The Small Business Doer

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How this review works

This Wave Accounting review was done by me, Greg Lam. I run this website, Small Business Doer, with the goal of helping out micro and small business people. The review is my own personal opinion and I was not paid to do a review.

My background is that I’ve been a small business owner since 1998. I have a degree in business from Simon Fraser University in Burnaby, BC Canada (Vancouver). I’ve been doing bookkeeping for myself, and others, since 1998, primarily with QuickBooks. I’m also a certified QuickBooks Pro Advisor. So, that’s the perspective you’re getting and keep that in mind when I evaluate the software.

I’m compiling multiple online accounting software reviews and will do a comparison of all the software available when I’m done individually reviewing each piece of software.

I’ve chosen 31 topics to write about for my online accounting software evaluation. It is by no means complete, and if I’ve missed some important topics, feel free to let me know in the comments section at the end of this review.

Software also changes at a rapid pace, so at the time I wrote this, which is April 24, 2012, this was what was true as far as I could see.

I spent about 12 hours with the software. I imported a trial balance ending December 31, 2011 from my QuickBooks Accountant Edition 2012 Desktop software. From there I entered and reconciled 1 month’s worth of data up until January 31st, 2012.

This is both a review and a walk through. I decided to include all my notes that I wrote down as I navigated the software. I left them in so that others looking at Wave Accounting could follow along and see the errors I made, the limitations of the software, and the work arounds that I found.

I was contacted by Wave Accounting to say that if I needed any help that they’d be available. I decided to not take them up on the offer since I wanted to do the review from the perspective of someone who only had the software and Wave’s online help guide to work with. I do however open it up to Wave to suggest any corrections, offer up comments, and provide and solutions for problems that I ran into.

If there is anything that I’ve said that is inaccurate or not true, please let me know so that I can update the article.

Enjoy!

Topics

1. introduction
2. user interface
3. double-entry accounting
4. syncing with bank
5. importing data from bank
6. data import
7. data export
8. auto entry of data
9. document attachment
10. chart of accounts
11. reconciliation
12. reporting
13. multi-currency
14. taxes
15. invoicing
16. payment processing
17. payroll
18. inventory
19. integration
20. paid premium features
21. mobile app
22. search / finding data
23. small annoyances
24. other features
25. what’s missing
26. tracking changes / undo button
27. customer support
28. help / documentation
29. questions
30. country it’s made in
31. price
32. recommendation

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1. introduction

You can look at Wave Accounting at http://waveaccounting.com/.

Sign up is fairly easy. Email and password is all you need. I like that you can get started quickly and easily.

Wave Accounting is based out of Toronto, Ontario in Canada and the software is geared towards small businesses with 9 employees or less. Wave Accounting is totally free and is ad supported, sort of like how gmail is free but ad supported. Wave Accounting does have some premium services, such as payroll.

Right off the bat seeing that you have options for both your personal and business accounts, I would say it really is geared towards small businesses or even micro businesses (really small small businesses).

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2. user interface

I’ve seen this a lot with online accounting software, where the “Dashboard” (home screen) contains an overview of some financial reports, bank balances, and other notices. While there’s nothing wrong with this, I’d rather my dashboard have the features I use most, which is entering transactions. Reports seem like a good idea to display, but I actually disregard all reports until I’ve verified that all the data is correct, and I can’t do that until I enter the transactions. If the dashboard was found in the reports section, that would be more useful to me.

One thing that bugged me about the Wave Accounting user interface is that it changes depending on what you’re doing or what kind of data you’ve imported. An example is that before I connected to a bank account, Wave Accounting gave me options to auto-connect to a bank or to manually upload a bank statement.

Once I auto-connected to my bank, the manually upload option disappeared and those options were then found at the bottom of the page.

In some ways that’s fine, since why do you need the manual upload button anymore since you’ve auto-connected, right? Well, I have a couple credit cards I need to add, so I was still looking for that manual button. I eventually found where the option to manually upload, but boy, was it some work. Also, the bank that did auto-connect only imported 15 days of transactions, so I needed an option to manually upload the non-imported transactions.

If the interface hadn’t changed on me, it would have been easy and a non-issue to upload those manual statements. Now that I know what to do, manually uploading is no longer an issue, but it is something that threw me off.

Navigation Notes

Here’s some notes on how entering some transactions in Wave went for me.

One of the first things I had to do, was create an invoice.

Adding a new customer, when creating an invoice, is as simple as clicking on the + button beside the “Customer Name” field.

When you go to add a customer, you get a pop up box with some simple options. You can click on the “Add additional information” button to get some more options.

Adding a product to sell is as simple as adding a customer. Again, click on the + button beside the “Product” field.

Once you select whether the product is something you sell or something you buy, Wave Accounting gives you the option of choosing what Income or Expense account to link to.

I like how I don’t have to switch back and forth between windows to do functions associated with an invoice (such as adding a customer or adding a product). Some other online accounting software I reviewed didn’t do so well in comparison.

A problem I ran into, is how to enter expenses associated with an invoice. For example, I had an invoice where I deposited a check at a live bank teller and the bank charged me $1.25. I couldn’t add this fee to my invoice since it was an expense item, and only income items can be added as a product.

So, I only entered the income items into the invoice and am going to see if I can add them as I receive the payment. The receive payment button appears at the bottom of the invoice, once you have saved the invoice. I don’t like the fact that the Payments button is hidden until you send out the invoice, it would be nicer if “receive payment” had its own button, like in QuickBooks, or if it was greyed out or gave you some type of message saying you need to save the invoice first before receiving a payment.

