The PROBLEM with Hnry

Let me just start out by saying that Hnry is a great platform for those just starting out on their self-employment journey. Specifically, those where their self-employment looks very similar to their past job, except are now on a contract and are left to handle their tax administration themselves.

Hnry is a tax administration service, rather than a tax or accounting advisor. You give them the data and they will spit out the answer.

For simple sole-trader businesses, this may be the perfect solution for you.

You get to maintain control over the process.

You can invoice your clients and claim back operating expenses as you go, quickly and easily on the app.

Taxes are paid throughout the year and your tax return is filed for you.

Very minimal time on your side is required.

Oh, and did I mention it’s extremely cheap? At 1% of your revenue, capped at a maximum of $1,500, you’ll be laughing all the way to the bank.

Taking NZ’s average income of $70k, you’ll be paying Hrny $700 to handle your taxes. That’s not bad, and considerably cheaper than an accountant.

I am of the opinion that if you are just starting out in business, and the way you make money is relatively straightforward, then Hnry is not a bad choice. However, if your earnings do grow beyond $70k, I argue that you should move to a personal Chartered Accountant.

The difference between Hnry and an Accountant.

Why the hell should I pay for an accountant?

You see, most of the value that an accountant provides for their clients is through understanding the wider context of their clients lives. That is, their personal lives outside of their business.

Let me explain.

How did you get to work today? Did you take your car or catch the bus?

Did you know that you can claim the GST back on the value of your car? Or how much of your vehicles running costs are you allowed to claim back given you also use the vehicle for your personal goings-on?

Do you work from home part of the time? I bet you do. Did you know you can claim a portion of your home expenses (rent, mortgage interest, rates, insurance etc) as a business expense?

Your partner has a business too I see. Turns out they have some historic tax losses that have not been offset against income. Could you use those tax losses to reduce the tax that you pay?

Are you looking to buy your first home in the near future? Given the strenuous requirements banks place on the self-employed to prove their income, should you pay yourself a PAYE salary so you can provide them with an IRD summary? Did you know you could do that?

And the biggest kicker in my opinion is that Hnry only serves sole-traders. So, at what point in time is it right for you to move your business into a company structure? Will they advise you when that is? This is usually a risk and commerciality-based judgement, and obviously they will struggle to weigh up these factors as they won’t see them.

You see, context matters. And unfortunately, Hnry can not understand your context because there are no means to explain the context to them, nor are they interested. That is not their business model.

Why should we trust you, Ryan?

Good question.

And as I say above, I do think Hnry is a great tool, in certain circumstances.

However, sometimes you need a bigger, sharper tool to get the job done.

When talking about serious $$ impacts from potential claims or the way the business is structured, it makes sense to pay a little bit more for the help of a human who understands you and your wider life environment.

Usually, the extra you will pay an accountant will be offset against the additional savings they will find for you. Or, you can save on the cost of your time and stress.

(P.S. I’m continuing my theme of European summer photos as the cover image. That’s me in Vienna getting tired of walking in the heat 😄🍻)