How Sole Traders Can Be Overpaying Thousands in Tax (And What You Can Do About It) | Hnry's James Fuller

WEBVTT - How Sole Traders Can Be Overpaying Thousands in Tax (And What You Can Do About It) | HNRY’s James Fuller James Fuller, Welcome to the mentor thank you man. I was driving down William Street on my way to the studios here this morning and I saw on one of the bus stop rolling posters, I saw Henry being advertised h n R Y. That's right, and I actually haven't seen a lot of it lately, but all of a sudden, I'm seeing this. It's a bit like when you buy a new car.

All of a sudden you start seeing that car for some reason. I'm seeing Henry all over the joint. You're the co founder of Henry and c R. Correct.

What does Henry do. Henry is an all in one service that takes care of all of the tax admin for sole traders. So effectively we make sure that sole traders are always up to date on their tax and we are also one of the largest accountancies in Australia. Okay, well let's look at soult Trader first.

Why sole Trader? So the business actually started My wife and I were sole traders and we you know, for anyone out there there's been a soul trader, it can be quite frustrating experience, like we weren't you know, we weren't raised with financial knowledge and the reason we were sold traders is not because we were trying to start a business. It was just we happened to work work in industries where it was just normal to be. A sole trader.

What were you doing to mony? Now, I was doing some kind of contract work for to tech startups, and my wife was doing sort of working government, so she was kind of doing. Policy work and the contractor as a contractor. Yeah, yeah, so short term, short term gigs maybe sort of six months at a time, something like that.

And yet we just didn't know anything about tax And you do what most people do. You go out and you get the you know, traditional accountant, and they give you whatever flavor of software they like, and you then become your own admin person. You're there doing the reconciliations, you're doing the categorizations, you're doing all of this stuff, and you're paying through the nose for the privilege, you know. And then at the end of the year, the accountant goes and you know, asks you is this everything?

Have you claimed everything? And then they charge you absolutely eyewatering some and we we sat there and said, this just isn't fair. You know, We're doing all the work throughout the year, we're then paying for the privilege of doing it, and we still don't know how much of our money is actually ours at any one time. You know, we got two young kids.

We want to know can we afford those rennots? Can we afford a family holidays? So we started off. Just running a spreadsheet.

We said, we'll work out how much tax we need to be setting a sign, and we'll try and work out, you know, how do we kind of make this work for us as a family. And it's sort of got out of hand from there. We had friends come to us and said, hey, look, we're contractors, what do you do about your tax And we said, look, we've got these spreadsheets, We've got this way of working it out. And in the end we sort of said, well, maybe we're not the idiots here, Maybe we've got something.

Maybe we've got a service that could benefit other sole traders. And so yeah, we spun up a one page website and put one hundred dollars into a Twitter ad campaign and people signed up, and yeah, we're what's nearly nine years later, we're one hundred and fifty staff across three countries and manage the taxes of tens of thousands of sole traders. Wow. During that period, I'm of dealing with sole traders and listening to all their woes about this particular aspect of their business.

As I understand, for soul trader, you're working six days a week. In your case you're a contractor, but you could be a plumber. Six days a week, are running a business, listening to everybody's problems and turning up to their home or their business to fix it up, and then you know, trying to get the right advice to them or physically sort of execute. And then at night you probably get at home and you're starting to write up your books.

And then on weekends and on Sundays and there's no time. Is that a sort of scenario. What are some case studdies you've come across? Yeah, one hundred percent.

I mean it's the case that you've just used. There is fundamentally that's the one that's the go to, right, everyone understands that one. But the sole trader economy, you know, we're talking about one point five million Australians. One point five million.

Yeah. They are everything from kind of creative freelancers to people working in real estate to your trade's to people in allied healthcare and wellness literally you name it. There are people earning money being sole traders in that space and they all share exactly this same challenge, which is they are sole traders because they want to be so they do it out of choice and they enjoy being sole traders, but they don't enjoy the admin and so to your point, they work maybe five six days a week and then they have that like admin time where they have to log into.

Their software, they have to do all of the work. They're never sure what they can claim and you know, no one's ever confident with it. And you're paying all of this money and you're just hoping you're going to keep your head above water. And there are too many people out there in Australia who are working sort of in their business rather than on their business.

Then they have to be their own admin person and it's yeah, it's just it doesn't stack up. And so when you look at the statistics, which is the average sole trader is missing out on nearly four thousand dollars a year in unclaimed expenses because it's too difficult for them to do it or they're not sure what they can claim, and they're spending what an average of five hours a week doing admin to your point five hours on a Sunday, and that adds up to know like four hundred million lost hours annually in Australia.

Have just lost productivity because people are having to do all of this admin and then pay through the. Nose for it. Well, it's funny to say that because you know, we have this big productivity discussion in Australia at the moment, and it's largely due to the way the tax systems sort of set up. Because the onus is on the sole trader or the person running the business.

You basically do got to do your reporting and if you do it, if you're stuff it up, you'll miss out. You'd rather get into trouble for going too hard or you'll you know, you miss out. We're not going too hard because you're too nervous you're going to miss out on something. And because you know, none of us, as sole traders can be experts in tax we would have a clue like we just we're experts are known when we've got to pay an expense, we've got ann obligation, but we most of us don't know what's deductible, not not deductible, et cetera.