When I went to receive a payment, I couldn’t choose an undeposited funds account (a holding account that you use for funds that you receive but don’t immediately deposit into a bank account). I only had the option to deposit it directly to a bank account. So, I received the money, but I don’t know how to add the foreign loss and bank charges to this transaction.

So, I go to “Imported Transactions” and try to split the transaction. I add lines, but it doesn’t give me options for choosing accounts to associate each line with, so I don’t know what will happen next.

The transaction becomes 3 transactions in the “imported transactions” window. Now I can associate each line item with an account.

I can also try to match the items to existing records, like a receive payment record that I created. To do that, I click on the button with three dots to give me the option to “Match to existing record”.

Wave Accounting pulls up an entry form that lets you find the correct payment to match the bank deposit to.

The problem with this split method, is that if you look into your transactions for your bank account, the amount appears split up. If you go to verify this against your bank statement, the numbers won’t line up, since it’s been split. If there’s no problem, the total amount in the end will match, but it is an issue when you’re trying to locate discrepancies.

In my situation, $50 I received in US funds (I’m in Canada, so the amount needed to be converted to Canadian funds) ended up being a $48.40 deposit into my bank. $50 was the amount received, $.35 went to a loss on foreign exchange account, and $1.25 went to my bank charges. Instead of showing up as $48.40 in the transaction list for my bank account, it showed up as 3 separate transactions.

I now have a transaction where I’m moving funds from my Accounts Payable (an uncleared check from before my trial balance date of 2011-12-31) but there’s no way to do it from the “uncleared transactions” window that I’m using since it’s neither an expense nor income. Accounts payable is a liability. To enter that, I go to Settings > Journal Transactions > Add transactions in order to manually move the money from my Bank (credit) to pay Accounts Payable (debit).

Getting back to the “uncleared transactions” for my bank account takes me another 3 steps. I click on “Imported Transactions”, choose my bank from the drop down box, then choose to show “50 per page” instead of 20 from the drop down box at the bottom of the page. So, to add that one item, which is a check that cleared, I had to go through 6 steps (3 to add the manual journal entry, 3 to go back to “imported transactions”).

Oddly, I can’t see any matching record for the journal entry.

Hmmm… so match to existing record only works with transactions entered as an invoice payment received or a bill payment paid.

Ok, I’m going to enter an expense and attribute it to my accounts payable then. I go to “Expenses” then “Quick Entry”. Under the “Financial Category” drop down box, there’s no option for accounts payable. It only shows expenses.

Grrr… I totally didn’t see the “Mark as transfer” button. It says “Use this tool when a transaction happens between your financial accounts. For instance, a payment from your savings account to your credit card.” I feel a bit silly for not choosing this option before.

I select “Mark as transfer” and don’t see anything but transactions, so I scroll to the top and I then see the option to do something with my transfer. Oh no, no accounts payable! How in the world do I match my cleared check to an imported transaction!

I can’t figure this out. I’m going to leave the transaction for now, but I’m assuming that I’ll have to simply delete the imported transaction since there won’t be any way to match it. I searched the help to see the deal with custom journal entries https://help.waveaccounting.com/customer/portal/articles/6056-adding-custom-journal-entries-. It appears that anything you do with a custom journal entry won’t show up under the “Income” or “Expenses” screens. They will only show up in your “Income Statement” report.

This is feeling to me like the logic behind some of QuickBooks which really frustrated me. You see in QuickBooks (and other software), there is sometimes more than one way to do something. If you don’t go to the exact same window that you used to enter a transaction, you sometimes can’t see it.

I’m now thinking that perhaps I should have used a different liability account than “Accounts Payable” to categorize my uncleared checks. So, I create a liability account called “uncleared checks”. Hurray, it shows up as a transfer option when I choose the “Mark as transfer” button. But I spoke to soon, it still doesn’t match!

I went on to try and chose the “create it manually” option, but I just end up with a double entry now! I’m going to delete the journal entry and this should solve it finally. However, I don’t see why the records won’t match.

Now I’m moving on to deposit some funds that I received in 2011 before my trial balance into my bank account in 2012. In QuickBooks, I have an account called “Undeposited Funds”, which acts as a holding account for payments that you receive from customers but haven’t deposited into your bank yet. It’s an asset account. An example of where you’d use “Undeposited Funds” is when you receive a check from a customer on the 12th and deposit it on the 17th. Before the check goes into the bank, it needs to go somewhere, and that place is “Undeposited Funds”.

Wave Accounting doesn’t have an automatic “Undeposited Funds” account that gets created, like in QuickBooks. I categorized the undeposited check as “accounts receivable” when I did my trial balance to start off my books. Now that I deposited the check, I am again faced with the scenario that there is no good way to move funds from an “Accounts Receivable” account to my bank.

I’m going to assume that I can’t create an invoice for this either. So, I think I’ll have to use the same solution that I did for those uncleared checks, which is to create an asset account called “undeposited funds” in my trial balance. It seems that Wave Accounting hides certain system accounts, such as “Accounts Payable” or “Accounts Receivable”. Ok, the account is created as an “other asset account” and I go to transfer the money from my new “Undeposited Funds” account, but….

No “Undeposited Funds” account. I think it’s because the “other current asset” account can’t be a payment account, so I’m going to create my “Undeposited Funds” account as a bank and see what happens.

Yipee! That worked. I’m slowly beginning to figure out how Wave Accounting works. I’m very worried that people who don’t have the persistence to dig this deep and see how Wave Accounting works behind-the-scenes will get frustrated easily.

