If you are a freelancer, a side business or a one-person service company that invoices a few clients a month and has no employees, pick Wave: its Starter plan is free with no time limit, the invoicing is unlimited, and you only pay Wave when a customer pays through a Wave invoice or you add payroll. Pick Xero if your business has, or is heading toward, employees to pay, sales in more than one state, stock to track, foreign customers or projects to cost, because Xero puts bank feeds, sales tax and 1099 management on every plan and adds multi-currency and project tracking as you climb its ladder, at the cost of a subscription from day one. Free is genuinely enough for a lot of very small businesses; the question is how long yours stays one.
Plans and pricing checked October 2026, and every figure below is read live from our pricing database, the same data as the table and calculator above.
Xero vs Wave pricing: a free plan against a ladder
Xero's entry plan is $27/mo (Early), its mid plan $59/mo (Growing) and its top plan $97/mo (Established), all billed monthly with no contract. The entry plan caps the invoices you can send and the bills you can enter each month, so a business with a steady flow of paperwork moves up a rung sooner than the headline suggests; the mid plan removes those caps, and the top plan exists to sell multi-currency and project tracking.
Wave's Starter plan is free, with no time limit, and its paid plan is $19/mo (Pro), also billed monthly with no contract. There is no top plan: Wave has a free tier and one paid tier, and nothing above it. The two ladders do not line up rung for rung, because they are selling different things. Xero's rungs add capacity and features to a ledger you already pay for; Wave's one paid rung adds convenience to a ledger that is otherwise free.
Xero gives you unlimited users on every plan with no per-user fee. Wave lets you invite others to the books, with fuller access roles on Pro. The comparison table on this page shows the current prices and the calculator above folds your invoices, users and employees into one estimated monthly figure for each.
Where Wave makes its money
Free software is paid for somewhere, and knowing where tells you whether Wave stays free for you. Wave earns on payments: card and bank payments taken through a Wave invoice carry a processing fee, on the free plan and on Pro alike, while a check paid into your own bank account does not. It earns on the paid Pro plan, which adds automatic bank transaction imports, unlimited receipt capture and automated late-payment reminders, and reduces card fees on some transactions. It earns on payroll, a paid add-on on both plans. And it earns on Wave Advisors, a done-for-you bookkeeping service sold separately from the software. A business whose customers pay by check keeps Wave free; one that takes most of its revenue through Wave invoices pays on every sale, which is a subscription wearing a different shape.
Xero's model is simpler to read: one subscription, chosen by plan, with payroll and Inventory Plus as optional add-ons.
- Accountant access: Xero Yes (free), Wave Yes (Pro)
Bank feeds, receipts and the daily bookkeeping
This is the quiet difference that decides how a free plan feels after a month. Xero connects to your bank on every plan, so transactions arrive on their own and reconciliation is a matter of matching. On Wave, automatic bank imports are a Pro feature; on the free Starter plan you upload bank statements yourself, a small chore for a quiet business and the reason a busier one upgrades or leaves.
- Bank feeds: Xero Yes, Wave Yes (Pro)
- Receipt capture: Xero Yes (Hubdoc), Wave Yes (Pro)
- Invoicing: Xero 20/mo (Early), Wave Yes (unlimited)
- Support: Xero 24/7 online, Wave Live chat (Pro)
Wave's unlimited free invoicing is its genuine edge over Xero's capped entry plan. Xero's answer is online support at any hour and free onboarding with a product specialist for new customers, where Wave's live chat is a Pro feature.
Sales tax, 1099s and tax season
Xero includes sales tax and W-9 and 1099 management on every plan, with multi-state sales tax through its Avalara integration. Wave applies sales tax to invoices and tracks what you have collected, but its multi-state handling is limited and it tracks rather than files.
- Sales tax: Xero Yes, Wave Yes
- Multi-state tax: Xero Yes, Wave Limited
- Contractor 1099s: Xero Yes, Wave Yes
- Tax filing: Xero Yes, Wave No
For a single-state service business the gap rarely bites. For an online seller shipping into several states, Xero's tax tooling is the point of the subscription.
Xero vs Wave payroll: both add-ons, priced differently
Both sell payroll as a paid add-on rather than including it in the plan price, switched on from inside the product. Xero Payroll, powered by Gusto, is available on every Xero plan and is priced separately from the ledger. Wave Payroll is a monthly fee plus a charge for each person you pay, on the free plan and on Pro.
- Payroll: Xero Yes (add-on), Wave Yes (add-on)
- Payroll cost: Xero $36/mo + $6/emp, Wave $40/mo + $6/emp
So a business with no employees pays Wave nothing at all, and a business with employees pays both vendors something for payroll. Put your real headcount into the calculator above and the payroll line appears in each estimate.
Room to grow: multi-currency, projects and inventory
This is where Xero earns its ladder and where Wave has nothing to sell. Wave has no inventory, no project tracking and limited multi-currency: it is bookkeeping and invoicing for a business that does not yet need those things. Xero covers basic inventory on every plan with an optional Inventory Plus add-on, and reserves multi-currency and project time and cost tracking for its top plan.
- Multi-currency: Xero Yes (Established), Wave Limited
- Project tracking: Xero Yes (Established), Wave No
- Inventory: Xero Limited, Wave No
None of this matters until it does. A consultant billing by the hour in dollars to US clients loses nothing on Wave; the first foreign invoice, shelf of stock or job you want a margin on is where the free plan starts costing you time instead of money.
Which one connects to AI assistants
Xero has a native AI assistant and publishes its own Model Context Protocol server, so an assistant that speaks MCP can be pointed straight at your Xero data. Wave's in-product AI is limited and its route to an assistant runs through a third-party connector.
- In-product AI: Xero Native (JAX), Wave Limited (receipt OCR on Pro only)
- Agent route: Xero Native MCP (official), Wave Via 3rd-party (community)
Pros and cons for this matchup
Wave wins on a free plan with no time limit, unlimited invoicing and bills on it, and a cost that stays at zero for a business with no employees whose customers pay by check. Its limits are automatic bank imports, receipt capture and live chat held back for Pro, a processing fee on card and bank payments taken through its invoices, limited multi-state tax, tracking rather than filing, and no inventory, project tracking or multi-currency depth.
Xero wins on unlimited users, bank feeds, sales tax and 1099 management on every plan, free accountant access, online support at any hour, basic inventory with an add-on to extend it, multi-currency and project tracking on its top plan, and an official MCP server. Its costs are a subscription from the first month, a capped entry plan, and a top plan to reach before multi-currency and projects switch on. Payroll is a draw: both charge for it as an add-on.
The verdict
For a freelancer, a side business or a one-person service company with no employees, Wave is the pick, and not grudgingly: the bookkeeping and invoicing are free without a time limit, and the only money that changes hands is a processing fee when a customer pays through a Wave invoice. Upload your bank statements by hand, or pay for Pro when that chore gets old. Xero is the better ledger the moment the business has employees, sells into several states, holds stock, invoices in another currency or costs its jobs, because those are the things Wave does not sell at any price. Run your invoices and headcount through the calculator on this page, then ask the one question that decides it: in a year, will this still be a business that Wave's free plan can describe?