So the system sort of forces us to be inefficient in terms of productivity by spending too much time and admin yeah, when we could actually be either spending time or a family or just chilling out or alternally doing more work. Yeah, absolutely need more money, yeah. Yeah, And that's the productivity challenge that exists. And you know this is when Clara and I we started the business, we said, well, why doesn't something like this exist that actually takes care of this so that you can have that time back to do whatever you want with And you know, you've got that money in your pocket, so you know what's yours is yours to save or keep or spend whatever you want to do.

And I think that's always been the challenge when you look at the broader sole trader small business market, is there's just this inertia that happens where people just feel compelled to do the same thing that everyone else has done, which is, oh, okay, I'll just go and get my software and I'll get my accountant. But that model doesn't work. You know, most relationships with traditional accountants, you don't speak to them for nine to ten months of the year, at the end of the year, and then at the end of the year, you have this big crescendo of activity where you're trying to find receipts down the back of the sofa and desperately think of what you bought six months ago that you might be able to claim.

Whereas what we do is provide that regular drum beat where you know, because you get a business account with a debit card and you're actually doing your spending on the card that is linked to your Henry account, you're effectively getting that tax relief on your expenses throughout the year, and you're only ever paying and contributing the exact right amount of your tax. And this is one of our big bugbears, is that if you're a small business owner and you're on let's say your accountants put you on installments with the ATO, we get this perverse thing where at the end of the year, I get a refund and I get excited about it.

And this is where I get passionate, because I go, you're paying, you're prepaying, and then but you're paying too much, you know, And it's like when I get a refund in the rest of the world, that's because something bad has happened. But in tax we go our refunds are a good thing, and you say, well, actually, well, if you'd have paid the right amount first off in your installments, you would have had that money in your pocket all year, rather than the ATO having it in there pocket for longer than they.

Need and they don't pay you interests either. Well, I think the part of the problem is it's like, that's the traditional model you get. You know, for those people who do prepaying installments, they're always paying too much and then they celebrate at the end of the year that they paid too much when they get some money back. Well, what is that mentality?

I mean, how's how's that arisen? What? I mean? That's crazy when you think about it.

Well, I think it's just the traditional accounting industry has always worked like that. They don't want to do work with their clients day in day out throughout the year. They want to do one big surge at the end of the year, and the reward for that big surge is that you might get a refund, whereas actually we flip the model on its head and say, you know, as an accountant, we work with our clients every day. You know, we have humans on customer support they can talk to, We help them with client issues, we help them with the expenses, they can claim.

The whole system that we provide is set up to actually make sole traders successful so that they get that time back, they get that money back, and they don't feel like the whole thing is just a rought that's you know, that they're forced to celebrate because they paid too much at the end of the year. Maybe you could explain them more. Then how does it work? So how does Henry work?

So we took about Henry being Henry's three things. So number one, it's it's your business account. So everyone gets their own unique BSB a in account number. You get a debit card.

So just to hold you there, just when you say, you get a b spoon number, so you actually get a bank account with Henry. You get a we're not a bank, but were sign you a BSB account number for yourself that you can get paid into by your clients. So you can tell you stay your client. This is when the client says to you, I want to make a payment to you.

You say, here's my b SPIN here's my account number. Correct, yep, just like you would if you want to put him into ain' z Bankcoutah or Combank or whoever you. Henry does that absolutely. So the first thing is I've got somewhere from my my client yep or my customer to send them money to number one number one yep.

So what happens then, So let's. Say your client pays you. Anytime you get paid into that account, well hopefully on time. Anytime you get paid into that account, we automatically calculate, deduct and pay the that right amount of your tax.

So that's all of your taxes where it's Medicare, income tax and your GST and then we pass the remainder onto you. And so that means what you get in your pocket is yours to keep, and we take into account any expenses that you might have had. So if you've got the Henry Business debit card, you can go out and buy your business purchases on it, so that when we go and calculate your tax, we take that into account. So that means throughout the year you're always up to date on your tax.

So month one, sorry to interrupt them, but month one, ten thousand dollars has come through to my BSB account and I'm using your Henry debit card and I only put my business expenses through that, right, yeah, you use it for more my business expenses. And maybe I'm buying paper, I'm buying. Laptop, consumables, equipment, whatever, that. Sort of stuff, and it's all coming through.

And then now Henry now knows sort I've spent for the month and basically knows how to spend every day. Yeah, every every minute every day for that matter. And then I do I elect, okay, Henry, pay me the net amount to myself. After Henry's done the calculation about tax, do I say, pay me daily or weekly or monthly.

So what you can do by default, it's just going to pay you out whatever's left. But you can set up we have features where you can actually distribute your income, so you can actually I want two percent to go into this savings account or this investment product, or I want to pay my mate back for something, or you know, give some money to my mum put end savings account. So what you can do is you set up these payment instructions and we just follow your instructions. You say this is where I want the money to go, and that's all you know, there's no extra charge for any of that.

That's all just part of the service. And does it does Henry calculate the income tax the amount of income tax, so I'm going to pay. So let's say I'm sold trade. In other words, I'm not a company.

I'm operating in my own name. Boris Trading is my Boris. And money comes in, you know what my expense of because I'm using your debit account. And then.

I guess the debit account gets cleared through the. Other account which the money's come here. And then it says, well, Mark, you know you're earning you know, fifty grand a month, which takes me into that tax category which is scary forty seven percent. Yeah, y plus medica a scairy one.

Yeah. But so Henry then takes out amount of tax out and puts it somewhere just. A pay to the tax offers just paid to the tax office go straight through it. So most people who are.