I now have a transaction that was in my “Accounts Receivable” that I can’t transfer or match up. I dig through the help files for the term “trial balance” and in an article find a link to this article on “Switching to Wave from other accounting software” https://help.waveaccounting.com/customer/portal/articles/8707-Switching-to-Wave-from-other-accounting-software.

If I would have read this, I would have saved myself some headaches. Wave Accounting instructs you to delete your unpaid invoices and unpaid bills in your old accounting software in order to avoid this problem. I haven’t confirmed with Wave accounting, but this has to be because you’d run into the problems I’m having, that there’s inflexibility with the type of accounts you can enter into the “Income” and “Expenses” screens as well as how you use the “Mark as transfer” button or the “Match to existing records” button when using the “Imported Transactions” screen.

The thing I don’t like about the Wave method of moving from old accounting software is that it asks you to change your old accounting software records. If you’re on desktop software, I suppose you could copy your file and manipulate the copy, but I would not want to mess with my old accounting file.

I’m still faced with the question of how do I handle my “Accounts Receivable” from before the trial balance? I create a bank account called “A/R from 2011″ and use that instead of the “Accounts Receivable” account. This works, because since I made the “A/R from 2011″ a bank account, I can transfer money from it to my business bank account.

So folks, this is perhaps another way of handling moving from existing accounting software or system to Wave Accounting. Create Asset and Liability accounts that have the option to be a “Payment Account” so that you can interact with those accounts in the “Imported Transactions” window.

Now that I’ve figured this all out, entering transactions through the “imported transactions” goes smoothly enough. I’m starting to get into a rhythm. I enter everything and am done all my transactions for my bank account for one month.

I start on my Visa credit account and all is well until I run into some payments that I made to my Visa card from my bank account. I now have duplicate transactions.

I tried the “Match to existing record” button and the “Mark as transfer” button, but neither show my transaction and the payments are definitely duplicates. So, I delete them.

While checking my reports, something that I don’t like is when I want to dig further into a transaction, such as a expense paid with my credit card, Wave takes me back to my credit card transactions once I get out of the window, as opposed to back to my reports. This means I have to either press the back button a few times (and make sure to hit refresh) or go back and recreate my report.

The last thing I have to do is to enter my PayPal transactions.

Since I couldn’t upload my PayPal bank statement (see the importing data from bank section) and my auto-sync with my PayPal only brought in a few days, I have to enter all transactions the manual way.

I run into an issue when trying to double check to see if I entered all my transactions correctly. When I went into “Reports”, then “Balance Sheet” and chose a “Report Date” for the end of the month, my PayPal account doesn’t show up (not to be confused with my PayPal US account, which is a different account). I’m assuming that because there’s no balance in the account at the date I chose, it doesn’t show up in the report. Well, at least that confirms that I entered all my transactions correctly. But it’s not good because I don’t see any way to include my PayPal balance from the balance sheet report.

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3. double-entry accounting

Having a general journal entry window lets someone who understands bookkeeping / accounting quickly add transactions and make modifications to the books. In other words, this is an essential window for your bookkeeper / accountant to have and they’ll be glad to have it.

The general ledger / general journal entry function is under Settings > Journal transactions in Wave Accounting. If you’re not a bookkeeper or accountant, you may never want to touch this. However, it is very nice to have, since with this one window, you can do any bookkeeping / accounting transaction. This is the “old school” way of bookkeeping.

I think Wave Accounting nicely sums up the use of this window.

Add double entry transactions that are not possible in regular income and expense tools

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4. syncing with bank

A big thing about Wave Accounting is that it can sync with your bank and auto-import your data on a daily basis. It can even auto-categorize your transactions. That’s neat!

Syncing with bank notes

I connect to my bank an all looks ok, but I don’t see where to go next.

I’m going to click on the dashboard button and see what happens. Apparently nothing. I don’t see my bank.

When I click bank on the “Account” button on the top of the screen navigation menu, my Vancity Bank does show up.

Yet it doesn’t show up in my Dashboard. I try to connect again. It says I’m connected.

I try logging into my online business bank account (not Wave Accounting) and I find out it is locked. After phoning a service rep from my bank and getting it reset I’m figuring that I’ll be able to try Wave Accounting again.

Ok, it worked! Now I’m choosing which account data to import and it asks me about “type”.

Well, Wave’s telling me I’m successful, and has the option to do other accounts. I’m going to go ahead and work on my main banking account first to see how that goes.

After doing some other work, I need to add a couple credit cards. To do that I go to “Account” on the top nav bar.

Hmmm… Can’t find CIBC (the Canadian Imperial Bank of Commerce). I tried searching by CIBC, Canadian, Mastercard, and various other names that start with C to no avail. I ended up manually creating a CIBC Mastercard account (which you can see how to do if you go to the data import section of this article).

I was able to find and connect to my Vancity Visa account.

Curiously, after I’ve set up, connected to, and imported bank statements, only my Vancity bank account and credit card account that I auto-synced show up in my dashboard under “Bank Accounts & Credit Cards”. My CIBC Mastercard does not show up. I guess only your auto-sync bank accounts and credit cards show up.

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5. importing data from bank

You can upload Microsoft Money (.OFX), QuickBooks (.QBO), Quicken (.QFX), or Simply Accounting (.ASO). Most banks give you an option for one of those formats, so this should cover you. Would be nice to have a .CSV format, since that’s the most basic format.

Importing data from bank notes

Now that I’ve successfully auto-connected my bank I can’t see the manual import button anymore.

