CPA Practices
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 52,200 CPA practices in the US provide accounting, tax preparation, and auditing services to businesses, non-profit organizations, and individuals. Tax preparation and tax planning work for organizations and individuals comprise about one-third of overall CPA client fees, but are typically over half of client fees for smaller firms. Tax work is about evenly split between individuals and organizations. An additional 36,500 solo accountants operate with no employees and generate $2 billion in annual revenue. CPAs are licensed by their State Board of Accountancy.
Changing Tax Laws and Accounting Standards
Keeping up with changes in complex tax laws and accounting rules is a major challenge for CPA practices, particularly smaller ones.
Liability Exposure
Difficult economic times can cause business owners to blame their advisors for financial difficulties.
Industry size & Structure
The average CPA practice has $2.6 million in annual revenue and 11 employees.
- There are about 52,200 CPA firms in the US operating about 55,000 locations and generating about $132 billion in annual revenue.
- Any accountant filing a report with the SEC is required to be a Certified Public Accountant (CPA).
- About 85% of firms have less than 10 employees.
- An additional 34,900 establishments are owner-operated with no employees. These solo accountants generate $2.2 billion in annual revenue.
- CPAs are licensed by their State Board of Accountancy. All States require passage of the Uniform CPA Examination prepared by the American Institute of Certified Public Accountants (AICPA) for licensing. Less than half of candidates pass all four parts of the exam on their first try.
- Nearly all States require CPAs to complete a specific number of continuing education hours before their license can be renewed.
Industry Forecast
CPA Practices Industry Growth
Recent Developments
Nov 22, 2024 - Recent Salary Bump May Not Be Enough to Boost CPA Pipeline
- In 2023, starting salaries for new CPAs increased over 2022 and bested inflation, but industry insiders suggest CPA firms need to do more to compete with other industries for top talent, according to the Journal of Accountancy. CPA employers increased 2023 starting salaries by 7%, three points higher than the inflation rate, according to the National Association of Colleges and Employers. Class of 2023 CPA starting salaries were $65,086 compared to $60,698 for Class of 2022. However, starting salaries for computer and information science positions in 2023 were $91,411. In addition to uncompetitive starting salaries, work overload and burnout hinder recruiting and retention. In recent flash polls of the top 500 firms outside the Big Four by the Association of International Certified Public Accountants (AICPA), 88% of firms said they increased starting pay in the last 12 months, and 57% said they plan to address workload balance.
- President-elect Donald Trump intends to pursue tax cuts that could impact most US families, but implementing them will depend on congressional action, according to The Wall Street Journal. Trump wants to extend the Tax Cuts and Jobs Act of 2017, which reduced taxes for about 80% of taxpayers. If Congress does not extend the law, the tax cuts will expire at the end of 2025. An extension of the 2017 tax cuts would also mean retaining the child tax credit, which currently provides a credit of up to $2,000 per child under 17. In addition to extending the 2017 tax cuts, Trump wants to eliminate tips and Social Security taxes. Republican majorities in the House and Senate increase the likelihood of tax relief, and Congress will determine if any tax cuts are temporary or permanent.
- To alleviate a nationwide shortage of accountants, two national accounting groups have proposed a streamlining of the educational process for becoming a CPA, according to The Wall Street Journal. Under current standards in all 50 states, students must complete 150 college credit hours – amounting to an additional year of college – to attain a CPA license. Industry observers suggest that fewer students pursue accounting in recent years due to the time and expense of additional schooling and more competitive salaries in comparable fields such as tech or banking. The American Institute of CPAs and the National Association of State Boards of Accountancy have suggested an alternate path to becoming a CPA, which allows candidates to replace the extra schooling with one year of work experience. Several states are considering the change. However, some industry insiders say the existing requirements ensure that candidates meet the same standard nationwide.
- In October, the IRS said that beginning in 2025, the agency’s free direct filing program, Direct File, would reach taxpayers in 24 states - twice as many states as in 2024, according to Accounting Today. Starting next year, as many as 30 million taxpayers will be eligible for Direct File, and the program will be able to process more types of income, credits, and deductions. Key additions include Credit for Other Dependents, the Child and Dependent Care Credit, the Premium Tax Credit, the Retirement Savings Contributions Credit, and deductions for health care savings accounts. Direct File was a pilot program that debuted in 2024 in 12 states and served about 140,000 taxpayers.
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