In business for a few years get put on installments by the ATO anyway, So this is basically you contributing towards those installments. But rather than having to make a big payment once every few months, you're literally contributing every time you get paid, so you don't have to make that eye watering payment. If you've ever had to do that, making a tax payment is just a painful experience. But actually, if you just get the little bits go out each time, then actually you don't have that headache.

You don't have to think about payment times, you don't have to worry about late fees, penalties, those sorts of things. And these are the things that soul traders don't need additional admin noise in their head. You know, they don't need to be worrying about when that payment needs to come out for a student loan, or when that payment needs to come out for income tax or GST. And these are the things that just naturally, you know, we're all busy people.

People tend to forget, they miss things out, and you know, the penalties can be quite large if you get this stuff wrong. And by the way, not a large horrifically scary because you get let you get. A letter, oh yeah, no one wants that. And or you're laying in bed at night thinking, wow, I haven't done my gust or I haven't done paid my installmant or I spent the installments what I was saving for on the store.

Oh yeah, no, I've I've done that, and I put myself out there. I'm a poster child for making tax mistakes. So you know, like you take, you dip into your tax funds to go buy that iPhone that you never get that money back. You never you say, oh, well you're chasing and you're chasing your tail.

Yeah. It's actually it can be one of the worst nightmarish positions for because the soult traders, you know, we all got to sleep properly. Everyone needs to sleep properly in terms of health. But one of the things that can wake up anybody in business, particularly if you're a business on your own as a soul trader, is that sort of two am wake up when you go, shit.

I forgot to do something. Yeah yeah, yeah. And tax has to be the greatest, not mere. It is, it's number one, and it's such a mental health challenge for people.

So we run a quarterly index of soul Trader sentiment here in Australia. So we've been doing it since twenty twenty one. So we have about fifteen of these what we call the Henry Sol Trader Pulse. It's like, this isn't us interviewing our own customers.

This is us getting kind of independently verified sole trader insights, and usually mental health is number one in terms of people's challenges. They say, actually, you know, it's tax stress, it's admin stress. And you know when you combine that sort of productivity drain that we've got that sort of four hundred million hours a year that we're losing, and then you compound that with the mental load that people are carrying, you know, it's just a terrible thing for the economy all around.

You might have done some studies on this, but as Henry actually worked for some of your clients and or in that it shows that it actually saves them tax. They've forgotten to do something or they didn't realize that this was a tax reduction. Yeah, I mean the most sold traders find that when they transition across to using Henry, they actually pay less in tax than they were previously, and they also save around seventy percent of the admin time seventy percent of the cost. So that means more time, more money in your pocket, and better mental health all around.

Like, this is about giving people a confidence to go out and earn with impunity to actually say well, look, I can now take on more clients, I can take on more work, because that doesn't mean more complexity, more tax headaches, you know, those sorts of things. So what we see is actually people who use Henry their income increases over time because they get more confidence in being independent because the admin is no longer this barrier that says you know, and I'll tell you sory.

One of the things that we see quite a lot is people who are starting out as sole traders. They might say, look, I will I've already got a salary job, but I have this passion I'm going to do something on the side. And we had a customer once who was a wedding photographer and he was doing Saturday's Sundays. He would do weddings and he'd always been kind of held back by the admin.

He would want to do more, but he really just didn't have that confidence. And so after he started started using Henry's he got to a point where he said, actually, you know what I'm gonna I'm gonna go part time on my salary job and I'm going to grow my sole trader business. And so he started gaining that confidence and then suddenly he said, you know what, Actually I don't need to be restricted to just wedding photography. I can do other things now that I don't have to worry about the admin.

And so he actually went down and he put a booth in the local mall and he started doing portrait shots for people on you know, just weekdays, like people come into the mall. And then he said, well, maybe I'll start selling some prints online. Maybe I'll start to earn completely differently. And that's a kind of typifies, you know, when someone makes that transition to full time sole trader and has the confidence to earn sort of typifies what we're seeing in the kind of economy globally, which is people want to take more control over how and from whom they earn their income, and they're starting to to have basically what we call a portfolio career.

They're you know, multiple different income streams, they're multiple clients, they're they're diversifying where they earn from. And that means they actually you know, services like Henry that underpin that mean that they have that confidence to go and do what they want to do rather than being tied to a single employer. This sounds like a cash flow manager because like as managing a cash flow for you because it's taking the scariness out of because one of the bigg our biggest expense, it's not materials, Our biggest expense is tax.

By far, it's a manager, so you have to withhold if you've got to adjust to the environment. It's the income tax you have to pay. That is our biggest expense. We never think about that.

But our biggest, our biggest six expense is the amount of money we have to contribute to society, which is via the tax system. And therefore, if we're trying to manage cash flow, we need to manage that biggest expense. If I said to you, ah, just going to any income, but don't worry about all the inputs, yeah, yeah, you're off your head mark. But but most soul traders do operate that way.

Yeah, well it's and this is the thing. It's it's not it doesn't come naturally to people, you know, And this is the way the system is set up. As you were saying that the sole trader is kind of expected to not only be able to you know, hone their craft and earn some money, they also are expected to know about tax and know when to withhold and when to pay and various other things. And so yeah, what we do is bring together that combination of all of the payments inbound and outbound.

We provide right sized software, so we tend to not call it accounting software because that's what accountants use. We just give people tools. So invoicing, quoting, manage your money. Movie you do invoicing through this too.

Yeah, yeah, so chase your invoices for you automatically. You know, you can basically set up all of your clients, whether you're domestic or overseas. And yeah, the whole thing is, you know, you can automate invoices on a schedule. So all just to make it easier for people.

