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WaveApps Bookkeeping Basics for Freelancers

Why Wave?

There are a bunch of different online bookkeeping options available, but the reason I’m sharing about Wave is because it’s completely free.

You’re probably thinking, what’s the catch? There are some sidebar ads on the site so that Wave can make money, but they aren’t in your face and I’ve actually learned to tune them out. You aren’t charged if you have more than five clients or want to categorize more than 15 transactions a month. The only time fees come into play is if you use their payment processor to collect payments or if you use their payroll system.

Looking for a free and easy way to manage your freelance finances? Look no further than Wave Apps. Here's how to get it setup and use it.

Who should use Wave?

Wave is great for freelancers and service-based small business owners. It allows you to invite your accountant to view your accounting without having to give them your login info. Wave isn’t the best if your primary source of income is selling inventory. If you want in-depth reporting beyond the basic profit and loss statement and balance sheet, you will want to check out Quickbooks Online or Xero.

If you don’t currently have a bookkeeping system in place, I recommend starting with the new year. Going back and trying to do all 12 months in your new bookkeeping software will overwhelm you and you won’t want to do it. By starting with January, you’ll have a fresh slate and you’ll be more likely keep up with it throughout the year.

Getting Set Up

  • Create a business account here.
  • Link your bank accounts, credit cards, and other payment collection accounts like PayPal.

Set up 2 Connect bank accounts

 

  • Set up your chart of accounts.

Set Up 3

 

  • Click on the Accounting tab on the left side of the screen. Here you can add/edit/remove different income and expense categories. You can also add income or expense categories when you’re assigning a category to a transaction. Simply click on “Add a new category” and a screen will pop up for you to add the category you need.

Set Up 3a

 

Monthly Tasks

  • Categorize your income and expenses.

Monthly 1 Categorize

 

  • Categorize transfers from one account to the other. For example, if you receive payments through PayPal, record the transaction that takes the money out of PayPal and the transaction that puts the money into your bank account as a transfer.

Monthly 2 - Transfer

  • Reconcile each account you’ve linked to Wave.This is like balancing a checkbook. During this process, you’ll see if any transactions were left out or double-counted.a. Make sure this drop-down menu shows “Unverified” so you can see the unreconciled transactions.
  1. In this drop-down menu, select the account you will reconcile.
  2. Select the dates that correspond with the bank statement. Sometimes statements align with the month-end and sometimes they start and begin mid-month.
  3. Enter the ending bank balance from the account’s monthly statement.
  4. Go line by line through your paper bank statement and check off the transaction on paper and on screen.
  5. Once you’re done, the “Difference” should show a big fat zero.
be-your-own-cfoFeeling lost about how to handle bookkeeping and everything money in your business? Amy’s course Be Your Own CFO is here to save the day. Learn how to setup your business legally, how to correctly use bookkeeping softward and much more. She’s generously offered FTFers $75 dollars off- just use coupon code FREELANCETOFREEDOM to get it! Don’t wait til tax time and get caught with your pants down!

These are the basic tasks in getting your bookkeeping set up and operating on a monthly basis. Some freelancers will have very simple bookkeeping and some will have more involved and difficult bookkeeping.

If you feel like you’re in over your head, don’t throw in the towel and give up. Contact a bookkeeper that specializes in cloud bookkeeping. Many offer a training option where they do an on-screen tutorial of the program using your actual transactions.

Once you get a couple of months under your belt, it gets so much easier!

Amy Northard Amy is a Certified Public Accountant who loves working with small creative businesses to make their bookkeeping and taxes less scary. She’s recently created Be Your Own CFO, which is a course that goes through the basics of setting up your business, creating a usable bookkeeping system, tax deductions, and much more. Amy loves sharing her #offdutyCPA adventures, doodle pup pics and tax tips over on Instagram. Find her on Facebook and Twitter.

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{ 6 comments… add one }
  • Julienne

    This is great. I use Wave exclusively and am super happy with everything I can do with it. (And my accountant is happy with the reports I can pump out for him at tax time!)

  • I just signed up with Wave and I love it! The fees for collecting credit card payments don’t seem different than paypal and it seems quit easy and simple to use! Glad to know it’s also CPA approved!

  • Love this post. I use started using Wave this year and it has made a massive difference to my business. I love how I can dig into the data and see where I spend the most etc. The only slight complaint I have with it is that it seems buggy with importing PayPal transactions and doesn’t show the fees as an expense. In fact, I’m moving over to invoicing with Wave because the payment processing fees work out a lot cheaper than PayPal, and it will import its own transactions more cleanly.

  • Gabriella

    Thank you for this post. I was subscribed with Wave and found it so buggy at the time, I dropped it. You’ve made me reconsider for 2016. Amy: Consider putting together a eBook for Wave! 🙂

  • David

    Hi,

    You recommend linking up all your bank accounts, and yet the image below this tip lists all American banks. So is Wave Apps only for American citizens? I don’t see you say anywhere if it’s for international users as well.

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