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
Recent Developments
Mar 22, 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 US Bureau of Labor Statistics (BLS). In Q4 2023, producer prices for CPA firms were nearly double wage growth, according to the BLS. 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 sending notices to about 125,000 individuals who earned $400,000 or more and neglected to file returns between 2017 and 2021, according to The Wall Street Journal. Tax experts note that although taxpayers are responsible for preparing and paying their taxes accurately each year, some fail to do so out of procrastination, financial problems, or intent to evade. The IRS has a good idea of who isn’t filing but, until recently, lacked the resources to pursue them. The Inflation Reduction Act (IRA) passed in 2022 included $80 billion in IRS funding to streamline agency operations and beef up enforcement. However, Republicans in Congress have vowed to cut IRA-related IRS funding by about $20 billion.
- In mid-March, Deloitte announced restructuring plans that aim to trim costs and simplify operations, according to the Financial Times. The firm will pare its operating divisions from five to four: tax and legal; audit and assurance; strategy, risk, and transactions; and technology and transformation. As client demand has waned, the Big Four accounting firms have begun to trim their costs. During the pandemic, the largest accounting firms saw a spike in demand as clients sought help to solve evolving remote work needs and cope with supply chain disruptions. However, corporations and governments are pulling back on consulting spending amid growing global economic uncertainty.
- 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.
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