So it's kind of become set and forget, so that when we do the third strand of our business, which is actually where your accountant we are tax agent. When we go to do that, all that information is already there. We don't have to come to you and say, hey, look, go and you know, remind me what you purchase nine months ago. We go, well, look we've got all the data, We've got all the stuff from the ATO.

Is there anything else you want to add in here? And then it gets filed and you're already lodge. Yeah, we do all the wadgreants. Yeah yeah.

Hendry's Lodge is a tax return as well. Yeah yeah. So we're one of Australia's largest accountantcies. So what we do is bring together the payments, the software and the accountancy all on a pay as you go basis.

So the whole thing is if you're not earning, you're not paying for that service because it's all based on your income. So we take a one percent fee on the income that you earn and that then is automatically expensed for you. And the whole thing is capped at fifteen hundred dollars a year, So. So you tay one percent of my income, but it is so long as there's not more than fifteen hundred dollars.

Yeah, So it's basically it's so if you earn over one hundred and fifty thousand dollars a year, you'll never pay more than that cap. So that's all of your accountancy, your tax agency, all of your software, all of your payments, which is you know, as you say, this works out seventy percent cheaper than the alternative, which is I got to go and get a business bank account. I got to go and get a traditional accountant, and I've got to pay for this never ending software subscription that you know, seems to keep going up every month.

It's very interesting that sitting the business account bit, because it's that's usually quite complicated. It sounds easy, but the amount of time we've got to spend in the bank or talking to someone from bank on this ky C type environment where they've got to know who you are, and the amount of darty got to file with them, and the stuff that they need to sort of add to their filing system, like you know, I don't know IDs and all that sort of stuff. You know, passport another form of ID.

How hard is it or how easy is it? Perhaps a better way of asking that question, is it to set up your accounts and your debit cards, et cetera with Henry. So when you when you sign up, we don't regn it. It's all online.

We've got mobile app on and the web app as well. But you sign up and you you give us some details you do need to do. We you know, we are required to do AMLKC checks, but all of that is online. So it's just you upload your ad.

The fastest we've ever had someone go from setting up to getting their account is about ninety seconds. Well, and the fastest we've ever had someone go from all the way through to getting paid the first time, I think it's less than an hour. And so that's people who have signed up ninety seconds to get their account details, they've issued an invoice, someone's paid it via faster Payments via MPP. Money comes in instantly, gets processed, everything goes out the other end by MPP, so it's real time payments.

So that means within an hour you can go from not being a sole trader to earning income and knowing that you're up to date on your tax. How do they accessis and as either through the app or a web app. Yep, so they either go through the website so Hnry dot com dot au or just download Henry off the mobile app store and it's yeah, you've literally got your accountant in your pocket. We've got our team of folks over in Pitt Street up in Sydney there to help you.

So if you're on the job and you're worried about how do you do your invoicing or how do you work with this client? You just open up the app, you can talk to real humans and get actual information from you know, not a you know, not a faceless bot, but actually a team of people that are there to help you. So that's the big thing that we do in our business. It's not about providing faceless software.

It's actually, you know, we joke, this is uh, this is service as a software. You know, we've got a big service element, got a big team of people that are there and they're passionate about helping our clients engage in their business and do better in their business. And that's you know, whether that's providing information or help or guidance, those are all the things that we can do because yeah, the software is great, right and automation is great, we can do all that. But this is a people business.

This is about actually connecting with our customers and truly understanding the industries that we work in. And that's what our team pride themselves on is actually being experts across all of the different industries that sole traders work in. This sounds too good to be true, Like, I mean, I can do it all online, but at the same time, I can access a person who's experience and yeah. You just book a call with one of our teams.

Yeah, yeah, just book a call online. They they'll they'll drop your line and you can talk literally talk about anything where it could be tech support, it could be my client's not paying, it could be hey, you know, do you have a feature that does X, Y and Z. And our teams they basically they spend all day just talking to our customers and that's throughout the year. That's not like, you know, you can turn up at tax time and that's the only time you're allowed to speak to us, and we don't.

We don't charge extra for that. That's all included. That's included the fifteen hundred Yeah. Yah, it's all included.

So the fifteen hundred limits. Fifteen hundred limits. So yeah, you basically get and we don't limit the number of invoices you can send or the quotes you can send whatever. It's literally just you get access.

It's pay as you go. And the thing that we you know, Claire and I are very really fierce about fighting for fairness, and it's a you know, our pricing model is fair. Everyone pays the same percentage. We don't have tiered pricing, we don't have hidden fees and The big thing for us is if you're not earning, and we know sometimes sole traders have dry patches and sometimes even if you look at January, everyone goes away summer holidays.

Soule traders aren't earning. In a traditional model, they still have to pay for the software. They may not open it for a month because you know, they're off on holiday with their family. But for us, we say, well, look, we want the whole whole service to be pay as you go, so you're only paying for it when you're actually earnings.

Pay when money comes in. Yeah, So you sort of clip the ticket only when the money comes in. If there's night not coming. In, yeah, then but you can still you can still call us up and you can still speak to us, you know, if you're in, if you're on holiday and you decide you want to get some help with stuff, We're not going to go, hey, you didn't get paid this month, so we're not going to help you.

And you can soon use a debit card. Yeah, you can still use everything. So this is this is the whole thing. We only we only take money from you when you're actually earning, and our role is to help you earn, to help.

You go out and you know, get incoming to into your business. It's sort of like accountancy in a box. Yeah, it's it's everything's in the box exactly. You're not an accountant the way.

