Rachel Jones co-founded Great Circle Communications Limited, an Edinburgh-based reputations management consultancy, in 1998. Rachel explains how it quickly became clear that understanding tax issues was a top priority.
What I did
Sign up for HM Revenue & Customs courses
"If we were trying to build up other people's reputations, it was important we could look after our own, so getting the business' tax affairs right from the word go was essential.
"Our local HM Revenue & Customs office runs half-day courses and I took advantage of several of these in Great Circle's early days. I went on ones covering how to pay yourself, how to pay employees, maternity leave and sick leave.
"They've proved very helpful. I don't remember everything but it means when my accountant talks about tax matters I at least have an idea about the basics.
"The courses were free too - I'd have been crazy not to go on them."
Invite the VAT inspector into the business
"Although we started the business from home with just one computer on the kitchen table, we knew we wanted to be VAT registered from the start. People expect to pay VAT in consultancy and having a VAT registration number positions you as a serious player. But VAT was double Dutch to us.
"We came across an HM Revenue & Customs stand at an exhibition where we chatted to the VAT inspector who agreed to come and visit us. I remember he sat in our living room - also our meeting room at that point - and gave us a presentation. He was very approachable and answered all our questions on what exactly attracted VAT and whether it was more advantageous to lease or buy a company car.
"Though we were VAT registered from the start, we reached the VAT threshold anyway within eight months. We were VAT inspected after three years and it was no big drama."
Use the tax helplines
"In the early days we used the various tax helplines quite a lot. We'd ring up the VAT office, for example, and ask why postage didn't attract VAT but you had to pass it on as a cost to clients. I'm still not afraid of ringing up and asking questions. They're there to make sure you get things right."
What I'd do differently
Speak to the National Insurance people
"When we started out we assumed our bookkeeper was keeping an eye on National Insurance but it wasn't something they knew about and the result was a National Insurance shortfall and a big bill. It's quite difficult to keep an eye on everything, but you must and for that you need to know the basics. We got the VAT right, but not the National Insurance."