Wave Accounting: Freedom from shoebox accounting
Originally this was Wave Accounting. Now it’s been folded into a series of applications, under the heading “Wave.”
It’s tax time. At least it was up until a couple days ago. In this annual ritual each of us goes through the process of organizing our previous year’s earnings and paying a portion to the government. These proceeds are the lifeblood of the country that keeps us free. Yet for many of us this is a stressful event. I remember the easy days. I had a steady eddy job at Acme large corporation. It was boring beyond tears, but tax day was a breeze back then. I needed to account for just a handful of investments and one W2. Those were the simple days.
One day, like many others, I spread my wings and left the security of a stable job. As an independent contractor large contracts can pay well, and small contracts keep things moving. All of them however, need to be accounted for at the end of the year. Thus, I learned the importance of what’s known as shoebox accounting. This is where you keep all your receipts in a shoebox and at the end of the year tally them up as deductions. Almost invariably a spreadsheet is involved to keep track of it all. I remember last year I headed down to see my accountant, spreadsheet and shoebox in hand. (I used an envelope actually.) I dumped it on her desk and she poured through all the papers. Watching her distill my year’s financial efforts down to a single bottom line is one of my favorite events of the year. It takes her so little effort and me even less. I just sit there making small talk, and pay her money at the end.
But keeping track of one’s expenses this way is both tedious and error prone. The first year I was self employed I had to visit my accountant two or three times since I didn’t bring everything I needed. Invariably some expenses were missed along the way. Thus, I ended up donating money to the stewards of this fair land. I very much appreciate our public servant’s hard work, but don’t really intend to overpay them. In this era of internet banking and technological advances there must be a better way. Surely we can do better than a pile of receipt and a hand made spreadsheet. Accounting programs provide some relief. They help keep track of one’s income and expenses. In reality though they just transfer the organizational problem from a once a year occurrence to an ongoing chore. You’re still manually tracking every invoice and receipt and recording it. A long awaited solution to this accounting management problem has finally arrived. It comes with the promise of doing away with the shoebox full of receipts once and for all. It’s called Wave.
Wave Accounting (found at waveapps.com), is a fully functional online accounting solution. With it you can enter in all your expenses and receipts that comprise your business as well as personal expenses. It comes with an invoicing system and payment reminder system as well. That’s just scratching the surface though. Wave allows you to integrate with your banks and credit card companies and will import all your transactions for you. Thus, when you go out to dinner with a client and pay for it with your credit card, it will import that transaction and prompt you to categorize it. By quickly dragging and dropping each expense they are readily categorized appropriately. With Wave, the receipts never need leave the shoebox, excepting for backup or the rare case of an audit.
The unprecedented ease with which accounting can be done with Wave doesn’t end there. As you continue to categorize your expenses the system will learn your spending habits and will automatically categorize them for you. All that’s left for you to do is approve the categorizations, or place them in a different category if needed.
To round things out it comes with multiple other amenities including balance sheets, general ledger, income statements, and a variety of other reports that you and your accountant will find useful. Speaking of your accountant, the system allows you to grant them direct access to your profile so they can log in. You can give them full access or a select portion of your financial profile. The list of Wave features goes on, but we’ll take a moment to jump to the bottom line. It’s best understood as quipped by the New York Times- “Even though I’d say the service is well worth paying for, it’s free.” Wave isn’t just free for 30 days, or free for limited access to their accounting system with the option to upgrade for more. It’s free- free. You never have to pay for it. The service is entirely funded by affiliate marketing ads from financial providers they work with.
Small business owners and sole proprietors have a unique challenge in tracking their expenses. The lines between personal credit cards and business accounts are frequently crossed. In many situations expenses slip through causing money to be lost. Wave’s free online accounting software for small businesses is the solution we’ve been waiting for. Its integration with banking institutions as well as auto categorization takes care of most of the steps needed to track one’s expenses. And while its automated features are groundbreaking, it’s flexible enough to be utilized as a conventional accounting system as well. With Wave small business owners can finally track both their personal and business expenses with accuracy and ease.