No, no, no, I'm a I'm I still count on my fingers. I can't. I'm sure an it guy. I'm an it guy.

I was a failed developer, wasn't very good at it. I couldn't keep up. And then I was as a management consultant for a few years, and then I started working with startups. And yeah, Claire is far more financially literate than me, but she's not She's not a trained accountant either.

So the two of us sort of approached this as what is a common sense way for soul traders to be able to handle their tax and by virtue of that, we're like, okay, well we need to get you know, to get our customers tax filed, we should probably be an accountant. And so, you know, we've got accountants on staff, but Claire and I aren't. We're not trained financial people ourselves. But that's amazing though, because you're actually coming at it from a different point of view.

Though you're coming at it from the customer's point of view. Yeah yeah, yeah, So what would we have wanted if we were starting again, what would we have wanted? And it's like you said, the accountant in a box, that's exactly what we've got there, which is all of your payments, all your software, all your accounting, all in one place, all on pay as you go. It's like, that's a fair system for everyone.

So rather than you know, I can imagine if the traditional accounting industry had tried to create something like this, it would probably be over complicated, massive tiered pricing, you know, pay every time your phone someone, you know. Whereas actually Claire and I got to go, well, what do people want? What real humans want here, not being counters, you know, what do they want? They're learned something fair and simple and actually a lot of the time they just want to forget about it.

So that's where we came up with our tagline of you know, things like never think about tax again, because actually that's what customers want. They don't want to think about tax, they don't want to think about admin. That's what caught my eye actually as I was driving down Winning Street today towards the studio, it says, I think it's said, never think about tax again. The ad that I was sort of the bus shelter, and that immediately could catch most people's eyes if they're in business for themselves.

And because that's something I think about all the time. A mental LOADO like, I mean, it's always there. I mean, has it all been done? I mean, because it's funny.

I was only thing the other day I was buying petrol. And everything I do in my car is so business related. Why the driving, the studio, driving for student and another studio like, and I thought, I wonder if I claim tax reductions from my petrol or some percentage of it, because no one's ever asked me, you know, what percentage of your car is used for private personal stuff down on the footy, and what percentage is being used for business? And then I assumed give and I'll probably spend one hundred and fifty bucks a week, particularly at the moment with all price of petrol going up.

And I thought, well, the fact that no one's ever asked me either tells me that I'm stuffing it up and I'm claiming everything which will get me in trouble, or I'm not claiming anything at all. Yeah, yeah, and I think it's the latter. And that's and that's the thing, you know, it's just what I say, there's three nine hundred dollars on average is what soule traders leave on the table every year because they're not claiming everything that they're entitled to. And you know, and then you get the opposite end of the spectrum where you know, some dodgy high street tax agent is allowing you to claim things that you shouldn't be.

You know. I had to to chat to a guy once who said that his his accountant was letting him claim the depreciation on his Porsche and I was like, okay, I was like, is it is it branded? Are you carrying work equipment so you you know, do you need to travel for work? And he's like no, no, he just said he thought you could get away with it.

And I think this is the misnoment that a lot of people have, right, is that if you've got a dodgy tax agent that's letting you get away. With that stuff or just reckless, reckless, they're not on the hook for it. If the ato come knocking and they say, hey, we want to we want to find out what's this depreciation you've been claiming. They will do it every five years by and then the.

First thing that accountant's going to do is go, here are their returns. They signed that these were all true and accurate. It's not not my bag. They signed that this was all correct, and then they will try and sell you audit insurance and say, well, you're getting audited by the ADA AT, Oh, this is how much it is going to cost you for us to support you in that, and that again it's not fair.

So actually, if you for us, it's about educating customers and saying, hey, look when you are claiming a you know, motor vehicle expense, asking how much that percentage is and that's what we do. Vial the app and we say, hey, what percentage of your motor vehicle is personal? So you do that you ask ye, yes, we we asked that question when you're raising these expenses. And so what that means is it's protecting people and you know, we don't want anyone getting in trouble with the ATO.

And we have so many folks to come across to us who've got you know, they've maybe done some dodgy claims in the past, and they get that level of comfort that actually they're being taken care of, not by someone who's you know, just going to be like fly by night and is not going to be there to support them, but actually by people who are going, hey, look, that's not claimable. You know, we review the expenses when people raise them. So you go out in your debit card and you go and buy something and upload the receipt and we'll have a look at that receipt.

Our team will have a look and go, you've I don't know, you've bought a whole bunch of cigarettes at the SERVERO whatever it is, and you go, that's not claimable. And so what we don't do is then pass that through to the ATO and have them come after you and say, well, how come you claim this stuff? We actually prevent people from getting in trouble by making sure that not only are they educated about what they can claim, what they should be claiming, but also that they're not in a position where they claim stuff just because they think, you know, all their mates are doing it, or some dodgy tax era or just human error.

Yeah, because people don't know. And that's you know, fundamentally, there's an education gap. You know, I talked to my girls. So we've got two girls, fourteen and eleven, and we talked to them a lot about kind of like financial literacy because when I was at school, they didn't teach anything about tax they didn't teach anything about business or anything.

And I look at my fourteen year old now, and at school they do actually do like business projects where they have to you know, they get given imaginary money to come up with a business plan and do stuff. And I think that's so much more than I got when I was at school, where you know, you just basically did maths and then that was it and suddenly you're out on your own and you become a sole trader and just suddenly expected to be a tax expert at the same time. So I think when you can bridge that knowledge gap for people and actually provide that information and confidence to sole traders, it's super rewarding to see people go, I am now confident with my tax affairs in a way that I haven't been in I don't know, ten years of soul trading.

