After giving up a management consulting job in favour of freelance work, Hnry CEO James Fuller and his partner Claire Fuller spent far too much time focusing on their financial admin, calculating the correct tax rate, and other expenses.
They were surprised at how much time and attention it took away from their core business. They developed an Excel spreadsheet that also caught on with their freelancing friends, and from there, payment and tax platform Hnry was born (though they have moved well beyond Excel spreadsheets these days)
The Freelance Collective sat down with James (virtually, of course) to learn more about Hnry, which quietly launched in Australia late last year. And to find out how it works for freelancers.
What is Hnry?
James: Hnry is different to basic accounting software. The core of our business is paying and filing your taxes and being your accountant. We combined several things in our service offering to help freelancers with their admin.
Everyone who signs up to Hnry gets their own unique Hnry bank account, into which all their freelance income gets paid. They can choose to send their invoices through Hnry or simply use the account to have invoices paid into.
Once the money comes into the Hnry account, we automatically calculate, deduct and pay the right amount of tax – whether that’s income tax, GST, student loans and so on. All the compliance aspects are sorted immediately. We can also pay other allocations such as superannuation and bills. You can nominate a percentage of your income to go to anybody. The residual money gets transferred to you. That all happens within about 60 seconds of the initial client payment coming in.
We also do automatic invoice reminders. If you’re sending invoices, we automatically follow up with your clients. So you don’t have to worry about having that conversation yourself and chasing invoices. We find it very effective. Those using it tend to get paid five times faster when there’s an overdue invoice.
We’re also about to roll out online payments as part of our invoices so our clients can be paid via an online debit or credit card at no extra cost to them.
All of our customers also get a human accountant who can answer any tax questions and lodge their BAS, PAYG and end-of-year returns, taking away hours of admin for freelancers. Our customers have unlimited access to our accountants, so they are not paying extra every time they want some advice. The accountants will liaise with the ATO on your behalf.
Our clients also have access to our invoicing and quoting software and can take photos and upload expenses. The big difference between us and standard accounting software is that you still have to do all the work with standard software. In contrast, with Hnry, you don’t need to be sitting there reconciling. You take a photo of the receipt. It automatically scans and categorises it for you, and you get a human to review your receipts to make sure you get the right tax relief straightaway. It means that you don’t have to worry about a big tax issue at the end of the financial year. No more stress from gathering your receipts and presenting them to an old school accountant who goes through them with a fine-tooth comb.
Also, being a registered tax accountant, Hnry can support one of the most complex challenges of being self-employed: getting access to loans and mortgages. The reports you get out of the Hnry app are immutable in the eyes of the banks because the payments have come through a Hnry Bank Account. And that’s what the banks and lenders like about it (when it comes to home loan applications).
How much does it cost to have all these services?
James: Hnry charges 1 per cent of each invoice for the service. The nature of freelance work is that there may be periods where there’s no work coming in, so we think a pay-as-you-go service makes much more sense. Regardless of how much or little work you have, you still get unlimited use of the service. You still get all your taxes lodged and calculated, and your payments are made. And if you aren’t earning, then you aren’t paying. Even if you have no work for months, we will still lodge your tax return at the end of the year for you.
Of course, some people will have continuous work and may be bringing in a high income, so we also cap the amount you pay at $1,500 if you earn over $150,000 per year. So you know, you’re never going to pay more than the cap.
That still gets you unlimited use of the service. You still get to phone up our accounting team and ask about expenses or invoicing or whatever questions you have. And that’s one of the benefits. Unlike old school traditional accountants whose bread and butter is small enterprise company accounting, we specialise in sole traders. We understand everything there is to know about being a freelancer.
When I was self-employed, my traditional accountant cost me upwards of $1,000 per year. Every time I needed my accountant, it cost more. I had to pay for my accounting software on top of that. And then there was the cost of my time to reconcile transactions and fiddle about in the software. When I added in the value of my own time, I spent far more than $1,500 on accounting – time I could have been growing my business. So for us, it was about simple pricing, pay as you go to get consistency, knowing that accounting, accounting software and all the payments side is taken care of.
And as your accountant, we also automatically claim back your Hnry fees as a deduction on your behalf. We approve expenses as you go so that you get your tax savings in your pocket immediately rather than having to wait until the end of the financial year.
How’s the reception been in Australia since you launched?
James: Oh, it’s been really good. The market seems so excited. It’s one of those funny things where we often get the response of ‘where has this been all my life?’
People have been saying they’ve been freelancing for years and have been struggling with this. And, until now, there’s never been an all in one solution that takes care of this boredom. Many people find this game-changing that they can focus on doing the work they love doing, indulging their creativity, and not have to worry about tax. We have been growing 20 per cent month-on-month.
We have sole traders from across many industries like trades, contractors and freelancers, especially creative freelancers, but they all see the opportunities for their business now they don’t have the burden of thinking about tax payments.
Is Hnry compatible with other accounting platforms?
James: All of our clients have access to everything Hnry has to offer. But if you don’t want to use our optional invoicing app, that’s fine. You simply need to get your invoices paid into your Hnry bank account so that we can make the deductions. Some of our customers even prefer to keep their existing accountants. That’s also fine, but isn’t necessary – we lodge all of our customers’ returns and statements as part of the service.
You also don’t need to worry about migrating other records because when you first sign up, we ask you about the income you have earned to date and whether you have paid or set aside your tax. It is interesting to note that 31 per cent of people who come to us from other accounting platforms or traditional tax accountants come to us with unpaid or unlawful tax returns. We offer a free health check for people as soon as they sign up with us and let them know where they are regarding any outstanding tax payments or lodgments with the ATO. That’s usually the first thing we look at when someone starts using our service.
We can also offer immediate solutions to those who have outstanding tax debts. We can artificially bring your tax rate up to pay down any tax bills you owe for the year. Or we have an option where you can get what we call a ‘tax quote’, which is how much tax we estimate you owe so far on your income. And we can help pay that through the ATO for you at no extra cost. There’s also an option for customers to say, ‘Leave it with me. I will settle anything for the start of this financial year’.
Where do you see Hnry fitting into the current FinTech for Freelancers landscape?
James: We tend to inhabit a space that nobody else does. There’s a lot of people out there who are trying to do accounting tools for freelancers, and it’s usually software. But software on its own is not very useful because you have to know how to use it and you can get yourself in a lot of trouble if you don’t have professional support. And usually, an accountant on their own is pretty useless because obviously, they want you to use software to do the work yourself. And then we also work in the payment space. So we offer payments plus the software and the professional accounting support, which is a space that I don’t see any other fintechs playing in.
That’s what gives us a unique proposition that means in literally 60 seconds, you can be up and running, ready to go with all your payments in place, with your Hnry bank account, with all of your software ready to go – all specifically tailored to you.
A SPECIAL OFFER
Hnry wanted to extend a special offer to The Freelance Collective – valid until the end of October.
This includes we can give them $50 in Hnry credit. This will cover the cost of the Hnry fees for their first $5,000 worth of client payments into their Hnry Bank Account.
- How Aussie freelancers are paying their tax in 60 seconds - October 8, 2021
- Podcasting with purpose from Melbourne - October 1, 2021
- How do you protect yourself financially as a freelancer? - December 13, 2019