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
Apr 22, 2024 - Slower but Steady Industry Growth
- The CPA practices industry is expected to see weaker sales growth this year, but demand is projected to improve in the following four years. The industry’s year-over-year sales increased by 13.5% in 2022 before dropping to 6.4% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to moderate further to about 3.1% in 2024, then rise to 4.5% in 2025. The industry will then see steady but mostly flat average annual growth of about 4.9% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
- Two major accounting industry groups have partnered with Tulane University to create a pilot program that addresses the ongoing shortage of accountants by streamlining how students can obtain the necessary academic credits to secure CPA licensure, according to the Journal of Accountancy. The Experience, Learn, & Earn (ELE) program was developed by the American Institute of Certified Public Accountants and the National Association of State Boards of Accountancy to provide students with a flexible and affordable path to obtain the 30 extra credits needed for a CPA license beyond a bachelor’s degree. The classes are online through Tulane’s School of Professional Advancement. Accounting firms, businesses, and government entities employ the ELE students while sponsoring their participation in the program. The ELE’s creators say the program addresses two key causes of the current CPA shortage: the costs associated with the extra year of education needed for CPA licensure and the challenges firms face in attracting new accounting talent.
- Optimism among chief financial officers (CFOs) reached a three-year high in the first quarter of 2024, according to a recent survey by Grant Thornton. The study showed that 57% of CFOs surveyed were optimistic or very optimistic about the US economy. More than 71% of respondents expected their firms’ net profits to increase over the next 12 months. CFOs with a positive economic outlook are ready to invest in their firms’ operations. Key areas of spending increases include technology and digital transformation (55% of optimistic respondents), cybersecurity (55%), sales and marketing (52%), and real estate and facilities (37%). About 47% of CFOs said their firms use generative artificial intelligence (AI) to improve efficiency. Of those CFOs using generative AI, nearly two-thirds say they have clearly defined parameters for using it, with data analytics, business intelligence, and financial processing being the most common applications. Most CFOs use AI internally and have yet to use it for customer-facing processes.
- 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.
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