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Self-employment - and what it means for New Zealand

The ‘Gig Economy’ is the growing trend for individuals to sell their services to others, on short-term, flexible contracts. Rates are charged by the minute, the hour, the day or even as a set price for a one-off job.


It’s not just for Uber…

People often associate the idea of the Gig Economy with firms like Uber, AirBnB and Fiverr - it’s seen as a very new concept however in reality, this sort of working pattern has been around for a long time - in the form of the self-employed workforce.

Whilst the ‘Gig Economy’ seems to represent the shift of self-employment into digital platforms and online marketplaces, the underlying idea of two parties negotiating a price for a short term contract for services, (rather than engaging in a long-term employment agreement) has been around for many years.

Over the coming years, the uptake of the Gig Economy is predicted to increase exponentially, with predictions that by 2020 the United States will see a 500% increase in individuals taking advantage of self-employment opportunities.


What does it mean for NZ Inc?

Organisations and individuals in New Zealand are already taking advantage of this growing trend, and for many years some industries have totally relied on the services of a self-employed workforce (Taxi Drivers, the Film Industry, Barber’s to name but a few)

As more and more organisations and industries look to take advantage of a more on-demand workforce and shift away from the overhead of ‘permanent staff’, there are some key concepts that organisations will need to become comfortable with:

  1. Changing work patterns: One of the advantages for self-employed individuals is the ability to work flexibly, taking on a volume of work that meets their own personal goals. Organisations will need to be cognizant that self-employed staff may not only want to work on a flexible schedule, but they also may want to work for multiple organisations at the same time.
  2. Taking advantage of a global workforce: The rise of online marketplaces like AliBaba and Amazon have enabled the global goods trade, and in the same vein Gig Economy marketplaces such as Fiverr have enabled self-employed individuals to sell their services globally. As more and more individuals embrace self-employment and the opportunity to sell their services globally, so organisations will in turn need to adapt and be open and able to take advantage of a more globally sourced workforce.
  3. Attracting top talent: As it becomes the norm for individuals to sell their services in this way, organisations will need to shift their employment models to cater for attracting the best self-employed talent. As of today, most organisations look to attract talent using traditional salary and benefit packages, offering the incentive of a ‘job for life’ should the applicant be successful. As more flexible working becomes the norm, organisations will need to look at other incentives to attract the best people - offering incentives that are directly applicable and valuable to a self-employed individual.


What does it mean for Kiwis?

There are currently over 300,000 individuals in New Zealand who are, or have at some point been in self-employment [citation needed]. Being self-employed here in New Zealand is far from unusual.

Some have taken up self-employment voluntarily to pursue a hobby, a dream or a new career path, whilst others have had to become self-employed simply because those are the expected working practices of their industry. (e.g Courier Drivers are mostly independent individuals)

Becoming a self-employed individual brings with it some huge advantages:

  1. The opportunity to set your own path: Being self-employed provides individuals with a huge range of opportunities in terms of where they can apply their skills. Some individuals choose to pursue self-employment alongside their existing ‘permanent’ employment, allowing them to dabble and experiment with a ‘side hustle’ as a way of earning some additional income
  2. Flexibility of roles: Self-employment allows the individual to choose where they apply their skills and when. Unlike more traditional modes of employment, where staff are expected to accommodate all tasks thrown their way as being ‘part of the job’, the self-employed are able to choose which tasks they are comfortable being remunerated for, based on the scope of their short-term contract. This brings with it a greater sense of empowerment for the individual, allowing them to focus their attention towards those tasks they are keen to pursue.
  3. Higher levels of remuneration: There is a perception that self-employed individuals are better paid than their permanent counter-parts. Whilst this may ring true in some cases, there are certainly many examples where self-employed individuals miss out - particularly given the common lack of holiday pay or sick leave for self-employed individuals.

The idea of becoming self-employed always tends to bring with uncertainty, and fear of having to manage your own tax and compliance. Self-employed individuals are expected to manage their own tax affairs right from day one, and for some people this can be a pretty firm barrier that prevents them adopting self-employment.

Part of the reason for this fear comes from the fact that traditional systems and processes (particularly in government) just aren’t designed to encourage or even support the self-employed. Tax cycles are all 6 or 12 months; buying professional insurance is on a 12-month cycle; getting your first mortgage as a self-employed individual can be a stressful and difficult process.

None of these processes in any way support an on-demand or flexible workforce, and in some cases, they seem absolutely at odds with the very nature of self-employment and the Gig Economy. You only have to compare the payment terms of the Gig Economy with the payment terms of tax to understand just how far behind the old-world models of tax and compliance really are.


So how do we embrace self-employment and disrupt those old models?

When we started Hnry early in 2017, we stated that our vision was to “make self-employment simple and more accessible for anyone”. As we see the trends of the Gig Economy around us, we are even firmer in our commitment to helping the self-employed, providing a service that opens up the Gig Economy and self-employment to anyone:

  1. Pay as you go Taxes: Every time you get paid through Hnry, we calculate and pay exactly the right amount of all your Taxes for you straight away, meaning that the money you get in your pocket is yours to keep. You never owe anything to the government, and you’re always up-to-date.
  2. Invoicing and Expense Management: Hnry provides you with the tools to help you work for multiple clients concurrently, allowing you to raise invoices, track your business and client expenses easily and efficiently - with no need to reconcile transactions or spend hours chasing overdue invoices yourself.
  3. Automated tax filings: We know that one of the hardest parts of being self-employed is dealing with tax filings. Hnry files both your GST and Income Tax returns automatically for you, as well as managing all your dealings with ACC.

At Hnry, we want anyone to be able to take advantage of the opportunity and flexibility that comes from being self-employed, without having to deal with the headache of tax and compliance. Think of Hnry like getting ‘self-employment in a box’ - it’s everything you need to operate as a self-employed individual, with a model that perfectly aligns with how self-employment works - pay as you go. Using Hnry gives you the confidence and freedom to focus on doing the things that are most important to you.

Yesterday’s model was a ‘job for life’ and a company that looks after you. Today’s model is flexible jobs, and Hnry looks after you.

DISCLAIMER: The information on our website is for general educational purposes only. It doesn't cover all situations and circumstances, and shouldn't be taken as direct tax advice. If you're looking for specific help with your taxes, join Hnry and our team of experts can provide you with assistance tailored to your business needs.

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