Yeah, because taxes as not only is the biggest expense, but it's the biggest scary thing, not just in terms of amount of money you've got to pay. But if something goes wrong, like you know, there's like the burden of proof in this country. If you kill someone, the burden of proof to prove that you should go to jail or give be in trouble is on the police or the prosecutor to prove beyond reasonable doubt that you you know, you did this crime. When it comes to tax, the burden proofs in reverse.

So if you do something the tax office gives you an assessment, the burdening proofs on you to prove that you are correct. Se the only time in Australia. That's a great point as a really great way of putting it, and the burden a. Proof is reversed.

And in which case, you know, like if you get a tax case and I've been through them, if you get a tax case, very hard to win, so you can't stuff anything up and the. Tax office will order you. They say, well, I can't tells me. Every five years, everyone in Australia will be audited within five years, every business person, not not a person who might advert salary, but every business person.

And if I pay my. Card, my debit card, your debit card, the Henry debit card, So what happens. Does Henry somehow know this stuff? So you you pay on your phone, so you use your.

Your tap and as soon as you tap, you'll get a push notification from the Henry app. Says, take a photo of the receipt and so because you've got it in your hand. So if you imagine you just basically you go and buy something, says, take a photo of the receipt. Snap a photo with your phone.

Yep, with your phone with the Henry app, you snap a photo and then you done. We've got the receipt, We've got all the transaction information. And then when we come to check that, we can go, hey, I can see you brought three miles bars along with you know, this is the bit that's tax deductible. This is the bit that's not.

But if you imagine how that works if you don't have that debit card right and in the traditional away, you throw the receipt away for a start. No, but tear what it does? Tear what happens? It sits on my in my car in the panel like yeah, and I leave there with good intentions.

I'm going to give it to my count and it just sits there and I'm at the end of the week I'm cleaning the I'm currently. Just get all of them and big scrunch and off they go. So there's no tax deduction at all. Well, and it's either there's no tax deduction or you end up in a situation where you go, oh, well, I don't have a receipt for this, but I've got a bank transaction that shows that it's there.

And those are the really dangerous ones, right is if you're not you know, the ato all government tax collection agencies are all of the view that you need to keep your receipts for a certain number of years, but a lot of the time I think seven years, seven years, but a lot of the time because that's too difficult. You know, a lot of traditional account go ah, now you'll be fine, don't worry about that. You know all they say to you, Yes, it's your responsibility to keep them, but for a lot of times we don't.

You know a lot of people like you say, just clean out the car, just get rid of the receipt and it's never a problem until it becomes a problem, until someone comes knocking and says, hey, you've got X amount of petrol spend this year let's have a look at your receipts, and you go, I don't have a single receipt because I cleared them all out of the car. Well, now you have to ask for the receipt. Well, and this is the thing, you know, whereas actually you know, with the with Henry, you literally go, here are all of my receipts, and you go, They're all in order, everything's been checked, everything's up to date.

You literally have an entire record of everything that you need a photo of every receipt And because you can literally make a purchase snap, a photo beIN the receipt. You don't have that shoe box full of receipts that you're in your car, in the glove box or whatever. In your wallet. I mean I had one for years in my wallet that I was going to do something with.

But you know, I got to the point where receipts were like disintegrating in my wallet after six months. You know. But it's funny, you should say, because it's one of the inefficiencies I find of that of the process of setting receipts out is that I was doing that. So I would every week just on the Petronon I would actually get the receipts, and I used to give it to my EA, and I'd say to my send it onto the accountant, and then she would.

And I used to think to myself, the accountant was not going to be doing something with that straight away, because that's inefficient from his point of view. I no doubt that he just collects it, and he might have a bookkeeper inside the firm that he works that he works for, and the bookkeeper will have to go through every one of those receipts and actually have to look at them all and work out what's deductive, what's not deductible. Then somehow I enter that number and as a journal entry or whatever the case may be, and then that would cost me.

If I could ask you one quick question. If I'm a person just about to start up my own business, I might already have a job and I decide I'm going to be a moonlight stuff at nighttime or weekends, like you're talking about the photographer. What's the very first thing that individual does in relation to setting themselves up. Where do they go, what do they do?

What are the sort of things they expect to encounter when they go to Henry. The good thing about it is is because it's you know, everything in a box. By the time you're signing up, you know, we're taking care of everything that needs to be taken care of, you know, the thing that you can do. First off, most people will go and they'll register themselves as an ABN Soul trader and they'll say, atually, I'll just go.

So that's important, is it? Yeah, So it's it's always important. It's good from a trust perspective, but also yeah, from a tax perspective, register yourself as an ABN Soul trader and then everything else is taken care of by Henry. And so when you're in that situation that you can go from signing up to getting paid in a matter of minutes, actually, then you don't have to think about the tax part.

And that's the thing that I think is very you know, it's a real game changer for a lot of sole traders because previously, if say I decided that I was going to go you know, I don't know, I was decided I was going to go out my own and I was going to be a personal trainer, and I said, Okay, I've got a bunch of clients lined up. What's the first thing I'm going to do. First thing you want to do is go and get clients. The first thing you don't want to do is to sit there and bother about admin and tax and be thinking about how do I structure my software and what categories do I need to put in?

Like that's all noise. Actually, if you're a sole trader and you want to go out on your own, the reason you're doing it is because you have a passion or you have a vocation or a skill that you think other people would benefit from. No one starts a business to do the admin. And I think that's the problem is right now it's turned on its head because the first thing most soule traders will do is go, oh, how do I get my ADMIN set up?

