Wave vs. QuickBooks Online: Which Accounting Software Is Best for Small Businesses?
Professional bookkeepers charge as much as $150 per hour.1 Want to save a little money by dedicating some extra time to the books yourself? Try one of these small-business cloud accounting services.
Brand-new business owners are scrappy. Propelled by visions of success and serving customers’ needs, they work hard and wear many hats. And for tracking the business’s money, in the beginning, there’s often a “fly by the seat of my pants” attitude.
Eventually, you’ll be faced with a decision—do you continue keeping the books yourself, or do you invest in a little help? You may not be an accounting whiz, but effective expense tracking, invoice managing, and payment processing are key to running a business smoothly.
Yet there’s no need to hire an expensive bookkeeper or spend months learning advanced accounting processes—there’s an app for that. Actually, there are two especially handy apps.
We researched, tested, and compared popular accounting software Wave and QuickBooks Online to find out which type of business each is best for.
- Wave is excellent for freelancers and sole proprietors with service-based businesses who need easy-to-use, affordable accounting.
- QuickBooks Online is best for small retail businesses that need more advanced (and therefore pricier) accounting services.
|Features||Wave Accounting||QuickBooks Accounting|
|Process credit card payments||2.9% + 30¢ per transaction||2.9% + 25¢ per online transaction, 3.4% + 25¢ per keyed-in transaction|
|Process ACH bank transfers||1% per transaction; $1 minimum||$0|
|Set up recurring billing||Yes||No|
|Create custom invoices||Yes||Yes|
|Generate financial reports||Yes||Yes|
|Track income and expenses||Yes||Yes|
|Manage payroll||$20/mo. (self-service states) or $35/mo. (full-service states) + $4 per employee/mo.||$45/mo. + $4/employee/mo.|
|Enable multiple users||Yes||Yes|
|Undeposited funds account||Yes||Yes|
|Security and encryption||Yes||Yes|
|Learn more||Get Started||Get Started|
What Wave and QuickBooks Online can both do
Wave and QuickBooks Online are cloud-based software, which means you don’t need to download an application to your computer to use the services. You just log in using your web browser and get to work.
Both are based on a double-entry accounting system—important for small-business bookkeeping that’s distinct from personal finance and budget software.
Wave and the Simple Start QuickBooks Online plan both include a bunch of useful features that can help you manage your business’s money. You can take customer credit card payments, send Automated Clearing House (ACH) bank transfers, and create customized invoices. You can also track your income and expenses and generate financial reports.
Furthermore, each software provider uses advanced encryption and security features to protect your sensitive business data—an important feature for fully cloud-based accounting software.
Where Wave and QuickBooks Online differ
Despite many similarities, Wave and QuickBooks Online each have certain features that the other doesn’t.
The most glaring difference is the price. You can create an account and use nearly all Wave features for free.
QuickBooks Online comes in four plans, each requiring a monthly subscription fee. But the cheapest small-business plan, called “Simple Start,” is a relatively affordable $25 per month. (You may be able to snag a lower price with Intuit’s frequent promotional pricing, but look out: you can either try any QuickBooks Online plan free for 30 days or get 50% for your first three months—not both.)
You’ll also pay different fees for processing payments depending on the software you choose. Processing credit cards via invoicing or card swipe is slightly cheaper with QuickBooks, though both providers charge the same for ACH bank transfers.
QuickBooks helps you estimate your taxes, showing your estimated quarterly tax right at the top of the page. QuickBooks also has a nifty mileage tracking feature that lets you calculate your trips and determine how much you can claim on your taxes. Wave doesn’t have these services.
Another difference is that Intuit offers customer support over the phone—Wave support is online only.
Wave accounting review: Best for freelancers
For freelancers—writers, designers, and photographers, for example—finding a system for income and expense tracking is often expensive and frustrating. Many freelancers aren’t skilled at accounting and can’t afford to hire an experienced bookkeeper.
That’s why a service like Wave accounting software can be such a relief for freelancers and other service-based small-business owners. Wave is free to start, and most features cost nothing as well.
How does Wave work?
Signing up for Wave is simple. Just provide your name, email, and profession and pick a starting point. You can jump right into invoicing and accounting to start working immediately.
Once you’re inside the software, Wave gives you full reign of most features, from tracking transactions to creating accounts. This can be overwhelming if you’re not at least partly familiar with business accounting. But overall, the Wave user interface is clean and intuitive.
Your actions in Wave are categorized into sales, purchases, accounting, payroll, and reports. Under sales, for example, you can create customers, products, services, and estimates. The accounting category lets you connect your bank to import transactions, or you can enter them manually.
You can also view a dashboard that provides a bird’s-eye look at connected accounts, cash flow, and reports such as P&L (profit and loss) statements.
Most actions in Wave are free, and payment processing costs only a transactional fee, but payroll plans cost extra. Depending on where you live, you can access Wave’s self-service payroll plan for $20 a month or its full-service payroll plan (which includes automatic tax filing) for $35 a month. Both plans cost an additional $4 per month per payee, meaning either a W-2 employee or 1099 contractor.
