Wave vs Xero: What “Free” Leaves Out, What Xero Caps, and the 24-Month Math for a Small US Business

Written & reviewed by Ram Singh, founder, Numerawise Solutions · Last reviewed September 13, 2026

The short answer: Wave is free until you want your bank to do the typing, and Xero is inexpensive until you send your twenty-first invoice in a month. Wave’s Starter plan costs nothing for unlimited invoices, bills and bookkeeping records, but automatic bank-transaction import, receipt capture and extra users live in the Pro plan. Xero’s Early plan includes bank feeds and unlimited users, but caps you at 20 invoices and 5 bills a month. Those two limits, one on each side, decide the comparison for most US businesses under about ten people. This post lays out what each vendor publishes, with prices as of September 2026, and the four signs you have outgrown either of them.

What each product is built for

Wave, a Canadian company owned by H&R Block, sells to businesses in the United States and Canada. Its pricing page lists two plans. Starter, at no charge, gives unlimited estimates, invoices, bills and bookkeeping records, the mobile invoicing app and a cash-flow dashboard. Pro, at 19 US dollars a month or 190 a year per business, adds automatic bank-transaction import through Plaid, automatic merging and categorization, unlimited receipt capture, late-payment reminders, invoice branding without the Wave footer, and additional users with admin, editor or viewer roles. Online payments, payroll and a bookkeeping service called Wave Advisors are paid add-ons on either plan; card processing is 2.9 percent plus 60 cents on Starter and 2.9 percent with no fixed fee for the first ten transactions a month on Pro. Wave’s own comparison table shows live chat and email support as Pro-only unless a Starter user buys an add-on.

Xero, a New Zealand company, sells three US plans on its pricing page as of September 2026: Early at 25 dollars a month, Growing at 55 and Established at 90, each for one organization with no per-user fee. Every plan includes bank reconciliation, sales tax, W-9 and 1099 management, real-time reports and a cash-flow forecast whose horizon lengthens with the plan. Early is capped at 20 invoices and quotes and 5 bills a month. Growing removes the caps and adds bill automation, performance dashboards and three budgets. Established adds multi-currency, project time and cost tracking, employee expense and mileage claims, KPI analysis and international bill payments. Payroll is Gusto inside Xero at 36 dollars a month plus 6 per employee or contractor, and Inventory Plus is a separate add-on. Xero has announced a price increase effective 1 October 2026; what that increase costs over 24 months is covered separately.

Side by side, on published terms

Sources: waveapps.com/pricing and xero.com/us/pricing-plans, both read September 2026. Both vendors reserve the right to change pricing; Xero’s page states a US price increase from 1 October 2026 and a new-customer promotion that ends 30 September 2026. Re-check before you buy.

The limit on each side, and who hits it

Wave’s limit is labour. On Starter, every bank transaction is typed in or uploaded by statement, because automatic import is a Pro feature. For a freelancer with thirty transactions a month that is an hour; for a shop with three hundred it is a bookkeeper’s afternoon every month, which is why most Wave users who keep the books current end up on Pro within a year. Once you are on Pro, the comparison is 19 dollars against Xero’s 25, and the difference is no longer price; it is that Xero includes 1099 management, unlimited users and a forecast, and Wave includes ten no-fee card transactions a month.

Xero’s limit is volume. Twenty invoices and five bills a month is a consultant or a landlord, not a trade. A contractor who bills weekly progress invoices to eight clients is at the cap in month one, and Growing at 55 dollars is the plan they are actually buying. The honest comparison for a business that invoices daily is therefore Wave Pro at 19 against Xero Growing at 55, and at that point Xero has to earn the extra 36 dollars a month with automation, dashboards and the user count.