And so that's where Henry comes in. We go cool, Well, once the admin's taken care or if you go do the business will take care of the back office. As Faniels talking to a former you just remind him something else. Is talking to a former prime minister this week Liberal Party Prime minister who was talking to me about the woes of the tax system in Australia and that you're saying that the amount of taxi pays too much, all that sort of stuff, And because I was actually interested to hear his point of view relative to you know, what sort of initiatives he would do if he was now the Prime Minister of Australia again, and he talked about then he said, in this country, there's probably most countries, if you're earning a certain amount of money, you work generally February, March, April and three qu April for.

The government and the rest of the year you work for yourself. But well, you just. Added another another dimension to that. You do do that because that's that money you earn is collected.

You end up paying it in taxi. Is just because of the tax rating system here. But on top of that, it's the administration too, because we collect the guverner's juice ty here, so we're actually tax collectors in our own right, and we pay in advance generally speaking, as assoult trader, the tax on the money you earn. You don't pay it after the June thirty when your logit tax returns, generally speaking, you because once you do that first time, after that they start giving an assessment in advance and they want you to pay by installments and you have to do the admin around that because you're expected to lodge the returns and work all this shit out yourself.

You've got to work out all the you know, the payments. You're going to make sure you do it properly. You've got to work out and you've got to you've got to arrive at the net taxable income for them so they can tend how much this tax is going to be paid. So probably if I was sitting sitting there with that form Prime Minister right now again today, I would say, yes, you do work up until the two thirds of the way through April for the government, but you're actually probably spending another month at least, you're probably end of May.

Just on admin, just on admin, and you don't get reward of that. No, you don't get any for it. You don't get you're not going to thank you very much, Mark. No, you're unpaid in your own business doing free admin work.

You're doing and you're doing the admin for them, and no one thanks you for it. In fact, if you get it wrong, it's like brain damage because not only. Are you stressing off your brain for ages. I mean, what would be great is if you know if you are going to get ordered it every five years?

Is that you think? Okay, I'm sweet, I've done it right. Coming with me here, there's all the data, there's all the information, so you know, then I can sleep at night. Yeah to me, I mean like, because it's hard enough in business.

Haven't got enough clients? My clients paying me is right? Now? We go through a tough time Australian economically.

Do my clients have the ability to pay me on time? What's my debtors look like? Do you guys walk with debtors? Yeah?

So we do automatic invoice chasing. So basically, when you invoice a client, you say, look, here's my payment terms. I want it. You know, I don't know, paid within twenty days.

But if that date passes, then automatically we send chaser emails really and yeah, and we basically say, you know, this invoice is overdue, and we sell multiple emails. And what we find is that when when the idea of having to chase payments is just something that doesn't have to be in assoult Trader's mind, they get really comfortable with it because I don't know if you ever been in this situation chasing someone for payment yourself is awkward. It's really bad, especially if you're selling retail.

You're selling to members of the public. So if you're a tradee having to go to mister Smith down the street and say, hey, your invoice is overdue. I really need you to pay this, that's an awkward conversation, particularly if you want to if you're thinking about like getting repeat business from that person. And it's you know, everyone forgets to pay an invoice here and there.

So we design the feature around automatic invoice chasing. And what we find is that invoices get paid overdo invoices get paid five times faster because they get an email that is a nice reminder. It's not you know, deck collection letter, it's not you know, but the stress of that doesn't have to sit with the sole trader because they say, you know what, Henry's going to chase them at least two or three times to get this invoice paid. And I know, the only time I need to really worry about it is if after the third fourth reminder they still haven't paid.

And what if Henry do then tell me yeah, yeah, So. We say, look, there's no response here, invoice has still not been paid, you know, and then it's up to the sole trader to intervene. But if you imagine in the time in between, they don't have that stress because they go, oh, yeah, I've got automated invoice reminders that are just going to go and nudge my client nicely that hate now's the time to pay. And again, it's all about taking the stress off the soul trader and what are the things that we can actually say, Look, don't you worry about that, because that's what you're paying us for, you know, whether it's the invoice chasing or looking at those expenses or you know, lodging your returns, you're paying us to do that so that you don't have to worry about it.

So the stuff that you. Do is you go out and you work with your clients, You go win more business, go spend time with your family, and actually go enjoy being independent, which is why they are according to all of our research, why they're sole traders in the first place, is because they love that independence. They don't want to be in a salary job, but they get burdened by having to do all of this admin just by virtue of wanting that independence. There's probably whole lot of people who would like to be sole traders, who would like to get in business on their own, but are scared to because of all this stuff.

Yeah, and to something said, this would open up the door for them. Oh yeah, so huge. It's a huge market for us is people who are first time sole traders and they say, well, I've always wanted to do something, but I've always been scared about the tax or the ADMIN or just the sheer cost or you know, some people aren't that financially literate and they find that, you know, they'll go to a traditional tax agent or accountant and they feel patronized because they don't understand GST and income tax and they feel like, you know, maybe they don't understand the industry that they work in.

And so the main thing is, actually, how can you give people that confidence? And they go, well, actually I will follow that path. They will become a sole trader. And you know, we just love seeing those customer stories of people who can I'm in and you know you can see it on our Google reviews or whatever where people are like, this has literally changed my life, Like I had not considered being a sole trader and now I am following my dream of independence.

