Hnry vs Xero: Which is best for sole traders in Australia?

When you're a sole trader, the last thing you want to spend time on is business admin. The right software should make your life simpler, not give you a second job.

Xero is the dominant name in Australian accounting software, and many sole traders use it. But it was built to serve businesses of all shapes and sizes, meaning it comes with a lot of complexity (and cost) that most solo operators simply don't need.

Hnry takes a different approach. It's purpose-built for sole traders and combines automated tax payments with an accounting service, so it's less of an accounting software and more a "hands-off" financial solution.

Neither is a perfect fit for every sole trader, but one may be a much better fit for your business depending on how you work and what you need.

This guide has everything you need to know to compare your options.

Compare Hnry and Xero for sole traders at a glance

Note: All info is accurate as of July 2026. Prices in AUD.

Hnry vs Xero: What they are and who they’re for

Hnry is an all-in-one tax and accounting service built exclusively for sole traders, freelancers, and contractors.

It's less like traditional software and more like an automated accounting service.

When a client pays via your Hnry account, the platform automatically calculates and deducts income tax, GST, Medicare levy, and any student debt repayments. The rest is deposited straight into your Hnry bank account. 

It's designed for sole traders who want maximum automation and minimal financial admin, and who are happy for Hnry to act as their registered tax agent. 

Xero is cloud-based accounting software used by over 1.6 million subscribers in Australia. This includes all types of business owners: sole traders, small businesses, accounting firms, and enterprises alike.

It's a comprehensive platform that handles invoicing, expense tracking, bank reconciliation, payroll, BAS reporting, and much more.

The trade-off is complexity: Xero generally requires either accounting knowledge or extensive help from an accountant to use well.

Xero is better suited to businesses that want hands-on control over their finances, work with an external accountant, or plan to grow beyond a single-person operation in the future.

Key features of Hnry

Tax automation via Hnry account

Hnry's flagship feature is automatic tax.

Every time you get paid (via your Hnry account), the platform calculates exactly what you owe in income tax, GST, Medicare levy, and student loan repayments and pays it directly to the ATO.

There's no scramble at the end of the financial year, no remembering to set money aside for your tax bill, and no need to lodge BAS manually.

For sole traders that struggle to save enough money throughout the year for tax, this can help with peace of mind. 

But it does come with some downsides that may be dealbreakers for some:

• You can't set those tax payments aside in a savings account to accumulate interest, or in an offset account to lower your mortgage rate

• As Hnry's system is automated, there is a chance of mistakes when paying the ATO or filing your tax return.

It's also worth noting that some Hnry users report that the service can be slow to lodge their tax returns or may make errors:

While you can't completely switch off and "never think about tax again," as Hnry's advertisements claim, it is a big step up from doing it solo. 

Unlimited invoicing and quoting

Send unlimited invoices and quotes directly from the app, and accept payments via bank transfer, credit card,  e-commerce platforms (e.g. Stripe, Paypal, or Shopify), professional services platform (e.g. Upwork, Mabel, or Tradify) or your mPOS or merchant terminal.

If a client hasn't paid within two days of the due date, Hnry follows up on your behalf. 

While the templates and branding customisation options are quite basic compared to other invoicing tools, and there are fewer automations to streamline your process, it will get the job done for many sole traders.

It is worth noting, however, that every invoice must be paid into your Hnry bank account in order for you to use the service. Hnry's automated system will then deduct the fees and tax, and deposit the rest.

This may be a deal-breaker for some sole traders, who prefer to have full control.

Expense management

Log expenses in the app by photographing your receipts, or use your Hnry Business Mastercard so expenses are captured automatically.

The Hnry system reviews expenses to make sure you're claiming every deduction you're entitled to, and flag anything that doesn't meet the ATO criteria for your industry.

(Although it is worth noting that this isn't bulletproof).

Kilometre tracking

Hnry offers a free companion mileage tracking app that integrates directly with your account, logging trips and producing ATO-compliant reports automatically.

However, it is worth noting that many sole traders report issues with the app's automatic tracking:

Tax and business reporting

Hnry generates profit and loss statements, expense summaries, and client statements that are accepted by banks and lenders for mortgage and finance applications.

You won't get the level of customisability that you will with other tools, but it is enough to give you an idea of where you stand financially. 

Integrations

If you need to integrate Hnry with the other tools you use to run your solo business, you can only do so via Zapier. If this is a key sticking point, Xero may be a better solution with its extensive ecosystem.

Key features of Xero

Tax automation

This is where Xero and Hnry part ways the most. Xero tracks GST on every transaction and can lodge BAS directly with the ATO, but it doesn't calculate or pay tax for you as you earn.

You're still responsible for setting aside money for tax throughout the year and lodging your own return (or paying an accountant to do it).

For sole traders who want a genuinely hands-off system, this is the biggest gap compared to Hnry. Xero is a tool you actively manage, not a service that manages tax for you.