I’m unsuccessful finding the import button when I go to the “Account” button on the very top nav bar. Likewise, I try to go to “Settings” and choosing the “Accounts” button, but no dice. Third try’s a charm and I find the way to manually import transactions for an already connected account in “Imported Transactions”. You go to “Imported Transactions” and then scroll all the way down, and find the little link that says “upload a bank statement”.

There’s an article on Wave Accounting at https://help.waveaccounting.com/customer/portal/articles/8039-upload-electronic-bank-and-credit-card-statements about how to upload electronic bank and credit card statements.

Success! I’ve got my first month of data from this year ready to reconcile, exactly what I wanted.

After successfully importing my bank and credit card statements, I’m stuck with my PayPal statement. The issue is that my PayPal doesn’t give me an option to download .OFX, .QBO, .QFX, or .ASO files. I only have .txt (tab), .csv (comma separated values), .IIF, and .QIF files.

Looking at the help articles in Wave Accounting https://help.waveaccounting.com/customer/portal/articles/452024-uploading-a-bank-or-credit-card-statement-in-csv-format, it does appear that I can upload .CSV statements. However, when I follow the instructions, I just get this:

This is odd, since I remember being able to import a CSV a couple months ago when I was initially checking out the software.

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6. data import

Wave Accounting does import of banking data quite well, as outlined in the above importing data from bank section, as long as it’s in the correct format. As far as I can see, bank data is the only type of data that can be imported into Wave. I searched “import” in the help section and found lots of great info, but unfortunately, found no articles on how I could import data.

If you’re moving to Wave Accounting from other software, it looks like you’re starting from scratch for chart of accounts, customer, vendors, invoices, etc…

That means you need to go through the chart of accounts and modify it to match your existing banking records. The way to do that is to go to “Settings” on the top nav bar and then go to “Accounts” on the side nav bar. From there you can add and delete accounts. If you click on “Account Balances”, you can enter a trial balance.

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7. data export

Data export is a big thing for me, since I want to be able to take my data with me in case something happens (like the software company merges, goes out of business, or I decide to use another service). It’s also good for people who like to play around with their numbers in a spreadsheet. Lastly, sometimes you want to export certain pieces of data (like say your customers) into another software application like CRM software (Customer Relationship Management).

Wave Accounting can export any of its reports, as outlined in this article https://help.waveaccounting.com/customer/portal/articles/234933-what-reports-are-available-can-i-export-reports-.

• Balance Sheet
• Account Transactions
• General Ledger
• Income Statement
• Sales Tax Report
• Income by Customer
• Expense by Vendor
• Aged Receivables
• Aged Payables
• Gain/Loss on Foreign Currency Exchange

Your options for export are PDF or Excel spreadsheets.

You can export all your data in one shot by clicking on “Accounts” and then finding the “Export Your Data” section.

This gives you some additional data not found in the reports section, such as:

• account list
• account accounts
• clients vendor
• clients customer
• products product
• taxes taxtype
• transactions billitem
• transactions inoviceitem
• transactions payment
• transactions transaction

I don’t know about the naming of the above reports, but between the reports export and the data export, you should have all you need.

One thing that worries me a bit with the export is that taxes paid and collected aren’t easily matched up to single expense or income transactions. That means you’re going to have a fun time (I’m being ironic) trying to reconstruct entries from this data. You’re going to have to reference your source documents (your original receipts or saved invoices) and / or match items in your reports in order to be able to figure out what taxes were charged for a particular expense or invoice. There are reports that show you how much HST you paid, but it’s only giving you part of the picture.

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8. auto entry of data

There’s a couple ways to talk about auto entry of data.

I believe most people relate this to the ability to connect to your bank (or upload a bank statement) and have your online accounting software automatically enter all the transactions for you.

Wave Accounting does have this ability.

You do have to remember that it’s not going to be 100%, so you’re going to have to verify each auto-entered transaction. You’re also going to want to match your documentation (your proof) to that auto-entered data as well. Auto entry data is cool when it works.

The second way you can think about auto-entered data, is how much your software remembers of transactions that you manually enter, such as what expense account and taxes are associated with a particular vendor.

Wave accounting has no ability to remember the account categorization and the taxes associated with a vendor when doing manual entry (note, this is for manual entry, not the auto-sync feature). I’m assuming this is the case since the whole premise of Wave Accounting is that you won’t be doing manual entry.

Auto entry of data notes

In Wave Accounting, once you connect to your bank or import your data, it’s now time to categorize. Off the dashboard you can either go to the “Imported Transactions” tab on the top nav bar or click the “to categorize” highlighted orange button from the dashboard.

Ok, my first bank import only has 15 days. I guess I’m going to have to do a manual import of the rest of the data.

Wave does recognize transfers between accounts. It will automatically give you an option box to verify the transfer.

One thing I noticed as I proceeded to enter 2 credit cards and 2 bank accounts, was that the smart auto-categorization feature was not kicking in. This is where Wave Accounting recognizes a transaction that you entered earlier (say a coffee from Starbucks) and remembers how you handled it last time.

Perhaps Wave was not auto-categorizing for me because I was working off of imported bank statements or perhaps it needs some more time to learn. I’ll have to see how it handles my auto-synced statements in a few weeks. I’m quite certain the auto-categorization / auto-entry feature works, since I got my brother to start using the software a few months ago to track his personal expenses and it was working for him.

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9. document attachment

Wave Accounting has no native document attachment feature, but it can connect with Google Docs. To enable this, you go to “Settings” and choose “Google Docs” from the left hand nav bar.

Document attachment is important to me since you need to back up your bookkeeping records with documents, such as the receipt for some equipment you bought. You can of course keep a digital or paper based record system outside of Wave, but I’ve found it incredibly useful to have the proof attached to my bookkeeping software’s record, since it’s very easy to double-check the document for something like a data-entry error.

