Business Toolbox: Finance

Business toolbox: finance tips for electrical contractor businesses

As a small business, it’s essential you pay as much attention to the finances as you do to the tools. Here, our experts answer questions posed by electrical contractors, just like you.

Our Finance expert:

Stephanie Roberts, Founder – The Minute Taker

Q: I need to manage my creditors more effectively. What tips can you give me?

Stephanie Roberts, Founder of The Minute Taker, says:

Budgeting for your proposed revenue The business’s incoming cash flow is reviewed on a weekly basis as it is the type of industry where last-minute bookings occur. Maintain a cash balance Just like a float that sits in the till of a retail store, every business needs to maintain a cash balance in their accounts to ensure that when an unexpected expense takes place, you have the funds available. Unexpected expenses could be anything from machinery breaking down to advertising costs on a slow week.

Pay your taxes and employees’ superannuation monthly

In today’s market, with higher-than-usual interest rates, you never know when consumer confidence may affect your business. I used to pay all of the superannuation and tax expenses quarterly, however, in 2023, I changed this to monthly as it gives me a more accurate snapshot of how much cash my businesses are holding and generating.

Be nimble

An ever-changing economy means that you need to ensure that you are running your business on a month-to-month basis. And by that I mean, ensuring that you know exactly what expenses you are incurring, not being afraid to question bills, understanding what has made your electricity spike up, and looking around to see if you can find a better deal on your security expenses, etc. Understanding your profit and loss statement is integral to knowing exactly what is occurring in your business on a daily basis and having the ability to reduce your overheads when they are no longer required.

Cash is king

When interest rates increase, business profits are eaten up. It is imperative that all business loans are paid off as quickly as possible to ensure that your profits can be redeployed to other areas. Having the cash available to try out new business processes, software, products, and even marketing initiatives means that you are always investing in your business’s future.

While adopting a cash flow budgeting approach may seem like a big step initially, it does result in reduced stress and a better ability to be nimble and plan for slower months when they occur.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional financial advice that’s tailored to your circumstances if you need it.

Our Finance expert:

Lawrence Petruzzelli, Business Development – MDB Taxation & Business Advisors

Q: What ATO changes do I need to be aware of for 24/25?

Lawrence Petruzzelli, Business Development at MDB Taxation & Business Advisors, says:

Instant asset write-off From now until 30 June 2025, small businesses with an annual turnover of less than $10 million can immediately deduct the full cost of eligible assets under $20,000. This is a significant increase from the previous threshold of $1,000. For electricians, this means the ability to instantly write-off multiple tools and equipment purchases, easing cash flow and reducing taxable income. Assets over $20,000 can still be depreciated over time.

Business Activity Statement (BAS) refunds

Starting from the first income year after the enabling legislation is passed, the Australian Taxation Office (ATO) will have up to 30 days (increased from 14 days) to notify taxpayers if they intend to retain a BAS refund for further investigation. For legitimate refunds retained over 14 days, the ATO will pay interest to the taxpayer. This change aims to reduce fraud but should not significantly affect legitimate BAS refunds.

Energy bill relief

To combat rising energy costs, the Federal Government is providing a $325 energy rebate to eligible small businesses. This rebate is part of the Energy Bill Relief Fund and will barely cover electricity bills.

New stage 3 tax cuts

From 1 July 2024, new Stage 3 tax cuts came into effect, reducing the tax burden for many Australians. This will increase disposable income, potentially boosting spending on electrical services and providing economic benefits for electricians.

Increased ATO compliance measures

Personal Income Tax Compliance Program

• Extended for one year from 1 July 2027, focusing on areas of non-compliance such as overclaiming deductions and incorrect income reporting.

Shadow Economy Compliance Program

• Extended for two years from 1 July 2026, aimed at reducing shadow economy activities, including cash transactions that often go unreported. This measure is particularly relevant for electricians

Tax Avoidance Taskforce

• Extended for two years from 1 July 2026, focusing on tax avoidance by multinationals, large businesses, and high-wealth individuals.

Counter Fraud Measures

• Funding of $187 million over four years from 1 July 2024 to detect and prevent fraud against the tax and superannuation systems.

* Please remember, this advice does not take into account your personal or business circumstances, is general in nature, and is provided for information purposes only. Please seek professional financial advice that’s tailored to your circumstances if you need it.