How your business can deal with rising energy costs

Analyse your costs

If there was ever a time to be smart with your accounting and cash flow, it’s now.

It is vital to keep as much cash as possible in your business and stay in control of your expenditure. You need to work out where you are spending too much money and identify the most profitable areas of business to focus on. 

Find the best energy deal

Prices are high across the board, but you might still be able to reduce the amount you are paying for gas and electricity. 

The commercial energy market is competitive and suppliers are typically keen to increase their customer base. Business premises tend to use more energy than domestic properties so reducing your bill can make a significant difference. 

There are many well-known price comparison websites available, where you can compare energy prices and hopefully find a better deal for your business.

You can also use an energy broker. Although they will charge a fee, they will do the heavy lifting for you. 

Energy efficiency measures 

Steps you can take to reduce energy at your business premises include:

• switch to LED lightbulbs: They last longer than traditional lighting and can reduce your energy bill by 20-40%.
• use eco mode: Switching appliances such as dishwashers and printers to eco mode will reduce your energy consumption.
• turn off equipment at end of the day: Switching off computers and other office equipment when not in use will cut your use of energy. 
• Install smart meters: This will make your bills more accurate and allow you to monitor your energy use on a daily basis so you can take steps to fix any problems. 
• minimise heat loss: Installing double glazing and insulation can reduce unnecessary heat loss.
• energy audits: You should regularly review your energy consumption to identify where you can be more efficient. Many suppliers offer this as a free service. You can also conduct it yourself or with the help of an external expert.
• staggering work hours and remote working: Allowing staff to come to work at different times can cut energy use as can running a hybrid model with staff working from home or elsewhere some of the time. 

Government Tax Reliefs

The Australian Government is aiming to provide businesses with an annual turnover of less than $50 million with an additional 20% deduction on spending that supports electrification and more efficient use of energy.

Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024. This measure is not yet law.

The measure will help small businesses make investments like:

• electrifying their heating and cooling systems
• upgrading to more efficient fridges and induction cooktops
• installing batteries and heat pumps.

Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.

Electric vehicles

Has your business made the switch to using electric vehicles?

Prices for new electric cars remain high, but state and territory governments are investing in charging infrastructures and are keen to incentivise people to go electric by offering a number of rebates and tax exemptions. Read our article for more information on how to benefit.

Increase your prices

You may want to increase the prices of your products or services to offset the impact of energy costs.

Raising your prices is never an easy decision, particularly at a time when your customers are also suffering as a result of the cost-of-living crisis. However, there are ways to do it successfully.

Steps include analysing your exact costs to work out by how much you need to raise your prices and segmenting customers to identify those who will be least sensitive to price increases.

You can also take actions such as adding extra value for customers to soften the blow of a price rise.

We have provided more detailed advice on raising your prices in this guide. 

How TaxAssist Accountants can help

TaxAssist Accountants can help you with the right advice to support your business.

Call us on 02 9174 5757 or contact us to find out more about our services and to book a free video or face-to-face consultation.

Last updated: 22nd June 2023