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 million in annual revenue and 9 employees.

    • There are about 52,200 CPA firms in the US operating about 55,000 locations and generating about $122 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
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Feb 19, 2024 - CPA Pricing Keeps Pace with Rising Wages
                            • Producer prices for CPA practices have more than kept up with steadily rising industry wages, according to the BLS. In Q4 2023, producer prices for CPA firms were nearly one-and-a-half times wage growth. As of Q4 2023, BLS data show that CPA employment levels were up slightly compared to the same time a year earlier.
                            • The IRS is warning tax professionals to be vigilant about “new client” tax scams that tend to peak around tax season, according to Accounting Today. Posing as potential new clients, cybercriminals send tax pros an email asking for help with their taxes. The emails typically include a link or attachment posing as the client’s tax documents. If the attachments are opened or the links clicked, the scammer can gain access to email addresses, passwords, client data, and other information. Red flags tax pros should watch out for include odd turns of phrase, awkward language, poor grammar, and spelling errors.
                            • In December, consulting and accounting firm Ernst & Young (EY) announced layoffs among partners and rank-and-file employees amid slowing demand for some of its services, according to The Wall Street Journal. The move follows the April 2023 layoff of about 3,000 workers. Several professional services firms have been trimming their workforces as slower demand has led to weaker revenue growth. Consulting services were in high demand during the pandemic as firms sought help with corporate strategy and digital transformation. Consulting demand typically rises and falls along with economic trends, while audit work remains relatively constant due to public companies’ financial reporting requirements.
                            • More accounting, consulting, finance, and tech firms are getting a jump on recruiting college students as the competition for talent heats up, according to The Wall Street Journal. Firms including Grant Thornton and PricewaterhouseCoopers (PwC) began advertising this fall for summer internships that won’t start until 2025. Competition is particularly acute for accounting majors, which are in extremely short supply. College career counselors note that financial firms are most likely to target sophomores for early recruiting, followed by tech and consulting firms.
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