal (note: this only links your PayPal account to view transactions, not accept payment for invoicing).
For most freelancers who operate on a cash-basis accounting method, Wave will have features you won’t use like aged payables and receivables. But you’re never charged for anything you don’t use.
Wave Accounting app/mobile features
Wave accounting does not have a full-feature mobile app. It only offers a way to manage invoices, business receipts, and payroll information.
Sorry Android users, Wave only offers two apps, Wave Receipts and Invoice by Wave.
Receipts by Wave for Business
This app allows you to take photos of business receipts and upload them to your desktop account using your phone. Great if you make business purchases on the go.
Invoice by Wave
If you travel a lot, this app allows you to send unlimited customized invoices. It links to your desktop account. You get notifications when an invoice was paid and reminders to follow up on unpaid accounts.
You’ll need to purchase the desktop feature that allows customers to pay your invoices by credit card.
iPhone users get three apps:
- Receipts by Wave
- Invoice by Wave
- Payroll by Wave
Just like the Android version, if you’re going to use payroll or accept credit card payments for invoicing, you’ll need to purchase those features from the desktop version.
Whether you use Android or iPhone, Wave has limited features that may or may not offer what you need. But if you’re just looking for something to keep receipts and send invoices, having a mobile app comes in handy when you’re on the go.
How much does Wave Accounting cost?
So, how much does Wave Accounting software cost? Well the base accounting software is free.
If you’re looking for a simple accounting software to track income and expenses, invoicing (without credit card payment) and business transactions, Wave is free to use.
If you want to add payroll, talk to a real accountant, or accept credit card payments from clients, Wave will charge you a la carte prices that are fair.
I was surprised to see that the new Wave dashboard is advertisement-free. However, they constantly push paid features when you move around within the desktop app. But, I’ll take that over flashing advertisements.
Wave’s payroll feature starts at $19 per month ($15 base fee plus $4 per employee).
Credit card processing
2.9% + $0.30 per transaction. This is comparable to PayPal, 17hats, and Stripe credit card fees. But it’s cheaper than Square credit card transaction fees.
What would make Wave Accounting better?
It’s difficult to find one absolute business tool that has every single feature you ever wanted and none of the ones you don’t. So, there are a few things I discovered that would make Wave accounting better.
Wave would be a better tool for freelancers if their mobile apps got updated more often and offered more access to desktop features. There is a slight disconnect between using the desktop version and the mobile app.
Wave falls short in tracking inventory. If your business has an inventory, you’re better off using an app like Xero Accounting.
I would have loved it if Wave offered a feature that allowed me to keep notes on customers and projects. Even though this is an accounting platform, it would be good to make notes on a client’s preferred method of payment and a way to keep track of different projects with the same customer.
Linking bank accounts is sometimes difficult. I couldn’t link my Capital One Spark Business account to Wave, but the system allowed me to link my PayPal business account three times by accident. This threw off my balances.
Deleting a linked bank account was also difficult. I thought I removed it from the Chart of Accounts page, but when I run a Balance Sheet report, it still shows three PayPal accounts, all with different balances. Not being able to connect my new bank renders the Wave accounting software useless for me.
Best Wave Accounting features
Wave has a long list of things it can and can’t do so here’s a quick recap of its most prominent features.
It’s free! Pay only for what you need. And Wave doesn’t splash advertising all over the desktop version.
Let’s you manage both business and personal finance in separate sections of your Wave account.
- Manage multiple businesses under one account
- Create income and expense reports
- Manage a comprehensive list of financial areas (sales, purchases, accounting, banking, and payroll)
You get an email each week that keeps you updated on income, expenses, and net profit for each business (if you have more than one), and your personal account.
What is Wave missing?
Wave needs to update their mobile apps and offer more mobile features.
Does not allow you to take notes and link different projects to customer information.
- Buggy bank account connections
- Does not help you manage quarterly taxes
- Does not track inventory
Should freelancers use Wave Accounting?
Despite the problems I’m having with Wave, yes, I would still recommend Careful Cents users try it. You can’t beat free cloud accounting software, especially if you’re just starting your freelancing business and bootstrapping everything.
At most, you’ll have all business income and expenses tracked in one place and access to reports you can use during tax time. You can always see an up-to-date picture of your expense-to-income ratio so you can make adjustments to your business if needed.
At worst, you won’t be able to link your business bank accounts.
See if you’re able to link your bank accounts and experiment with Wave’s many features.
Test drive their invoicing software and see if it’s a good fit for your freelancing business. Ready to try Wave Accounting software for free?