Invoicing

Xero's invoicing is flexible and polished. On the Ignite plan, you can send up to 20 invoices and 5 bills per month. Upgrade to Grow and those caps are removed entirely.

You can customise templates, set up recurring invoices, and accept online payments.

Neither of these tools win based on their invoicing features, but Xero does have an advantage in that you can choose to be paid into any bank account. 

Expense tracking

Xero connects to your bank account via bank feeds, automatically pulling through transactions for you to categorise.

Receipt capture via Hubdoc is included on all plans. If you don't want to juggle between different apps, you'll need a Grow plan or higher to use the Xero app to snap pictures of your receipts and add them to expenses.

Tax and business reporting

Xero's reporting suite is one of its strongest features vs a solution like Hnry, particularly as you move up the plan tiers.

You get profit and loss reports, balance sheets, cash flow forecasts (30-day on Ignite, 60-day on Grow), BAS reports lodged directly to the ATO, and more options to customise your reports. 

Integrations

Xero's ecosystem is unmatched in Australia, with over 1,000 third-party app integrations covering CRM, e-commerce, job management, payroll, and more. If you use other business software, chances are it connects to Xero.

Xero vs Hnry 2026 pricing comparison

Here's the pricing structure for each company (accurate as of July 2026).

Hnry pricing

Hnry charges 1% + GST of every payment made into your Hnry account, capped at a maximum of $1,500 + GST per year. For payments under $50, a minimum fee of $0.50 per payment applies.

For sole traders who earn sporadically, or earn less than $30,000, Hnry is by far one of the most affordable options. 

However, as you grow, you may find yourself spending more on Hnry than you would even on an expensive solution like Xero:

Hnry does not offer a free trial.

Xero pricing 

Most sole traders know Xero as one of the most expensive solutions on the market. With steep monthly rates and annual price hikes (the most recent being this month), it can be out of budget for many.

For most sole traders, the relevant plans are Ignite ($37/month) and Grow ($78/month):

• Ignite includes quoting, 20 invoices/month, 5 bills/month, bank reconciliation, GST tracking, BAS lodgement, and payroll for one person. Receipt capture is not included.

• Grow removes invoice and bill limits, adds receipt capture via Hubdoc, expands payroll to two employees, and extends cash flow forecasting to 60 days.

Many sole traders find they quickly outgrow Ignite's 20-invoice cap, forcing them up to Grow. It's worth thinking carefully about your invoice volume before choosing.

Xero offers a 30-day free trial with no credit card required.

See our full breakdown of Xero pricing and plans.

Other key differences between Hnry and Xero accounting software for self-employed Aussies

Ease of use for sole traders

Hnry is designed for people who are experts in their trade, not in accounting.

The setup process is straightforward, and the app is built around the idea that you shouldn't need to understand tax to run your business.

Because Hnry handles the tax and compliance side entirely, you're mostly using the app to send invoices, log expenses, and check your income summary.

The main adjustment is routing your client payments through your Hnry account rather than your regular bank account.

Some users find this takes some getting used to, particularly if they have existing direct debits or payment arrangements to redirect.

Xero has improved significantly in terms of usability over the years, but it's still a full-featured accounting platform – meaning it has a learning curve.

Most sole traders who use Xero do so with the support of an accountant or bookkeeper.

If you're comfortable with financial concepts and want hands-on control, Xero is manageable. But if you're coming in with no accounting background and just want to send invoices and stay on top of tax, Xero can feel overwhelming.

Working with an accountant

One of the key differences between Hnry and Xero is whether you need (or want) a separate accountant at all.

With Hnry, an accountant is baked into the price. Hnry employs its own team of registered tax agents who lodge your BAS and tax return as part of the service, so most sole traders never need to engage anyone else.

The trade-off is that you can't bring your own accountant into Hnry, choose which Hnry accountant you want to work with, or get advice tailored beyond what their team offers.

f you have a more complex situation (multiple income streams, an upcoming structure change, a property investment strategy) you may still want independent advice on top.

Xero assumes you'll be working with an accountant or bookkeeper, even if it doesn't include one. The software gives your accountant full visibility into your books, and most Xero-using sole traders pay separately for tax return preparation, BAS review, or ongoing advice.

That's an additional cost on top of your subscription: anywhere from a few hundred to a couple thousand dollars each year, depending on how much support you need.

But it also means you can choose an accountant who understands your specific industry or goals, rather than a generalist tax service.

Xero and Hnry customer support

Because Hnry is also your accountant, support goes beyond general software help. You can contact their team of sole trader tax specialists via in-app chat with questions about expenses, tax obligations, GST registration, and more.

That said, even the most satisfied Hnry users have reported long wait times and trouble reaching an accountant during the end of financial year period.

Xero offers online support via their help centre and support team. However, Xero doesn't replace your accountant. For anything compliance-related or strategy-related, you'll need a separate accountant or bookkeeper.

