Wave vs. Xero: free is enough until manual work becomes the bill.
Wave Starter can be the correct long-term system for a tiny service business. Xero earns its subscription when automation, collaborators, bills, reporting, or connected operations make complete books meaningfully easier. Revenue alone does not decide; complexity does.
Use Wave Starter when one person can maintain simple books manually and basic invoices are enough. Upgrade to Wave Pro when bank imports and receipts solve the problem. Move to Xero when you need a true shared accounting system, wider integrations, more controlled bills and reporting, or a bookkeeper who prefers it.
Compare the plan you will actually use
| Plan | Regular price | What it solves | What still breaks |
|---|---|---|---|
| Wave Starter | $0 | Unlimited estimates, invoices, bills, and bookkeeping records; online payments optional | No automatic bank imports, automated categorization, receipt capture, or additional users |
| Wave Pro | $19 monthly or $190 annually | Automatic bank imports through Plaid, auto-merge/categorize, receipts, reminders, users, live chat/email | Connectivity depends on Plaid; narrower ecosystem and operating depth than Xero |
| Xero Early | $25 monthly | Bank connections and reconciliation, smart document capture, reports, 1099 and sales-tax tools, unlimited users | 20 invoices and 5 bills; automatic reconciliation beta is not included |
| Xero Growing | $55 monthly | Unlimited invoice/bill volume, automatic reconciliation beta, stronger dashboards, unlimited users | Costs $660/year before add-ons; support is online-case based |
Stay with Wave when the process is simple and controlled
Wave Starter is strongest for a one-person service business with a small number of accounts, straightforward income and expenses, no inventory, and an owner willing to maintain records. Its free plan includes unlimited invoices and bills, so it does not punish a growing client list the way some invoicing-led entry plans do.
The free price shifts work onto you. Transactions must be entered or brought in without the automatic bank-feed workflow sold in Pro. Receipts are not captured for you. Another user cannot simply enter the books. That is acceptable if the monthly close remains short and accurate.
Wave Pro is the first comparison—not Xero—when the failure is simply “I need bank imports, receipt capture, reminders, and my bookkeeper to log in.” At $19 monthly or $190 annually, it is cheaper than Xero Early. But bank connectivity uses Plaid and is not guaranteed for every institution. Test your specific bank and card before assuming Pro removes manual entry.
Move to Xero when accounting becomes shared infrastructure
Xero is a broader accounting operating system. Every business plan includes unlimited users, bank reconciliation, smart document capture, reporting, bank connections, and an app market Xero describes as more than 1,000 certified apps. For ecommerce or an operation assembled from several tools, that integration surface may be the reason to pay.
Do the cap math before choosing Early. Twenty invoices and five bills are low limits for a business that invoices weekly or pays several vendors. App-created transactions can count toward the invoice limit. If the limits do not fit, compare Wave Pro at $19 against Xero Growing at $55—not Xero Early at $25.
Xero also changes the support model. It advertises free online support around the clock, but no inbound customer-service telephone number. A case may result in Xero calling you. An owner who needs to call immediately should treat that as a fit issue, not a footnote.
Payment processing does not make the bookkeeping plan free
Wave lets customers pay invoices online, but processing is separate from the accounting subscription. Starter’s published card rates include a fixed $0.60 component; ACH is listed at 1% with a $1 minimum. Pro changes part of the card-fee structure for the first ten transactions each month. Model your actual invoice size and payment mix. A $0 accounting plan can still produce meaningful payment costs.
Xero also connects payment services rather than making card acceptance free. Compare the payment provider’s fee, settlement timing, chargeback handling, automatic matching, and how gross revenue, fees, and deposits appear in the books. The lowest headline rate is not useful if deposits cannot be reconciled.
Use five triggers—not revenue—to decide
- Close time: the monthly close repeatedly takes longer than the value of the subscription.
- Exceptions: refunds, fees, sales tax, transfers, and unmatched deposits are becoming routine.
- People: a bookkeeper or collaborator needs direct, controlled access.
- Systems: ecommerce, inventory, expense, CRM, or payment tools must feed the ledger reliably.
- Reports: you need dependable payables, cash flow, project, lender, or management reporting that the current workflow cannot produce.