Best Accounting Software 2021

Xero vs. Wave

Is Xero or Wave the better solution for you? This in-depth, feature-by-feature breakdown will help you select the best accounting software for your business.

No matter your business size or industry, you should invest in an accounting software to manage your finances. This software facilitates invoicing, expense tracking, payroll, and lessens your chances of financial mismanagement. You’ll likely grant your accountant access to the software so they can keep your books balanced, prepare your business for tax season, and identify opportunities to improve the financial health of your business.

This article identifies key differences between Xero and Wave. We’ll compare and contrast their features, pricing, usability, and customer service availability. We’ll also make recommendations about who each tool is best for based on hours of in-house research and product testing.

Xero & Wave Comparison Summary

Xero and Wave are two accounting solutions that we researched and tested firsthand. We spent weeks researching accounting platforms and interviewed current customers. Xero was given a rating of 91, while Wave received a rating of 86.

Xero received its score because it’s a moderately advanced tool at a very reasonable monthly price. It’s also fairly user-friendly, which is hard to come by in accounting software. Wave was given a rating of 86 because while it’s a valuable freemium tool that provides the ultimate level of user-friendliness, it was difficult to contact customer support.


Below is a breakdown of our four review criteria and the ratings that Xero and Wave were given in each category.

CriteriaAnalyst RatingFeaturesUsabilityPricingCustomer Support
Xero9199.599
Wave86810106

Xero is one of the best accounting solutions for small businesses because, while it’s not as advanced as the top tools on the market, it comes close for a fraction of the cost. Two professional bookkeeping companies we interviewed use Xero because they find it offers nearly the same functionality as QuickBooks Online, but is much cheaper and easier to use.

Wave is a freemium accounting software that’s best suited for freelancers and service-based companies, given that the inventory management features are elementary. Because the basic accounting features are entirely free, you can get started with the software in just a few minutes.

Here are a few quick points to summarize who we recommend each tool for:

You'll prefer Xero if:

  • You want a software that provides high performance for a relatively low monthly cost
  • You sell products or services, or both
  • You’re interested in more than 800 pre-built integrations with Xero’s Marketplace

Try Xero Today

You'll prefer Wave if:

  • You’re a freelancer or have a small, service-based business
  • You want the flexibility to add only the paid features that you need
  • Your ultimate goal is ease of use and flexibility

Try Wave Today


Table of Contents

Who Should Purchase Xero?

We broadly recommend Xero to all small businesses. Xero pricing runs from $11 per month to $62 per month, which is incredibly affordable for the features and power that you get in return. Invoicing is easy, there are more than 50 accounting and financial reports, and you have the ability to track and manage inventory.

Compared with Wave, Xero is a more sophisticated product overall. It’s correspondingly more difficult to use, but most businesses will likely find it more valuable.

Who Should Purchase Wave?

Wave is the best accounting software for freelancers and small service-based businesses. Though basic compared with its more expensive counterparts, Wave has everything you need to get up and running with accounting quickly. You can also add payroll, as well as bookkeeping, tax, and accounting services, onto your free base plan.

Customers we interviewed were all extremely complimentary of Wave and indicated that they had neither the need nor the desire to switch to a new software anytime soon.

Xero & Wave Price Comparison

Wave is a freemium tool, meaning that the accounting, invoicing, and receipt capture features are free. On the other hand, Xero costs between $11 and $62 per month.

Xero Pricing Details

Xero has three plans to choose from and their Growing Plan, which costs $32 per month, is their most popular option.

PlanPricing
Early Plan
  • $11 per month
  • Send quotes and 20 invoices
  • Enter five bills
  • Reconcile bank transactions
  • Capture bills and receipts with Hubdoc
Growing Plan
  • $32 per month
  • Unlimited invoices and quotes
  • Enter unlimited bills
Established Plan
  • $62 per month
  • Track projects
  • Claim expenses
  • Use multiple currencies

Wave Pricing Details

Accounting, receipt capture, and invoicing are entirely free of charge. There are processing charges for payment processing, and the add-on features like payroll and bookkeeping services start at $20 per month.

