Second Quarter had business activity and income substantially better than First Quarter of 2009.  Some of it was seasonal, but some of it was definitely some people feeling more confident that the recession is leveling out.   Based on the ferry traffic, the Port of Friday Harbor and Roche Harbor’s increase in boat nights, some of the Whale Watch and Kayaking businesses being up over 2008 this year – it appears tourists in the Northwest may be staying closer to home.  Retail and restaurants are still generally down from 2008 – some a substantial amount.

Businesses are, obviously, really trying to look at re-structuring so they can continue doing business whether it is retail, restaurants, lodging, construction or professional services.  Most realize they need to cut expenses but want to be smart about it.  Making sure the Net Income increases due to cutting expenses is the key.

One area that almost everyone has been able to save is by reviewing all of the insurance policies and shopping them around.  Everything from the residential insurance, to car insurance and business liability has definitely different options from different insurance companies.  I have the found clients have found the biggest difference in commercial real estate policies and commercial liability.  Everyone has a tendency to cut down on Marketing.  That is an easy one to see immediate help with the cash flow.  However, good marketing (i.e. effective at bringing income in the door) is still paying for those businesses that really take the time to figure out what is effective.  I have one business that is substantially up for 2009 over 2008 and it is clearly due to smart (and expensive) marketing.  Both their Net Income and Gross Income are up this year.

All businesses need to be more careful than ever to file and pay all their taxes on time.  Everything from Sales Tax Returns to the Schedule C (sole proprietorship) to Labor and Industry (work comp) returns are being audited.  Businesses have to make sure all their tax filings match the returns the file with the IRS and the State Department of Revenue.  The IRS and WA State Department of Revenue compare numbers to make sure everything matches – if it doesn’t, you get audited.