Wave vs. QuickBooks Online: Which Accounting Software Is Best for Small Businesses?
Professional bookkeepers charge as much as $150 per hour.1 Save the money and start using 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, standard accounting services. QuickBooks Online is best for small retail businesses that need more advanced accounting services.
|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|
|Analyze P&L reports||Yes||Yes|
|Track income and expenses||Yes||Yes|
|Manage payroll||$20 or $35 + $4 per employee/mo||Requires higher subscription plan|
|Enable multiple users||Yes||Yes|
|Undeposited funds account||Yes||Yes|
|Security and encryption||Yes||Yes|
|Get Started||Buy Now||Buy Now|
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.
The downside to cloud-only software is that it doesn’t work unless you have an internet connection. But with the Wave or QuickBooks Online mobile app, you can use a cellular connection or Wi-Fi hotspot to work from just about anywhere.
Wave and the Self-Employed 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 analyze profit and loss (P&L) reports.
Furthermore, your sensitive business data and privacy are protected with each software provider through advanced encryption and security features.
Where Wave and QuickBooks Online stand out from each other
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 totally cost-free. From payment processing to online invoicing, you pay nothing to use Wave.
QuickBooks Online comes in four plans, each requiring a monthly subscription fee. But the cheapest plan, called “Self-Employed,” is an affordable $10 per month. (You may be able to snag a lower price with Intuit’s frequent promotional pricing.)
From payment processing to online invoicing, you pay nothing to use Wave.
You can try any QuickBooks Online plan free for 30 days, giving you the chance to test drive both Wave and QuickBooks to see which one works the best for your business.
Beside the subscription fee, you’ll pay different fees for processing payments depending on the software you choose. Processing credit cards online is cheaper with QuickBooks. And there’s no fee for QuickBooks ACH bank transfers, while Wave charges 1%.
Wave does let you add payroll services, but it’ll cost you. Depending on your state, you’ll pay a $20 or $35 monthly fee plus $4 per employee. The basic QuickBooks Online plan doesn’t include payroll services; you’ll need to pay for one of the more expensive plans for that feature. And unfortunately, you can’t upgrade the Self-Employed plan to higher plans. So if you need payroll services or expect to soon, we don’t recommend the Self-Employed plan.
Also missing from QuickBooks Online Self-Employed: recurring billing and the ability to enable multiple users. Wave includes both of these services at no extra cost.
Conversely, 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.
And there’s more. So far, we’ve only talked about the base, cheapest QuickBooks Online plan—but that’s certainly not your only option. If you’re willing to pay more, QuickBooks offers a range of services that outpace what Wave serves up for free. Read below for details.
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, accounting, or payroll to start working immediately.
Once 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 statements.
Most actions in Wave are free, but if you want to do payroll, you have to pay. Payroll services start at $24 a month plus $4 per employee. If you’re unsure whether you’d like the payroll feature, sign up for the one-month free trial.
Wave accounting: The good and the bad
- 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 that works with the Wave iOS or Android mobile apps.
Customer service is another win for Wave. When we scoured the web for customer ratings, the results were mostly positive. Wave also provides lots of online resources, like a blog dedicated to business owners.
Plus, you can order certain professional “onboarding” services from Wave that let you get training by phone from a Wave representative. These onboarding services include bookkeeping (for $199 per month) or accounting and payroll (a $249 one-time payment).
On the other hand, Wave doesn’t offer customer support by phone unless you pay extra (QuickBooks Online includes phone support). So if you’re in need of immediate help, you may have trouble getting a resolution.
There are more downsides to Wave. 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.
If you’re a Wave user looking to make a switch to QuickBooks or another service, you can export your data to Excel or CSV formats. You can also download all your saved receipts to a ZIP file. But according to several online complaints we unearthed, migrating your data into another company’s software may be challenging.
The bottom line: for freelancers who need a cheap (i.e., free) way to manage their basic accounting needs, Wave is the best bet.
QuickBooks Online review: Best for retail businesses
For growing retail small businesses that manage and sell inventories of products, we recommend QuickBooks Online. But beware: for the accounting and payroll services that businesses like these need, you’ll need to purchase a more expensive plan.
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 the their business, the Self-Employed QuickBooks Online plan also includes a mileage tracker. This section has an impressive “auto-tracking” feature that lets you use your mobile phone to track eligible miles. Or you can add mileage manually. 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, P&L, 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 because 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.
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
- Five-user access
- Mobile device and app integration
QuickBooks Online: The good and the bad
- Advanced features available
- Smooth and reliable accounting functions
- Integration with other Intuit products
- Paid subscriptions only
- Non-upgradeable basic plan
- Mixed customer ratings
QuickBooks’ $10-per-month Self-Employed plan gives you lots of features similar to what Wave offers. Its main advantage, however, is a mileage tracking feature that doesn’t exist in Wave.
But considering Wave is free, and the basic QuickBooks plan is $10 per month, we recommend looking at the other QuickBooks plans—especially since you can’t upgrade from Self-Employed to the other small-business plans.
|Plan||Monthly price||Learn more|
|Simple Start||$20||Get Started|
For $10 more per month, the Simple Start plan trades the mileage tracker for sales tax tracking—a key feature if your business collects sales tax.
Pay $35 for the Essentials plan to add the ability to manage bills, such as electric or vendor bills, and to let several people use the software. The Essentials plan also includes time tracking that helps you track the time of you, your employees, and your client.
What’s our favorite QuickBooks Online plan? If you’re a retail business owner, buy the Plus plan. This gets you all the features included in the Essentials plan plus management of inventory, projects, and contractors.
At $60 per month, the Plus plan is definitely a bigger investment. But if your product shelves, client relationships, and customer base are growing, it’s worth it. Wave simply can’t compete with QuickBooks Online’s advanced features.
If you’re a retail business owner, buy the Plus plan.
But be warned: your costs will increase if you need payroll features. You can add “Enhanced” or “Full Service” payroll services to any QuickBooks Online plan (except Self-Employed) for $39 or $99 per month, respectively. And you’ll pay another $2 per employee per month for payroll services.
QuickBooks doesn’t have the same stellar reputation with customers that Wave does. Overall, the company’s customer satisfaction ratings are mixed. However, we wager that this could partly be due to Wave’s relative infancy in the market compared to Intuit’s multi-decade experience in providing financial services.
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.
Other QuickBooks and Wave alternatives
Wave and QuickBooks are certainly not the only two small-business financial software providers in existence. In fact, there are dozens of online accounting solutions to choose from (which could make your head spin). To simplify the choice, here are four top alternatives:
|Product||Starting monthly price||Learn more|
|FreshBooks Cloud Accounting||$15||Learn More|
|Gusto||$39 + $6/user||Learn More|
|Sage Business Cloud||$10||Learn More|
For small- or medium-sized businesses with accounting needs, your profession could 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.
Our reviews are guided by our readers’ input—so we want to hear from you! Leave a comment below and tell us which online accounting software has given your business the better boost.
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?”