The 24-month math

Use list prices and your own transaction counts. A sole proprietor who sends ten invoices a month and is willing to upload bank statements pays Wave nothing for two years and Xero Early 600 dollars at today’s price, more after 1 October. The same person who wants the bank feed pays Wave Pro 380 dollars over two years on the annual plan against Xero Early’s 600. A small firm with two people in the books, forty invoices a month and a contractor to pay at year-end pays Wave Pro 380 plus a payroll add-on, against Xero Growing at 1,320 over 24 months with 1099s included. Add card fees at your own volume: on Wave Pro the first ten transactions a month carry no fixed fee, which on ten 500-dollar invoices saves six dollars a month and is worth nothing to a business paid by check. None of these totals is large. What is large is the cost of picking the wrong one and migrating twice, which is why the section below matters more than the table.

Four signs you have outgrown both

1. You need inventory with cost of goods sold. Wave does not list inventory tracking; Xero offers it as a paid add-on. A business that buys and resells stock usually lands on QuickBooks Online Plus or above, where quantity, cost and COGS are native.
2. You need class or location reporting. Two locations, two service lines or a grant-funded program each want their own profit and loss. Xero has tracking categories; Wave has none; QuickBooks Online Plus allows 40 combined classes and locations and Advanced removes the cap.
3. Your CPA or bookkeeper works in QuickBooks. Most US small-business accountants do. The hours they spend translating Wave or Xero reports at tax time are a cost that never appears on either pricing page, and reviewing your bookkeeper’s work is easier when you share a system.
4. A lender or buyer has asked for statements. Both Wave and Xero produce a balance sheet, but a two-year-old Wave Starter file kept by hand rarely reconciles cleanly, and that is what a lender’s reviewer checks first. What investor-ready books look like sets out the test.

When one of these applies, the move is usually Wave to QuickBooks Online or Xero to QuickBooks rather than Wave to Xero; the comparison page for that decision is Wave vs QuickBooks.

What moves between them

In either direction the chart of accounts, customers, vendors, open invoices and bills, and bank transactions move; the destination’s structure decides how. Leaving Wave, its categories map onto Xero’s chart, Wave Payments deposits are split back into gross sales and fee expense so that revenue is not understated, and payroll history is loaded as opening balances unless you scope the detail. Leaving Xero, tracking categories become Wave’s customer and vendor lists plus reports, because Wave has nowhere else to put them, which is the main reason that direction is rare. Both jobs end with bank balances that agree to the source to the cent at the cutover date and a read-only archive of the old system; how much history to carry is the scoping decision that sets the price.

Frequently asked questions

Is Wave really free?

The Starter plan is free for invoicing, bills and manual bookkeeping records, with no time limit. What it does not include, on Wave’s own pricing page, is automatic bank-transaction import, receipt capture, additional users, invoice branding without the Wave footer, or live chat support; those come with the Pro plan at 19 US dollars a month or 190 a year per business, or as paid add-ons. Card payments and payroll are paid on both plans.

What does Xero’s cheapest plan not let you do?

Xero’s US Early plan limits you to 20 invoices and quotes and 5 bills a month, and does not include multi-currency, projects, expense claims or the customizable dashboards of the higher plans. It does include bank reconciliation, sales tax, W-9 and 1099 management and unlimited users. A business sending more than 20 invoices a month needs Growing, and one that needs multi-currency, projects or expense claims needs Established.

Can I move from Wave to Xero without losing history?

Yes. Wave’s exports and reports give the chart of accounts, customers, vendors, invoices, bills and bank transactions, and a managed conversion loads them into Xero with opening balances and history reconciled to Wave’s ending bank balances. Wave’s card-payment fees and payroll history are re-established as opening balances rather than transaction by transaction unless you scope the detail.

Should I skip both and go to QuickBooks Online?

If you already know you will need inventory tracking, a US payroll built into the ledger, class or location tracking, or a QuickBooks-literate bookkeeper or CPA, going straight to QuickBooks Online avoids a second migration later. If your needs are invoicing, bank reconciliation and clean statements for a Schedule C or a single-member LLC, Wave or Xero will do the job for less, and QuickBooks can wait.

Moving from Wave to Xero? Wave to Xero conversion sets out the scope and the fixed price. Outgrown both? Start with Wave to QuickBooks Online or Xero to QuickBooks. Weighing Wave against FreshBooks instead? FreshBooks vs Wave.