I didn’t get great results when I tried to attach documents in Wave Accounting unfortunately. I tried the “add new file” button, under Files, which showed up at the bottom of an invoice I was creating. When I selected a file to add, nothing happened.

Something that is too bad is that you can’t attach documents to every type of transaction, only invoices and bills. So, even if the document attachment feature worked (it’s currently in beta), it’s not a viable solution for those that want to attach proof to each transaction in their Wave Accounting software.

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10. chart of accounts

If you don’t know what chart of accounts is, it’s a listing of all your accounts (Income, Expense, Assets, Liability, and Equity). Believe it or not, but some software I’ve seen doesn’t easily have this ability to see all your accounts in one page in a way that bookkeepers and accountants would like.

Wave Accounting shows you your accounts in a few ways. If you’re looking to add or edit accounts, you can do so under Settings > Accounts.

It would be nice if Wave let you see your account balance or description from this page. It would also be nice to have the ability to click on the account name to see all the transactions in that account. The only thing you can do from the “Accounts” window is to add, edit, or delete accounts.

One thing that you want to make sure when you’re creating accounts, is that you categorize it correctly. Once you’ve categorized your account, there’s no way to modify it. I’ve had to re-categorize accounts for many clients, so it’s too bad that this can’t be done in Wave.

If your accident prone, Wave Accounting lets you re-create previously deleted accounts. This is handy if you accidentally delete an account.

Be careful when setting up your opening balance under Settings > Account Balances. You can’t copy and paste any amounts that have commas in them (I did this when doing my trial balance).

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11. reconciliation

Reconciliation, the process of matching transactions in your bank statement to transactions in your accounting software, is a crucial step in the bookkeeping process. This is because it verifies the data you’ve entered into your books.

A reconciliation process that is easy to use is a crucial feature for me.

In a way, when you’re entering data into Wave Accounting, you’re also reconciling. You use the “Imported Transactions” window to verify your transactions and categorize them into the correct accounts.

A major issue I have with Wave is that the “imported transactions” window is supposed to replace reconciliation, but this didn’t work out well for me, as witnessed in my notes below and in my recommendation section.

Some Reconciliation / Categorization Notes

I find it a bit confusing that all my different banks and credit account transactions are mixed (perhaps because I file my documents by bank and credit card account). I used the drop down box to only show one account at a time. It would be nice to also have the option to only display certain time frames, such as all transactions in one month, but I don’t see that option.

Once you’re categorizing uncategorized transactions, you can click on the three dots on the right hand side of the transaction to open up more options.

To categorize your transaction, you click on the check box and then click on the appropriate category on the right hand side. It was a bit confusing at first, but once you understand it, it’s fairly easy.

One of the advantages of Wave Accounting is that you can categorize multiple transactions at once. I don’t know if this saves me much time or not, but it does seem handy.

One issue I ran into was when I incorrectly entered a date. I accidentally created an invoice with today’s date, not the month it was supposed to be in, which is January. When I received the payment, I think it automatically chose the invoice date. I’ve since fixed the payment date and the invoice date, yet in my account records, the transaction still shows up as date I incorrectly entered.

I remove the payment to try again, since I can’t have that transaction wrong by several months. When I go back to the “Imported Transactions” window, the transaction doesn’t show up. I then go to the “Income” window and proceed to add the payment for the invoice. That works, and the transaction shows up in my account transactions report for my bank.

All right, I reconciled my bank account for the month of January. I ended up having to manually export an excel file in order to match it up against my bank statement. The problem I had was that the Debits and Credits didn’t match my bank statement, since when I split transactions for items such as bank charges when depositing a check, I ended up with more Debits than Credits on the Wave Account Excel spreadsheet. However, if I deduct the Credits from the Debits on both my bank statement and my Wave Accounting Excel spreadsheet they match, so I’m thinking that we’re all good with this verification.

Reconciliation in Wave Accounting, is a serious issue for me, a bookkeeper, since I think it’s going to be very hard to verify that my records are accurate. If I go into the “Reports” section, choose “Account Transactions”, and then choose my bank account, I get a list of all the transactions that have gone through my bank account. What I don’t get is an ongoing balance after each transaction or an overall balance at a certain date. Without the ability to see my balance, there’s no point that I can say, “everything up to this date” is correct.

I’m sure there’s got to be some way around this. For example, it does give you debits, credits, and the total of each. So, knowing that, you can probably use that to match the numbers to a banks statement. But, one of the things about reconciliation is that you have a starting off point, like the balance as of the end of day January 31st, 2012 is $12,003.24. If you knew that, then you could verify, but you only get the debit and credit totals.

There’s a bank balance total that you can see by going to the “Dashboard” window. This is actually the balance pulled from your bank account, not from Wave Accounting software, so I don’t find this helps with reconciling.

Thinking on this, I decide to go “Reports” and go to “Balance Sheet”. If I filter the date, I can now get a bank balance as of a certain date.

To reconcile I have to combine the two reports and manually do some checking.

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12. reporting

Reporting is the end result of your bookkeeping efforts that most people are eager to see. It’s how much you made, how much people owe you, how much you owe people, etc…

Wave Accounting has all the standard reports you’d like, Balance Sheet, Account Transactions, General Ledger, Income Statement, Sales Tax Report, Income by Customer, Expense by Vendor, Aged Receivables, Aged Payables, Gain/Loss on Foreign Exchange.

