Accountants are generally pessimistic about the U.S. economy and the small business environment over the next year and a half, unless you talk to them about their own firm and clients, in which case they become much more optimistic.
This is according to the findings of a recent poll from tax compliance solutions provider
However, accountants were more optimistic talking about their own firms and clients. When asked how they think their clients will do, the most common answer at 50.2% was “no change,” while 26% said they would be worse off and 23.9% saying they would be better off. The contrast is even more striking when considering themselves and their firm. The poll found 44.5% of accountants think their own firm will do better over the next year and a half, and 43.9% anticipate that they, themselves, will be doing better.
But this does not mean that there aren’t challenges for small businesses. Hiring and retaining employees is cited by 59.76% of accountants as one of the Most Important Small Business Issues, followed by problems related to raising prices at 57.06%, and keeping up with technology at 49.25%. In light of these challenges, accountants are emphasizing cost management and financial discipline with their clients. They’re telling them to find ways to cut costs, build savings and even be willing to work harder and longer for less pay at the economy moves through this period of sturm und drang, as well as keep a close eye on their metrics.
Accountants are also telling clients to bolster their client and customer relations, be ready to adapt to changing circumstances, take advantage of AI and other technology, stay current on tax and regulation changes, focus on staff retention and quality (like not hiring family and friends), concentrate on financial planning and projections, review pricing and revenue strategies, and be aware of external market conditions by things like expecting big business to be your long-term competition.
Of course, as always, the devil is in the details. There are certain sectors accountants feel very confident in for the future while others have less certain prospects. The strongest two are professional services (like lawyers, doctors, etc.) at 59.9% and technology at 53.5%. They are much less sanguine about other sectors. Healthcare facilities was a distant third at 36.03%, followed by construction at 26.6%, cannabis at 25.9% and government contracting at 25.6%.
Accountants have the least amount of confidence in arts and entertainment (6.4%), retail trade (4.7%), franchising (2.7%) and, at the bottom of the list, auto dealers (2.0%).
“Main Street accountants have perhaps the most accurate view into the health of small businesses in local economies, so our 2024 Accountants Confidence Report provides a unique aggregate snapshot of how businesses are faring, now and into the near future,” said Sona Akmakjian, global head of strategic accounting partnerships at Avalara. “This new data around accountant sentiment also demonstrates the extent to which mom-and-pop shops depend on the business acumen and advisory of their trusted accounting professional who must now wear many hats to help clients through headwinds including ongoing staffing shortages, continued inflation, and better understanding technology, including AI, to deal with current and forthcoming challenges.”
The online survey was conducted between March and April 2024 by CPA Trendlines Research to the CPA Trendlines proprietary database of readers, followers and subscribers in practicing tax, accounting and finance professional services firms, including CPAs, bookkeepers, tax professionals and business advisors. Sent directly by email invitation and via social channels comprising more than 155,000 followers, respondents were incentivized by offering a “top-line executive summary of results.” The study has a margin of error of 3-5 points at a 90% confidence level.
The typical survey respondent is handling more than 300 businesses, in addition to 621 individuals and almost 200 nonprofits. With a projectible 347 participating accountants and advisors represented in this survey, this study provides visibility into the financial situations of an estimated 86,999 U.S. small businesses.
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