Why I Switched My Accounting to Hnry
14 Jul, 2024
I didn’t mean it to happen, but I inadvertently turned my passion project, The Happy Saver, into a business. When we started The Happy Saver in 2016, our primary motivation was to share information on my blog about things I was learning about personal finance. Jonny always said that if I found money and investing interesting, others would. Our primary goal was to help others learn how to manage their money. We were never in it to make money off those same people and never wanted to grow The Happy Saver into a business forced to make money. Our view was if we made money, we saw it as a bonus, not a necessity. This perplexes a lot of people. Why would a blog on money not be trying to make money?
Eight years later, my primary motivation remains helping others answer their questions about their pūtea.
However, as the years ticked by, we began making money from blogging and podcasting! Our view on earning this income was that everything we did had to remain free to those reading or listening, and this income was excellent for offsetting the monthly costs we incurred to produce the blog and podcast. I earn money by writing content for other companies, podcast sponsorship, referrals and affiliate income. I earn income directly from my Phone A Friend and donations via Buy Me A Coffee. Our income predominately comes from relationships I established with companies I rate highly for their integrity, who don’t influence what I choose to write about.
From the beginning, we have always declared to the IRD every dollar we earned, and we slowly created and added to our budgeting and account-keeping systems to keep track of everything. Due to Jonny being self-employed at the time, we were already using an accountant, so it was easy to just hand them The Happy Saver accounts, as minimal and paper-based as it was, at the end of each financial year.
However, as always seems to happen, the layers of complication started to build:
The Happy Saver now has its separate bank accounts
We started to earn more income
The financial outgoings (software costs, etc) steadily kept rising
It was unclear what we could claim tax back on and other things we couldn’t
Invoicing was manual and clunky
Our accountant was guiding us towards paying to use Xero
End-of-month record keeping became increasingly complicated
Setting tax aside was guesswork at best
Waiting for our accountant to complete our paperwork took up to five months
Accounting costs kept increasing
As the blog accounts became more complex, our personal work situation became simpler. Jonny ended his sole trader status and returned to a PAYE job while I continued to work my PAYE job. Collectively, we earned dividend income from our share investments.
Tax time should have been simple, but processing our returns took ages and was increasingly expensive. I knew we would have to take the blog accounting all online soon, but if we were to use Xero, we would use a hammer to crack a nut. The blog's income is small in the grand scheme of things, and I didn’t want to have to take on the complexity and expense provided by a global accounting software firm.
Above all, though, it felt like the effort to run a business (something I never actually set out to do) was ever-increasing, but the financial reward for doing so was dwindling. I found myself with increasing amounts of cash being held in my business accounts for suspected expenses, and I was always wondering if I had put enough aside for tax. When the income from The Happy Saver triggered provisional tax payments, where you pay your taxes ahead of time, I suddenly stopped paying myself anything at all, just to ensure we had the money put aside for taxes. Now, if anyone can easily save up for something, it's me, but having to do it made me feel so unprepared, which is not a good feeling.
The tipping point was that I really only started blogging to help people, which I knew I was doing, but managing ‘the business’ was taking up increasing amounts of my precious time. I could see my monthly costs of producing the podcast and blog rising, yet I had no clear idea of whether I was making enough to cover them all.
I knew there was a better way to run the financial side of my business because I’d heard about it years before. In 2021, I wrote an article for Hnry called “Even freelancers need a little holiday.” I read up about them then but never acted because the pain of staying with my current systems didn’t outweigh the pain of changing. Over the last couple of years, the name Hnry has continually popped up, so it just stayed on my radar.
Finally, in early 2024, I’d had enough of my now-nowhere-near-good-enough accounting systems, so I switched to Hnry to run The Happy Saver accounts.
I wanted to specifically write about my experience today because it has been over three months since I started using them. The first of the month used to be the time that I’d be printing off bank statements, matching invoices with payments, making sure all expenses had been categorised, and guessing at how much tax I needed to set aside for some future far-off date when my accountant told me how much to pay. Everything would be compiled in a folder for presentation at the end of the tax year. I’d update my spreadsheet monthly with all relevant information and ensure everything was accounted for in PocketSmith. But with the question of “how much tax do I need to pay” hanging over my head, I was just guessing at the viability of The Happy Saver.