Support experiences seem to vary, based on customer reviews and posts in Xero communities.

How easy is switching to or from a Hnry account?

Switching accounting tools always comes with some admin, but the amount of friction depends heavily on where you're switching from.

Switching to Hnry

You'll need to manually upload any Pre-Hnry income, expenses and client data. Make sure you take into account the time needed for this.

Switching from Hnry

The main thing to plan for is redirecting your income. Because Hnry requires client payments to flow through your Hnry account, switching away means updating your payment details with every active client: bank details on invoices, any recurring billing arrangements, and anything set up as a direct debit to Hnry.

You'll also want to time the switch around your tax position. Since Hnry pays your tax as you go, moving mid-year means checking what's already been paid to the ATO so you don't double up or leave a gap.

It's worth exporting your income and expense history before you leave, since Hnry's reports are useful evidence for your accountant even after you've moved on.

Because Hnry acts as your registered tax agent, you'll also need to formally end that agent relationship with the ATO (or have your new accountant do it) before anyone else can lodge on your behalf.

How easy is switching to or from a Xero account?

Switching to Xero

You'll need to manually import your existing data, or pay Xero's migration partner Jet Convert if you would like help bringing data over from MYOB, Quickbooks Online or Reckon. Some bookkeepers and accountants may also offer paid migration services. 

Switching from Xero

The admin here is more about data than payments. Your income keeps flowing into your own bank account either way, so there's no need to redirect client payments.

The work is in exporting your historical data: invoice and quote history, expense records, and reports for anything you need to keep for ATO purposes (5 years for most records).

Most sole traders switching from Xero are doing so because they've been paying for features tied to a small-business plan they don't use, so it's worth checking exactly what you need to bring across versus what you can leave behind.

If you use an external accountant, you'll want to loop them in early as they'll need access to the new tool. Depending on how integrated they were with your Xero setup (bank rules, chart of accounts customisations), there may be a short adjustment period either side.

Hnry vs Xero: Pros and cons to consider 

Hnry pros and cons

✅ Purpose-built for sole traders — every feature is relevant to how you work

✅ Tax paid automatically as you earn — no end-of-year surprises

✅ All lodgements handled by registered accountants (income tax, BAS, and more)

✅ Pay-as-you-earn pricing with no lock-in — you stop paying when you stop earning

✅ Unlimited invoicing, expense management, kilometre tracking, and reports all included

✅ No need to pay extra for accountant support

✅ Hnry automatically claims its own fee as a business expense

❌ Income must flow through your Hnry account — requires redirecting client payments

❌ No free trial

❌ Not suitable if your business structure changes (e.g. you move to a company structure or hire staff)

❌ Limited third-party integrations compared to Xero

❌ At lower incomes the 1% fee offers great value, but the comparison vs a flat subscription depends on what you earn

Xero pros and cons

✅ Extremely powerful and flexible, suits a wide range of business types and sizes

✅ 1,000+ integrations with other business tools

✅ Scales with your business if you take on employees, add payroll, or need project tracking

✅ Strong business reporting, particularly on higher-tier plans 

✅ Accountants and bookkeepers are very familiar with Xero, making it easy to collaborate 

✅ 30-day free trial available

❌ Not built with sole traders in mind, and features and pricing reflect a broader business audience

❌ Steep learning curve without accounting knowledge

❌ Ignite plan's 20-invoice cap is restrictive for active sole traders

❌ You'll likely need an accountant for tax and compliance — an additional ongoing cost

❌ Prices have increased multiple times in recent years, with another hike coming July 2026

❌ Receipt capture only available on Grow ($75/month) and above

Verdict: What's better, Hnry or Xero?

Choose Hnry if:

• You want to set and forget your taxes

• A pay-as-you-earn plan suits your business better than a monthly subscription (and you don't mind paying a bit extra when you have lots of client payments coming in)

• You won't make more than $40-50k annual income from your solo business 

Choose Xero if: 

• You want full control and visibility over your finances

• You don't want to route your income through a third party and would rather manage your own cash flow directly

• You already have an accountant you want to keep

• You're planning to grow your business and may need payroll, inventory, project tracking, or other features beyond what a sole-trader-specific tool can offer.

• You don't mind paying $37-107 per month

Depending on how you run your business, it's also possible that neither Hnry or Xero is the right fit.

If this is the case, it may be worth looking into an alternative that better suits your business needs. 

What are the alternative to Hnry and Xero in Australia?

Some sole traders may want to look at popular accounting software like Quickbooks or MYOB, although they'll run into many of the same problems as Xero. 

If you're looking for a middle ground that's purpose-built for Australian sole traders (and their budgets), with the flexibility to manage your own finances?

Rounded might be a better fit.

How does Rounded compare as a Hnry alternative?

How does Rounded compare to Xero?

Thinking of switching to Xero or Hnry? Try Rounded first

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