Xero vs Wave: Which One Fits Your Business Needs?

Choosing the right accounting software is important especially when you’re managing business finances, whether you’re just starting out or already scaling.

In this post, we’ll break down the two popular tools Wave and Xero in a way that’s easy to understand.

From pricing to features, and ease of use to customer support we’ve covered everything you need to make the best choice.

🔍 What Is Wave and Xero?

👉 If you want basic features for free, Wave is a solid choice.
👉 If you want detailed financial control and reports, Xero may be a better fit.

📊 Core Features Comparison

Let’s see what you get with each tool when it comes to day-to-day accounting:

Feature	Wave (Pro)	Xero (Starter)
Invoicing	Unlimited, customizable	Limited (20 invoices/month)
Expense Tracking	Yes	Yes
Bank Reconciliation	Yes	Yes
Financial Reports	Basic only	In-depth reports

• Wave gives you most of the basics you need to run your business.
• Xero shines when you want deep financial reports, cash flow tracking, and audit-ready books.

🔍 Feature Comparison: Wave vs Xero

🧾 Invoicing

Wave	Xero
Free invoicing with unlimited, customizable templates.	Limited invoicing in the Starter plan (up to 20 invoices/month).
You can create, send, and track invoices easily.	Includes more advanced features like batch invoicing and invoice templates.
Allows automated recurring invoices for subscription-based businesses.	Recurring invoices available, but only in higher-tier plans (Standard & Premium).
No extra cost for invoicing in the Starter plan.	Paid plans only include full invoicing features (Starter doesn’t include everything).

💳 Payments

Wave	Xero
Integrated payments via credit card and bank payments directly in invoices.	Integrated payments with third-party apps like PayPal or Stripe.
Free to accept credit card payments (except processing fees: 2.9% + $0.60 per transaction).	Accepts payments, but extra fees for integrations and add-ons.
Invoice paid directly through Wave — no extra fees for basic features.	Additional payment processing fees for certain add-ons and integrations.
No monthly fees for accepting payments.	Additional costs if you want advanced payment tools or integrations.

💼 Payroll

Wave	Xero
Payroll available as an add-on for $35/month (only in the US and Canada).	Full payroll features available in all plans (Standard & Premium).
Includes tax calculations and direct deposit options for employees.	Full-service payroll with tax filing, employee setup, and more.
Payroll is limited outside of the US and Canada.	Works in more countries with features like pay runs, tax rates, and employee benefits.
Limited integrations with third-party payroll providers.	More integrations for payroll and HR management tools.

📚 Accounting

Wave	Xero
Basic accounting features like income, expenses, and basic financial reports.	Advanced accounting tools such as tracking profitability and cash flow.
Single-entry bookkeeping — good for solo entrepreneurs or small businesses.	Double-entry accounting for more robust financial tracking and scalability.
Automatically syncs with bank accounts for easy reconciliation.	Bank reconciliation with advanced features like bulk reconciliation in higher plans.
Limited reporting (income statement, balance sheet) in the free plan.	Full financial reporting (P&L, balance sheet, tax reports) in all plans.

🔧 Advanced Features

Here’s where the difference becomes clearer:

• No inventory tracking.
• No project tracking or time logging.
• No multi-currency transactions.
• Limited reporting options for advanced financial tracking.
• No automated workflows for recurring transactions or projects.

• Offers inventory tracking in Standard & Premium.
• Has project tracking and job costing tools.
• Allows multi-currency support in Premium.
• Advanced reporting tools for profitability and cash flow.
• Customizable workflows for automated invoicing and payments.

👉 If your business involves stock, multiple currencies, or billable projects — Xero is a better option.

💸 Pricing Comparison

Here’s a quick look at how Wave and Xero charge for their services:

Wave Pricing

Plan	Price	Billed	Features Summary
Starter	$0/month	Free Forever	Great for basic accounting — invoicing, tracking expenses.
Pro	$170/year	Annually	Adds bank connections, receipt scanning, chat support.

Wave is one of the few tools that offers real accounting features completely free which is why many solo entrepreneurs love it.

Xero Pricing

Plan	Price/month	Features Summary
Starter	$29	Send quotes, invoices, track bills, basic reconciliation.
Standard	$46	Adds bulk transaction reconciliation, more users.
Premium	$69	Includes multi-currency support, extra automation.

Xero doesn’t offer a free plan, but it gives you access to business-level features especially helpful as your business grows or becomes more complex.

✅ Pros and Cons Summary

Platform	Pros ✅	Cons ❌
Wave	– Free starter plan – Simple interface – Great for freelancers	– No advanced tools – Limited integrations – Support only for Pro users
Xero	– Business-grade features – Strong integrations – Better reporting	– No free plan – Learning curve – Higher price

Which One is the Best Choice for Small Businesses?

Wave is the Clear Winner 🏆 in this (Wave Vs Xero) Comparison. While Xero offers more features, Wave stands out as the best value-for-money choice, especially for freelancers, startups, and small business owners who don’t want to spend hundreds of dollars each year on accounting software.

🎯 Final Call: Who Should Choose Wave?

If you’re a freelancer, a small business owner, or just looking for a smart, budget-friendly way to manage your finances — Wave is hands-down the better option.

It’s not just about saving money. It’s about getting exactly what you need, without the stress of paying for features that don’t matter to you.

🏁 Winner: Wave Accounting – Simple, effective, and affordable (or free!).

🧠 Final Verdict: Which One Is Best for You?

It depends on what stage your business is in.

• ✅ Choose Wave if you’re just getting started, managing a side hustle, or want a free, simple tool to track income and send invoices.
• ✅ Choose Xero if you run a growing business, want to manage inventory, connect multiple tools, or need full accounting reports.

📌 Must Read: Xero Pricing 2025: Is It Affordable Accounting Software?

🤔 FAQs