Something I noticed with the “Expense by Vendor” report is that it only showed you manually entered expenses. Anything that was entered using the “Imported Transactions” window didn’t show up, I would have to think that because that process doesn’t let you choose a Vendor name. So, this report wouldn’t be too accurate for Vendors where you don’t manually enter all the expenses.

In QuickBooks I definitely have more advanced reporting functions. QuickBooks has hundreds of stock reports, with each report having the ability to be customized, filtered, and memorized. For people used to QuickBooks’ extensive reporting capabilities, they may feel restricted by Wave’s options. For those people that need the basics, which is probably a large amount of Wave’s targeted business demographic of small businesses with less than 9 employees, they should be able to do just fine with Wave’s reporting abilities.

You can export your reports into Excel and mess with them, which is something that I do even with my QuickBooks reports.

I do like that you can drill down into transactions and find out more details. For example, if you wanted to check out all the expenses in your “Meals & Entertainment” category of expense, you’d click on the name and you’d then be able to see all the individual transactions.

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13. multi-currency

Multi-currency is something that’s becoming ever more crucial in today’s business world. Many people sell to and buy from multiple countries and collect / pay in more than one currency.

Wave Accounting has the ability to handle multiple currencies. For a test expense I entered, Wave pulled the exchange rate data from XE.com, which is a cool feature, especially for foreign cash receipts. I remember having to manually look up exchange rate history online, which is a real pain.

I don’t do much multi-currency myself, so wasn’t able to really test out how good the multi-currency works. However, it seems to work smartly in automatically calculating the converted value of the money on the day of the transaction. That’s nice.

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14. taxes

Taxes are something I can best comment on from a Canadian perspective. For us, we have federal and provincial taxes that we have to track and file. Having proper tax tracking capabilities is an essential function for Canadian businesses.

The UK has VAT (value added tax) which is similar to our Canadian Federal Tax (GST – Goods and Services Tax). I believe the way we handle taxes is fairly similar, but I’d need someone from the UK to let me know (or perhaps an accountant who practiced in both Canada and the UK).

For the US, I don’t think you guys claim back any sales tax for items that you buy, so it’s not as crucial as a feature? If anyone out there in the US knows, please let me know.

Wave gives you the option to select whether or not your transaction has taxes associated with it. To open up the option to add sales tax to the transaction, click on the button with three dots on the right hand side of the transaction. A nice thing about the taxes, is that if the auto-calculated tax amount is not correct, you can type in the correct amount. This is good for sales receipts where some items have taxes and some don’t.

When it comes time to file sales taxes, you go to Reports > Sales Tax Report.

Seems fairly basic to me. If you’ve entered all your transactions correctly, I suppose you’re good and don’t need many more options. However, from my experience filling out Canadian forms, it would be nice to have a report that gives you all the information you require to fill out your GST form, such as your total sales and the corresponding line numbers (as seen in the report I pulled from QuickBooks).

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15. invoicing

Wave Accounting does invoicing. It also integrates with FreshBooks (whose primary feature is invoicing), so if your invoicing needs are more robust, you can use FreshBooks to do your invoicing.

You can also somewhat customize your invoices in Wave and choose from a few looks.

Wave doesn’t have advanced features, such as inventory. If you’re looking to do that, you’re best to use Wave’s FreshBooks integration (FreshBooks can do inventory).

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16. payment processing

Payment processing is the ability to send an invoice out to a customer and have them pay via credit card, debit card, PayPal, or some type of online method.

Wave has no payment processing. However, it integrates with FreshBooks, which can do this.

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17. payroll

Being able to do your payroll through your accounting / bookkeeping software is nice if you have employees. Calculating payroll manually is doable, there are online calculators that can help you. However, the reason you want to use software for your bookkeeping is so that you don’t have to do things manually.

Wave’s only premium feature is payroll. You can read all about Wave’s payroll features on this site https://payroll.waveaccounting.com/welcome/landing.

I haven’t tested out this feature, so can’t comment. It’s only Canadian payroll (US coming soon). The price is $3 per employee per payroll, which isn’t too bad if you have only an employee or two. What it does include is direct deposit to your employee’s accounts, which is a nice feature. Manually writing checks, printing slips, and stuffing envelopes sucks.

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18. inventory

Being able to track inventory is an essential function for any business that sells products that they need to keep track of.

Wave has no inventory feature, but it integrates with FreshBooks which has some basic inventory functionality (like tracking inventory levels), so the combination FreshBooks and Wave will solve that need.

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19. integration

The power of software is that it can integrate with other software so that applications can share data automatically. If you are using software for CRM, payroll, invoicing, e-commerce, etc… whether or not your online accounting software can import that data can be a crucial deciding factor for you.

In other cases, sometimes your online accounting software won’t do everything, so the only way to get a feature is to integrate with other software that can do it.

Wave integrates with FreshBooks, which integrates with PayPal, so I’m assuming that if you invoice via Freshbooks, this is a way to import all the money you receive via PayPal easily into Wave (although I’m only assuming, I haven’t tested). Wave’s integration with FreshBooks is also in Beta, so be sure to test it out before relying on it.

Wave also integrates with Google Docs for document attachment for invoices and bills. It’s in beta mode as well. In my tests, the feature didn’t work, so if it’s something you need to reliably have right now, I wouldn’t count on it.

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20. paid premium features

Wave Accounting is completely free. The only price you pay is seeing ads in your interface. I’d actually strongly consider paying a bit of money to remove the ads.

The only premium feature that Wave Accounting has, is the payroll feature, which is discussed in the Payroll section. Essentially it’s $3 per employee per payroll period (only available in Canada now, but US is coming soon).

