Sole Traders Losing $3.2 Billion A Year In Productivity As Economic Outlook Toughens

Self-employed New Zealanders are losing around two million hours a week - approximately $3.2 billion per year - in productivity, due to the burden of tax and financial administration, while 75 per cent believe the 2022 Budget would have either zero or a negative effect on their business,

according to the latest results from the independent Sole Trader Pulse survey.

Sole traders are a significant part of New Zealand’s economy, making up almost 20 per cent of the workforce. The independent survey, commissioned by Hnry, also reveals many have a pessimistic outlook on the economy’s health, with just over 40 per cent saying conditions will be poor, or very poor, in six months’ time.

James Fuller, CEO and co-founder of Hnry, New Zealand’s largest accountancy, says despite increased earnings over the last quarter, many independent earners are tightening their belts.

“We’re in a perfect storm of inflation, rising interest rates, fuel costs, supply chain issues and economic uncertainty - despite more than half of those surveyed reporting higher income than the previous quarter, we’re seeing more people preparing to hunker down in the second half of the year,” he says.

“A deeper understanding of the unique needs of sole traders by the government is still evidently required. Only three per cent of those surveyed believe the latest Budget will actually bring any benefit to their business, while zero tradies surveyed believed it would do any good for their business at all”.

Sole traders are also contending with the credit crunch. Less than half of people surveyed had attempted to take out lending or credit over the last six months, and less than one in ten had considered non-government sources of credit - like banks or finance companies.

“Tougher lending criteria is impacting sole traders’ ability to secure credit to grow their business or fund assets like work vehicles. Just 39 per cent of sole traders attempted to secure alternative funding in the first half of 2022 - of those that were successful, almost two-thirds focused on government grants and subsidies. Less than one-in-ten looked at non-government sources of credit,” Fuller says.

James Fuller has been regularly meeting with Hon Stuart Nash, Minister for Small Business, to advocate for sole traders and highlight the sector’s specific needs so it can be better equipped to thrive in the challenging economic conditions. Of pressing concern is how the sector can recoup the two million hours lost every week to ‘unbillable time’; and the role digital tools and services can play in achieving this. Tradespeople were spending the most time on administration, at twice the weekly average, while sole traders using modern, online accounting services spend less than half the weekly average.

The Sole Trader Pulse surveys a wide sample of 500 independent earners, including freelancers, contractors, consultants, tradespeople and gig economy workers. It is New Zealand’s first independent, nationally representative sentiment index for sole traders, providing valuable insight into the growing sector that is being recognised at a governmental level. It has a margin of error +/-4.4%.

About Hnry:

Hnry provides an all-in-one digital accounting service for contractors, freelancers, sole traders and the self-employed, allowing them to focus on getting the job done and never having to think about tax and compliance again. Australasia’s fastest-growing accountancy, Hnry, takes care of taxes and filings, invoicing, expenses and payments in an affordable, pay-as-you-go model and provides expert, on-demand support.

Founded in Wellington in 2017, Hnry has experienced record growth and now helps self-employed people in both New Zealand and Australia. Hnry has continued to win awards and accolades, including ‘Emerging Service of the Year’ at the 2019 Wellington Gold Awards, being named a finalist for ‘Hi-Tech Service of the Year: at the 2019 NZ Hi-Tech Awards, winning ‘Supporting Gold’ at the 2020 Wellington Gold Awards and People’s Choice (FinTech Organisation of the Year) Award at the 2022 Australian Finnies. The company is currently a finalist for ‘Hi-Tech Service of the Year’ at the 2022 NZ Hi-Tech Awards.

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