But I could only do it because I don't have to worry about the admin. I was thinking about the part where you said dumb. Included in the fee is the ability to ring the accountant and I know that or someone who has expertise in the particular field that I have a question about, someone to Henry that is. And you just make your book an appointment and you talk to them just like you would ordinarily go and see your account your book appointment.

Down'll see them or call them, probably call them these days. And what is the time of the timing of that? Can I call Saturday Sunday? You just choose.

We have a whole bunch of available slots, and so you get a link that says here, look, here's a link to our calendar, all all of our folks, and you just find a slot that works for you, and you know, you know, you work around your timings. We got a whole bunch of put people at work different hours, and you find a slot and then we just call you. You just give us a little heads up, You say, hey, I just want to talk about I don't know this tax support thing or this client whatever it is, and then we give you a call and one of our folks who's an expert in your industry or in that particular challenge you're you're facing.

They'll just give you a call and you just get to talk it through with a human on the phone, and they'll have your account in front of you in front of them. They'll be able to take a look at, Hey, here are some things you might want to set up, or I've just noticed we've got I don't know, this client needs to a bit of extra information added. And they're there to help you kind of unstick yourself. So rather than you having to go to like a I don't know, communal help forum or search the internet to go how do I solve this?

Well, ask a well ask aid a mistake? Yeah, exactly, go and ask a generic AI what you should do. You know, you're actually talking to someone who knows your business, they know your industry, they can see all your information in front of them, and they're there to actually to help you. They're not there to patronize you.

They're not there to say, hey, you haven't done X, Y and Z. They're there to go, hey, actually, how can we help How can we help unstick you in your business so that you can go back to what's important. It says, completely disruptive. This henry is completely disruptive of a system that existed in austraight for hell of a long time.

It just give me, correct me if I'm wrong though. So one, it gives you a debit card. Two, it can access if you go via the via the applica and access or all the information that appears in a. Cost receipt.

It collects, it sends invoice, It collects the money into account. It takes out the tax and just to income tax and just to any other type of the imposts. It pays you the difference. You are guys, and you guys take a limited amount of money you're going to take and it's fifteen hundred bucks or one percent of the title revenue.

It doesn't bid you during a period when you're not receiving any income, which is great. So this sort of respects your your own your sovereignty when you might want to take a holiday, and doesn't charge you for it. It gives you access to talk to an expert if you need to, for no extra cost. I missed anything out there.

And then we lodge all your returns for you. Lodges the returns, So it takes it from you know, cradle to grade right to the end, everything, everything, everything in between. It does your bookkeeping, it does your accounting, It does some advice work, it does collections, it does invoicing, does all the you know, the accounting admin stuff that you normally would have a person in your office to do or you do it to and allows you have you get guys only studying on sort of on average, how much time a person gets back in the.

Normal so compared to what compared to the alternatives, I think most people save about seventy percent of the admin time, which is on average most people are spending five plus hours a week on admin, so they get seventy percent that saved. And then we're seventy percent cheaper than the alternatives as well, so it's actually it's more time in your day, more money back in your pocket. And then there's the whole other lens, which is actually people are paying less tax when they're using Henry, so you're actually getting more efficiency.

The peace of mind. Get peace of mind, right, and that's that's so important this day and age, is actually people get peace of mind, like you say, they can sleep at night, and you know even you know, business owners waking up at night remembering, you know, did we pay that thing? Imagine when that stress goes away, and you know, that's the that's the joy of this is actually it seems like it's so simple, do you know what I mean? Like, why haven't people done this before?

So I remember first pitching this, you know, when when Claire and I first started the business, and you know, you go to as I sort of I suppose a tech startup. You go to these pitch nights where you pitch your business in front of a whole bunch of people and they and I remember the first one of those that I did, and as I came off the stage, I walked to the back of the room and this this fellow came up to me and he looked me dead in the eye and he said, you busted. He's like, that is such a good idea.

I'd thought about doing something like this years ago, but I'd never actually went through with it. And he's like, congratulations, but you busted. And I think it was that moment of like, actually, it does seem so simple. It's like why haven't people done this?

And then you know, Claire and I effectively have scaled this business now across three countries and as one hundred and fifty staff, and the whole thing has been based on taking an approach that is outside of what people had tradition, We've done and saying well, actually we can scale as we can make this work and we can make this fair for allsole traders. Well, I mean, as an advocate for small businesses, which I am and I have been for lot a number of years, I want to say congratulations, but you as a small business owner now a big business, but importantly what you're doing for small business owners giving them time back, because that's what we're all poor on time and the amount of admin we have to do through regulatory environments and everything else.

I mean, there's enough regulations out there as it is, let alone having the tax regulatory environment sitting over the top of you, I want to say thank you. And I've just completed a review for the state government New South Wales which I've submitted to the Treasurer. And one of the biggest issues for in New South Wales. Of the two thousand people three thousand people that we interviewed and we did it both online and in person, stakeholders as well, cash flow was number one.

Managing cash flow was number one. And you know some people really skilled artists, you know, like crafts people, trades people, you know, people work in cemeteries. Like it's just a massive span of people. Number one cash flow.

How do I don't know how to manage it? Yeah? And where do I find someone who can do it for me? And managing cash flow is not just what's coming in with what's going out.

It's it's all the stuff in between, all the information, all the informative stuff. What informs me is what's coming in. What informs me is what's going out? Is it the right amount of money?

Net my net position? Because you know, taxes an invisible cost, and as. You say, it's always lurking, and it's the biggest one and it's always lurking. It's like it's sort of like a shadow sort of following around the joint.

Well done, thanks very much, James.