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 52,700 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 million in annual revenue and 9 employees.
- Any accountant filing a report with the SEC is required to be a Certified Public Accountant (CPA).
- There are about 52,700 CPA firms in the US operating about 56,100 locations and generating about $113 billion in annual revenue.
- About 85% of firms have less than 10 employees.
- An additional 36,500 establishments are owner-operated with no employees. These solo accountants generate $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
Mar 10, 2023 - Firms Look Overseas to Meet Labor Shortfall
- An ongoing shortage of accountants may be due to the added educational time and expense necessary to become a CPA, according to The Wall Street Journal. A lack of enough new accountants entering the profession has forced accounting firms to boost salaries, turn away auditing work, and send work overseas. Some industry watchers suggest students are avoiding accounting in part due to the extra year spent in college to obtain the required 150 hours of college credit to get their license. Minnesota is considering a change to state law that would make the path to licensure easier. Some accounting trade groups have pushed back, suggesting that CPAs licensed in Minnesota might be unable to practice in other states. South Carolina and New Jersey are also reviewing alternatives to the 150-hour requirement.
- More large companies are disclosing and obtaining assurance services related to their environmental, social, and governance (ESG) initiatives. Providing assurance for client ESG information represents an opportunity for accounting firms, according to a recent report co-authored by the Association of International Certified Public Accountants (AICPA), the International Federation of Accountants, and the Chartered Institute of Management Accountants (CIMA). In a recent AICPA and CIMA survey of top US accounting firms, 84% of firms that do not currently offer ESG assurance services said they are likely or very likely to do so in the next one to three years. However, firms also cited the lack of internal resources and experts as the chief barriers to providing ESG assurance services.
- In early March, the IRS issued a consumer alert warning about a new filing season scam involving Form W-2 fraud circulating on social media. The scheme encourages consumers to use tax software to manually fill out Form W-2s with inflated, fraudulent income information. The scammers urge people to fabricate large income and withholding amounts from made-up employers, then file a fake tax return electronically to obtain large refunds. The IRS has warned taxpayers against being tempted by such schemes, which put them at risk of significant financial and criminal penalties.
- The IRS has extended the tax filing deadline to October 16, 2023 for individual and business filers in three states affected by natural disasters, according to Accounting Today. Taxpayers in all 58 counties in California will have their deadlines extended due to flooding, landslides, mudslides, and a blizzard this year. The extreme weather events followed a spate of wildfires in the state in 2022. Due to severe storms and tornadoes in January 2023, taxpayers in seven Georgia counties and two counties in Alabama will also have their filing deadlines extended. Taxpayers in affected areas do not need to do any additional paperwork or make any special requests for additional time to file.
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