On the 1st of this month, I sat down to “do my accounts”, but apart from checking the expenses were all loaded into Hnry, there was nothing to do!
To put it bluntly, I was gobsmacked at the ease of it all. I’m so pleased I’ve eliminated the complexity from my blog's ‘business’ side so I can get back to doing what I enjoy: helping people.
The complexity I’d created in my business accounts was at odds with how I ran the rest of our finances using PocketSmith, but now it has caught up. I’m happy to share my experience of Hnry to encourage others to simplify their small business because it honestly doesn’t have to be as hard as I’d made it out to be. What happened to me was that as The Happy Saver grew, I opened up new accounts with a new bank, signed up for more software, and entered into new affiliate relationships. I just kept screwing new elements onto an increasingly rickety system. When I joined Hnry, I threw it all in the bin and started from scratch, and I’m pleased I did.
Who is Hnry?
Hnry is a New Zealand all-in-one accountant and tax automation tool for sole traders. I want to encourage any freelancer, independent contractor or sole trader business owner not to wait as long as I did to research using it.
This blog post is not sponsored or endorsed by Hnry. But I do have a promo code, as any user does, and using it will give us both a $25 credit on our Hnry account when you start using their service. Please consider supporting me by using my code when you join Hnry. (RUTH192703)
Basically, how Hnry works is if I have a Phone A Friend conversation with someone, I go to my Hnry account, easily create a $110 invoice, set the payment date and email it to the person I’ve just had the pleasure of speaking with. Their payment is then funnelled through my Hnry ASB account (which they set up for me), where they deduct their 1% fee, my ACC levies, and the correct amount of tax I owe the IRD. They then send the remaining $78.75 to my business bank account. This is my after-tax income, which I can spend however I like. If I were GST registered, they would sort that and chase up late payments if I selected that option. If I wanted them to, they could also send an amount to my Simplicity KiwiSaver for me. They can also pay directly into a range of investment accounts like Sharesies. If I had to make a student loan or child support payment, they would sort that, too.
Hnry screen showing a Phone A Friend invoice.
Hnry screen showing the total deductions from Income Tax, ACC and Hnry Fee and my Income from a Phone A Friend after tax.
Much like a PAYE employee, the money that arrives in my bank account is mine to spend.
Alternately, when I pay my $140 Mailchimp monthly invoice, for example, I upload the invoice to Hnry, and they review it and accept it as a legitimate business expense. They show a running total of my estimated reduction in income tax as each of my expenses is applied, giving me tax relief immediately. If they ever reject an expense, they explain why. This month, I purchased office supplies and was given a physical receipt. I immediately took a photo of it, logged in to Hnry on my phone, and uploaded and categorised the receipt. It was then viewed and approved.
Hnry screen showing my MailChimp expense has been accepted.
Any paperwork is completed on the go now, which is much easier as there is no longer any waiting around to compile everything at the end of the month.
Creating invoices and making payments is easy. As a rule, I don’t create that many invoices—only eight in June—and I don’t have that many expenses—just six in June. I know I could easily scale up if I need to, but Hnry doesn’t mind that I don’t!
What do they charge?
Like I now pay tax as I go, Hnry gets paid as I go. They charge a 1%+GST fee from every $100 (gross) self-employed income paid into my Hnry bank account. However, if I receive individual payments under $50 (which I do via my Buy Me A Coffee), a minimum fee of .50c per payment applies. There are no sign-up fees, and there are no monthly or annual fees. Their fee is capped at $1,500 per year, meaning I’d have to earn $150,000 to pay their full fee. I’m on track to pay $400 - $500 in fees for this financial year. And finally, because their fees are a business expense, they automatically claim them as that. Since Jonny and I were paying our accountant close to $1,700 a year, this is a significant saving for our household.
My biggest headache was managing taxes. I didn’t want to get it wrong by setting aside too much or not enough. Knowing that Hnry has automated the entire process by calculating, deducting, and paying my taxes as I earn is such a weight off my shoulders. It’s a real game-changer.