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21. mobile app

It should be noted that any online accounting software can be accessed via your web browser, regardless of your device. However, when an online accounting software provider has a device specific app or a mobile version of the site, it’s designed to work well with in that aspect, so it can be an advantage if you’re planning on accessing your books through mobile devices.

Wave Accounting doesn’t have a mobile app. Even though I have an iPad and an Android smart phone, I don’t care that the software doesn’t have a mobile app, unless the app were to do something beyond what the web browser version could, such as connect with PayPal’s mobile payment system or take pictures of receipts and attach them to records.

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22. search / finding data

Being able to find your data easily is nice! This is actually quite an important feature since I find bookkeeping can be an investigative type of job. The more powerful your search capabilities, the faster you can work.

Wave Accounting doesn’t have any universal search button, so you can’t search your records like you can use Google to search the Internet. I don’t know if any software has this capability, so, it’s not a knock against Wave. However, I have seen software have search capabilities within certain windows or types of transactions, which Wave doesn’t have.

I think your best bet if you want to search Wave is to go to Reports > General Ledger and click on “Detailed”. This will give you all your transactions for all your accounts. You can then use CTRL + F (windows) or COMMAND + F (Mac) to search for a dollar amount or the transaction description.

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23. small annoyances

I put this small annoyances section in there to talk about some small things that aren’t really a big problem, but it would be nice if the software acted differently.

One issue I have with Wave Accounting is that there is no easy way to match my digital and paper documents (like my receipts and bank deposits) to my Wave Accounting records. The transactions don’t have any unique identifiers that I can see, with the exception that you can have Invoice numbers or Bill numbers. But not every transaction is an invoice or a bill. If I had a unique number or code for each transaction, I could label my paper and digital documents with that code and I could match them up, in case of an audit. It does seem there is a description window available for most types of transactions, so that could mostly work, but I don’t like a mostly solution, I want a “it works in every situation” solution.

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24. other features

Other features is a section to add in features or functionality that didn’t get their own section.

One feature that Wave Accounting has that wasn’t mentioned was the ability to add Guest Collaborators. You can do this under Settings > Guest Collaborators. You can give full access or the ability to only view, but not edit.

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25. what’s missing

Here’s some items that I found missing in Wave Accounting. I’m sure that other users will come up with items as well. The important thing to consider when evaluating online accounting software is to see whether it has the features / functionality you need, and whether the items missing are something you can work around or live with.

1. Wave can’t import a General Ledger. I don’t know if any software can, but if there was some template you could use to reformat your data, then I could see this being a cool feature.
2. Budget. No way of tracking your budget vs. actual. Possible of course to do an export of a report and then do it in excel, but it’d be nice to have a basic budget feature for profit and loss.
3. A proper way of reconciling. There’s no easy way of verifying your transactions, which is something I sorely missed when entering my data.
4. A way to import a .CSV bank statement. This might seem minor, but I think that almost every bank can give you a .CSV file of all your transactions. So, the ability to import a .CSV statement is a valuable feature.
5. An audit trail. There’s no way that I can see to access a record of all your transactions, included deleted and modified transactions. An audit trail comes in handy when you’re trying to figure out how your clean set of books suddenly became messed up (usually because of an inadvertently changed or deleted transaction).

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26. tracking changes / undo button

Being able to track what you are someone else has done is important for auditing / investigating how data was entered and manipulated. I use it more for the “how did this happen” so I can fix it rather than the “who did this” ability.

Another function that is good to have with software is the ability to undo a mistake or to redo something that you accidentally deleted.

Wave Accounting lets you undo the lastest transaction that you did. I can’t find any way to undo more than the last transaction.

Wave Accounting has no audit trail.

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27. customer support

Customer support is a crucial feature for some users, especially those who are not as comfortable with software as others. I kind of default to looking at what kind of existing documentation is out there, since I don’t like waiting on support to potentially help me out.

I can’t give any comment on customer support since I didn’t use it. I was approached by Wave Accounting, asking if I had any questions, so that’s a bonus. That means they’re paying attention to their twitter feed.

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28. help / documentation

As mentioned above in the support section, I’d rather see great help / documentation than great support (although I’m sure others would have their priorities reversed). Having information that is easy to access and easy to understand is something that’s nice to have.

I did use Wave’s help files. In most cases, it was able to help me find the answer I was looking for, even if to confirm that Wave Accounting couldn’t do what I wanted it to.

If you’re moving to Wave from another accounting system, I’d suggest looking at their Year End Resources & Tax Prep set of help topics https://help.waveaccounting.com/customer/portal/topics/116371-year-end-resources-tax-prep.

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29. questions

This is an area that I was going to use for questions that I have for Wave Accounting. I’d also like to add suggestions to this category.

1. Are you able to open up the limitation of only being able to use certain accounts in certain windows, such as only being able to use income (categories) in your income window? There are plenty more examples, but letting the users choose more than income accounts will greatly increase the flexibility of your software. I’m pretty sure the reason you limit account options is so that novice users don’t accidentally choose the wrong accounts. However, I’ve seen software like QuickBooks give a warning if a user is trying to choose an account that is not normally associated with the window, like choosing an expense account when creating an invoice. Kashoo does a different approach where it does not show the other accounts initially but has an option to show all accounts. Bothe QuickBooks and Kashoo options work for me as it still protects the novice user while at the same time allowing the advanced user to handle their books easier.
2. Can you keep your user interface consistent? I really don’t like buttons and options moving around on me.
3. When you create a bill or invoice, you’re able to attribute your income or expense in that invoice or bill to multiple accounts. Why then, do you have to split up certain transactions into multiple transactions (like when you’re adding an expense through the “Imported Transactions” window?
4. Reconciliation, please! Some way to reconcile with check boxes and balances. Even a report that helps with reconciliation would be a good start.

