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
Oct 22, 2024 - Accounting Groups Propose Alternate Path for New CPAs
- 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.
- In a recent Gartner survey of 121 finance leaders, 58% of respondents said their finance organizations are using AI. In a similar survey in 2023, only 37% of those surveyed said their finance departments were leveraging AI. Two-thirds of finance leaders surveyed said they were more optimistic about the potential impact of AI than they were a year earlier. The leading use case for AI implementation in finance is intelligent process automation (44% of finance organizations), which uses the AI capabilities of existing automation tools, including robotic process automation. Other key use areas include anomaly and error detection in large datasets (39% of finance organizations) and analytics and financial forecasting (28% of finance organizations). While finance leaders have made progress in implementing AI, their top challenges are data quality and availability, and attracting enough AI talent.
- In September, PricewaterhouseCoopers (PwC) said it would lay off about 1,800 workers, the company’s first such move since 2009, according to The Wall Street Journal. PwC said it would also restructure its technology group amid a slow demand for some of its advisory services. The reductions will include associates and managing directors in the firm’s business services, and audit and tax segments, and about half the cuts will be for positions outside the US. PwC noted that, unlike its Big Four accounting firm peers, it has not laid off US-based workers over the past four years. The move by PwC comes as some professional services firms have seen demand for certain services soften amid high interest rates and a sluggish economy.
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