- No cost for most services
- Access for multiple users
- Positive customer ratings
- Difficulty scaling up for larger business needs
- No mileage tracking
- No inventory management
Wave’s greatest appeal is that it’s (mostly) free. It’s also easy to use and full of useful features, such as a simple receipt scanner app for Android and iOS. Its invoicing app also lets you send customized invoices on the go. Clients can pay you directly from the invoice, and with Wave Payments, you can accept the payment and begin processing it right away.
If you’re willing to pay extra for expert help, Wave offers a few unique services like outsourced bookkeeping (starting at $129 a month) and over-the-phone accounting coaching (a $279 one-time fee).
We picked Wave as best for freelancers, which means we don’t think it’s as great for larger, growing businesses—like retail stores—that need more advanced accounting solutions.
Although you can connect Wave to a few online retail platforms like Etsy and PayPal, your e-commerce options are limited. And Wave doesn’t include any inventory management services either, so you’ll need a separate solution for that.
Wave doesn’t offer customer support by phone (QuickBooks Online includes phone support). So if you need immediate help, you may have trouble getting a resolution.
The bottom line: for freelancers who need a mostly free way to manage their basic accounting needs, Wave is the best bet.
QuickBooks Online review: Best for retail businesses
For small, growing retail businesses that manage and sell products, we recommend QuickBooks Online. But buyer beware: especially when compared to Wave, QuickBooks Online can be super pricey.
How does QuickBooks work?
You can start with QuickBooks Online with a new account, or you can use an existing account with another Intuit service, such as Mint. If you’re a Mint user, QuickBooks can link your business accounts and import your transactions. This is super handy if the accounts you’ve been using for business are already in the Intuit ecosystem.
Once signed in, you launch into the software with a short tutorial for manually entering transactions and accounts. You can then navigate to various sections, including invoices, reports, or the dashboard.
For those who are often on the road as part of their business, each QuickBooks Online plan also includes a mileage tracker. Another perk: QuickBooks displays the IRS mileage rate on the screen, which should make tax preparation easier.
The QuickBooks Online dashboard displays your accounts, expenses, invoices, profit and loss, mileage, and estimated quarterly tax. That last one is another brilliant feature. Using your actual business data, QuickBooks projects how much you’ll likely owe the IRS every quarter. (This could be shock or relief, depending on your situation.)
What are the differences between the QuickBooks Online and Desktop versions?
Before QuickBooks Online, Intuit launched the accounting software as a desktop application. You can still purchase QuickBooks Desktop, but we don’t recommend it—it charges you extra for plenty of features that come standard with the online version.
The major advantage of QuickBooks Desktop is that it works as long as your computer does, no internet connection required. With the cloud version, your access to the software is limited if you’re offline, but let’s face it: When are you ever offline these days?
QuickBooks Desktop also has two features conspicuously missing from QuickBooks Online: calculating and rebilling job costs and calculating discounts by customer. But the advantages stop there. QuickBooks Online gives you access to myriad features at no extra cost that make picking the cloud option a no-brainer:
- Automatically scheduled invoicing
- Automatic bank account syncing
- Customer support by phone
- Encrypted data backups
- Mobile device and app integration
- Advanced features available
- Smooth and reliable accounting functions
- Integration with other Intuit products
- Paid subscriptions only
- Non-upgradeable basic plan
- Mixed customer ratings
QuickBooks Online pros
QuickBooks Online offers four small-business accounting software plans to Wave’s one. No matter which plan you choose, you get features like receipt capturing, invoicing, and payment receiving options—just like with Wave.
Unlike Wave, QuickBooks Online also includes mileage tracking with each plan. If you’re willing to pay more for higher-tier plans, you can access features that you can’t with Wave:
- Time tracking
- Additional user access
- Inventory tracking
- Batch invoicing
QuickBooks Online cons
QuickBooks Online certainly does more than Wave, but it does so at a cost. QuickBooks’ cheapest accounting plan, Simple Start, starts at $25 a month. Its main advantage over Wave’s free plan is its mileage tracing option and enhanced tax-tracking features, but depending on your business’s size, the extra $25 a month ($300 a year) might not be worth it to you.
And if you need inventory tracking, be willing to pay a lot more. The Plus and Advanced plans include inventory features, but they start at $70 and $150 a month, respectively. And if you want to add payroll, you’re looking at a much heftier fee than with Wave. Sure, each QuickBooks Payroll plan comes with automatic tax filing, unlike with Wave, but plans start at $45 a month and max out at $125 a month . . . on top of your regular monthly accounting plan.
The bottom line: If you’re a small-business retailer who needs to track inventory, the advanced features in the QuickBooks Plus plan are worth the investment.
In the end, your profession might determine whether Wave or QuickBooks Online is better for you. For freelancers with limited budgets, Wave has the upper hand. Retailers looking to scale up their business and manage inventory should look to QuickBooks Online.
Looking for alternatives to QuickBooks Online and Wave? Check out some other options on our best accounting software article.
At Business.org, our research is meant to offer general product and service recommendations. We don’t guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.
1. Upwork, “How Much Does It Cost to Hire a Bookkeeper?”