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30. country it’s made in

In some ways, the country where the software is made shouldn’t matter. However, I think for accounting / bookkeeping software, it matters more than other types of applications. This is because the people in their own country should (and emphasis on should) naturally design the software to fit the needs of their local tax and accounting requirements better than software made in another country. I’ve noticed this especially when it comes to taxes and payroll.

Wave Accounting is based out of Toronto, Ontario in Canada.

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31. price

Price is always an important factor for businesses. One thing I think you should consider is how much does it cost you to not pay for what you need. Or in other words, how much time (whether it’s your “free” time or someone’s paid time can you save by using the software).

One of Wave’s greatest attributes is that it is absolutely free! The only thing that you have the option to pay for is payroll, but even if you don’t choose that option, you can still manually enter your payroll.

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32. recommendation

Wave Accounting was designed with user friendliness in mind. A quote from their about us page is:

Wave Accounting is an intuitive, 100% free, easy to use accounting application that’s built for small business owners, not accountants. (Actually, accountants love us too! In fact, we have our own Pro Network just for accountants.)

I have a couple issues with this statement. The first is intuitive. I really don’t find the software intuitive. Now that I’ve spent many hours with it and understand how it works, I think I can handle doing what I need to do with the software.

On the flip side, I can see what Wave Accounting was going for, which was to try to be intuitive for someone who doesn’t know bookkeeping or accounting. In a perfect world, where you didn’t have any odd transactions, I can see how Wave Accounting would kick some ass. I’ve yet to see a set of books that didn’t have any non-standard transactions. Here’s a few situations that you’ll run into where Wave’s intuitive software becomes non-intuitive:

1. Any time you deposit more than one check at a time into your bank account. Since Wave Accounting has no “Undeposited Funds” account, there’s no intuitive way to handle this (you have to split the transaction, in case you’re wondering).
2. Any time you are charged a fee, whether it be a bank service charge, merchant account fee, or gain / lose money on foreign exchange when you deposit money into your bank account (you have to split the transaction).
3. When the automation doesn’t work, such as when matching up transfers between accounts.
4. When using “Imported Transactions” for anything other than expense or income accounts.

I have a hard time seeing how accountants would love Wave Accounting. I’m going to throw myself into the accountant corner, even though I’m a bookkeeper, which is different than an accountant. This is probably not the best analogy, but an accountant is like a doctor where a bookkeeper is like a nurse. A nurse can do a lot of the day to day care of patients whereas the doctor makes the bigger picture decisions (I’m sure I probably tick off some nurses and or doctors, sorry).

In any case, I thinks it’s the inflexibility with the way transactions are handled is what would make accountants not like Wave Accounting. My experience with Accountants is they completely understand double-entry accounting (debits and credits – or in other words doing Journal Entries) but they don’t necessarily understand bookkeeping software and their rules. So, I can see accountants simply wanting to fix a problem by going to that journal entry window, but finding that entries made there don’t show up when you’re trying to reconcile, which is the “imported transactions” window.

Reconciliation is really at the core of why I can’t use Wave Accounting. I think the whole concept of the auto-sync and auto-enter software is that it gets rid of the reconciliation process. In reality, what happens is that it makes the reconciliations process (the verification that your bank records match your accounting software records) more difficult. If items you enter through a journal entry can’t be matched to transactions in your “imported transactions” screen, then how do you reconcile?

What does Wave Accounting do right and who could benefit from it? As a personal expenses manager, I think it would do great! That’s because there is room to not be 100% accurate, there is no requirement to provide documentation to prove the transaction, and tracking taxes doesn’t matter. I in fact recommended Wave to my brother to manage his personal finances, and for the most part, it worked well for him (although, he did have the same type of reconciliation / duplication issues that I ran into).

Wave, when the auto sync for banks is working, allows a business person to easily keep up to date with their latest finances, which really is a crucial need of small businesses.

Wave also has all the benefits of online accounting software, in that you don’t need to worry about installing software, backing up, networking computers, different versions of your files, being able to invoice only from the office, and having multiple people work on the file at the same time.

One of the items that I didn’t get to cover in great detail was the automated entry of data, as Wave Accounting gets smarter over time in remembering past categorizations of expenses and income. Providing that this works the majority of the time, I can see how this could help speed up the bookkeeping process.

For the small business owner, would I recommend Wave? As odd as this may sound, because Wave is supposed to be intuitive, I’d recommend Wave if they are able to do some training on the software first. I think that if they were taught for a few hours on how to use the software, they’d avoid many of the issues I ran into. In fact, Wave does have a pro network of accountants that specialize in Wave http://waveaccounting.com/pro-network/.

As easy as software is supposed to make the whole bookkeeping process, I think the small business owner who doesn’t enjoy or know bookkeeping will find many ways to screw up their books. It’s almost inevitable. When that becomes the case, how easy is it to fix those mistakes, whether through help from non-paid others (support staff, help documentation, online forums) or paid help (bookkeepers and accountants). I think that anyone who uses the software should make sure they have a bookkeeper or accountant who knows Wave Accounting that can be at their disposal. Again, Wave’s pro network may solve this issue.

Other accounting software

If you’re wondering about alternatives, I’m currently doing an online accounting software review and comparison. Currently I’ve done reviews of the following accounting software:

1. Kashoo review
2. Wave Accounting review
3. LessAccounting review
4. Quickbooks Online review
5. Xero review
6. FreshBooks review
7. FreeAgent Review