Whatever money comes into The Happy Saver bank account is mine to manage now. And I can’t express how much better that feels, knowing that I no longer have to set money aside in different bank accounts for future (unknown) tax bills. I still keep two other bank accounts as sinking funds. One is where I keep a business emergency fund, and the other is to save up for replacing tech that wears out, and for the giveaways I do, courses I attend, etc.
Budgeting on an irregular income.
Hnry has allowed us to make it easier to budget our household spending on our irregular income. Managing cash flow is one of the hardest things for people with fluctuating incomes. People often say they “Can’t budget because of their unpredictable income.” Well, you can. And I always managed to, but it just got a lot easier.
With the blog, income comes in during the month, and now that I know that by the time it hits our business account, I’m free and clear to use all this income, I’ve worked out what the minimum I’m likely to earn per month is. I’ve set up a recurring weekly payment into Jonny and my personal bank account, guaranteeing a set income for the week. Of course, I can pay extra to our personal account if I have a particularly excellent month.
So now we earn income in three ways*:
Income from my two-day-a-week PAYE job
Income from Jonny’s two-day-a-week PAYE job
After-tax income from the blog and podcast
*Our fourth income stream is income from investments, but this is not factored into our monthly budgeting.
I have let Hnry know about all my income sources. Therefore, even though the income from my PAYE job doesn’t go through Hnry or my business accounts, it comes directly into my personal bank account. Hnry still accounts for this income when sorting how much tax I pay over all my income sources, which makes things incredibly simple.
You can join at any time of the year.
The tax year ended on March 31st, and because our accounting bill was looking to be almost $1,700, I wanted to avoid that fee if I could, and I knew I could join Hnry at any point in the year. I spoke with Hnry and decided to bulk upload my 2023/2024 information from my income sources. I nominated them as my new tax agent, which gave them access to my PAYE, KiwiSaver, and any other relevant information held by IRD. By mid-June, they had compiled everything for me to double-check. I could load a few unique income sources at that time, such as the imputation credits from our Smartshares investments. I approved it all on a Friday, and within 24 hours, it was processed by Hnry and then the IRD. We had a refund due (because of those imputation credits), which was paid into our bank account by Tuesday.
A M A Z I N G!
Who's doing all the work behind the scenes for me? Computers and humans make a great team at Hnry. They are now my accountant, overseeing what happens to the money entering and leaving my bank account as required to ensure everything runs smoothly, including the actual filing to the IRD.
As with any new system, the setup took a couple of weeks, mainly because we loaded all of last year's income and expenses, and it took me time to get the correct information together. This was mainly because some of my blog income sources are tricker to track but still must be declared, plus I had to provide evidence of my dividend income and imputation credits.
Jonny and I had a few short phone conversations with Hnry and many chats via their in-app messaging service. I also read everything I could get my hands on, which is why I’ve written this today for a future user who is looking for information. I wanted to get it right the first time, which we have managed to do. If you have questions, please feel free to get in touch.
Now that I’ve been using Hnry for a while, I am grateful I finally made a change. I’m still discovering new features, and I suspect I’ll continue to do so. If you’d asked me if my old systems worked, I would have said that they worked well enough for me. But having now experienced just how simple account keeping for a small business/side hustle can be, I can now see how inefficient I was with my time before using them.
As a new month begins, knowing that all the information is correct in Hnry, I can finally answer my question of whether the income The Happy Saver is making covers the outgoings of running our website. I can say with 100% surety that it is! And some.
Now that Hnry is taking care of The Happy Saver, I import that information into PocketSmith, thereby gaining a comprehensive understanding of our financial life. All of the painful administration work is gone. Winning!
Once again, this blog post is not sponsored by Hnry. But I do have a promo code, and using it will give you a $25 credit on your Hnry account when you start using their service. I will receive the same, which will offset my future Hnry fees. Please consider supporting me by using my code, and also, please let me know in the comments about your experience if you are already using Hnry. When researching whether to use them, I found that first-hand experiences were helpful to read.