Payroll
  • $34 monthly: Tax Service States
  • $20 monthly: Self-Service States
Wave Advisors
  • Accounting & Payroll Coaching: $229
  • Tax Service: Starting at $1500 yearly
  • Bookkeeping & Payroll Support: $149 and up per month

Xero & Wave Feature Comparison

Xero and Wave generally offer the same features, but Xero’s are more detailed and powerful. However, Xero does not offer the tax, bookkeeping, and accounting services that Wave has.

FeatureXeroWave
InvoicingYesYes
Expense TrackingYesYes
Accounting Reports50+~15
Vendor & Client CRMYesYes
PayrollYesYes
Project TrackingYesYes
Time TrackingYesYes
Receipt CaptureYesYes
Inventory ManagementYesYes - basic
Accounting & Bookkeeping ServicesNoYes
Mobile ApplicationYesYes
Accountant AccessYesYes

Top Features: Xero

Xero has a full-featured marketplace, exceptional reporting, and highly customizable invoices and dashboards. As mentioned above, while the tool isn’t as user-friendly as Wave, it’s still not as difficult to use as comparable products like QuickBooks Online and Zoho Books. For a more in-depth overview of all of Xero’s features, read our Xero review.

Invoicing

Xero’s invoices are heavily customizable, though easy to create. You’ll be able to preview invoices, import customer invoices, set payment reminders, and customize the layout of your documents. You’ll also be able to send quotes in much the same way.

Xero Invoice

While invoicing with Wave is just a bit easier, you have more customization options with Xero.

Inventory Management

As you’ll see below, you can input items you purchase and sell into the tracked inventory section. You’ll set the unit price, accounts, and tax rates for all the items. You’ll also put descriptions for your suppliers and customers to provide a bit more context.

Xero Inventory

Wave’s inventory management is nowhere near as detailed, which is why we recommend that product-based businesses choose Xero.

Xero Marketplace

One of Xero’s biggest bragging points is their marketplace, which has more than 800 pre-built integrations with nearly any tool that businesses would need to integrate with accounting. Applications are also divided into type and business category, so for example, all hospitality-related applications are in the same group.

Xero Marketplace

Top Features: Wave

Wave’s best features are the dashboard, invoices, and services. The reporting section is a bit thin, but you can export all your information to run more advanced reports in other applications. To read further into Wave, check out our full-length Wave review.

Advisors: Tax, Accounting, & Bookkeeping

Wave offers advising services for accounting, bookkeeping, and tax purposes, all starting at $149 per month. While the pricing can get quite high, it’ll be beneficial for small businesses without an in-house bookkeeper to sign up for these services. Xero also doesn’t offer these, so if you want an in-house advising service, Wave is your better bet.

Wave Advisors

Dashboard

The Wave dashboard, as you can see, offers crucial graphs and information regarding payments. You can not only see your overdue invoices and bills, but add customers, vendors, send invoices, and more.

Wave Dashboard

Business Banking

Wave Money, the business banking feature offered by Wave, is a bank account with built-in bookkeeping. There are no monthly fees or minimum balances, and it’s FDIC insured. Though this is currently in a limited release and offered only to single-owner businesses in the United States, Wave intends to make it more widely available soon.

Bottom Line

Xero is more advanced than Wave and should be used by any product-based business that requires more than entry-level reporting. Xero is one of the best tools on the market and, compared with other accounting solutions, offers high-level power for a very reasonable price.

Wave is more of an entry-level solution that can scale relatively well as your business grows. Because the inventory management is somewhat lacking, it’s not the best option for product-based businesses. It’s one of the most user-friendly and modern platforms on the market, making it ideal for those who are just starting out with accounting software.

If you’re interested, visit Xero or Wave today to get started.

Katelyn Anderson

Katelyn is a Junior Research Analyst at SoftwarePundit, where she conducts in-depth analyses of technology markets & products and writes software-related content. She graduated summa cum laude with degrees in English and Psychology. Her main areas of interest are content creation, user experience, and search engine optimization. You can connect with Katelyn on LinkedIn.

Katelyn is an expert in several software categories including:

  • Accounting software
  • Live chat software
  • Vacation rental software

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