Accounting Industry Trends
The accounting industry is an evergreen product that businesses and individuals require to handle their financials. They provide a valuable service, whether it is calculating the profitability of a company or handling the taxes for the average person.
This page highlights the accounting industry trends that will help you understand the basics of the profession. We will break up the information into various categories to help you find the accounting trends that interest you most. There is enough variety to provide a comprehensive overview of the industry. Also, read to the very end for answers to commonly asked questions. These will help you get a better idea of the issues in the industry.
Without further ado, let’s dive into the accounting industry stats.
Top 10 Accounting Industry Statistics and Facts of 2022
During 2020, $110 billion was generated in the accountancy industry
90% of accountants feel there was a cultural shift in the industry
Over half of accounts feel that providing financial advice is part of the job
57% of accounts are improving their technological literacy
Around half of the accountants share that new regulations are a big challenge
79% of firms offer COVID-19-related services
$56,032 is the starting salary of accountants
The volume of work done remotely is being increased by 43% of accountancy firms
Around half of the small businesses rely on reputation to choose an accountant
10-15 years is the average time taken to make partners in accountancy companies
General Accounting Industry Trend Stats
This section provides information on the general stats that provide an overview of accounting. They are a good starting point to get the lay of the land. These interesting statistics can help you figure out the important accounting practice.
As of 2020, the size of the accounting industry is $544.06 billion
The massive industry is worth more than half a trillion dollars as of 2020. It is constantly growing as the number of businesses that need accounting services increases. Companies understand the value of a good accountant, which can help them grow.
However, accounting software that automates the work humans traditionally do can undermine growth. AI-based software is allowing the average person to perform complicated tasks only accountants could do before.
Source: Research and Markets
51% of companies share that regulatory change is one of their biggest challenges
Accountants can help overcome regulatory challenges for companies to avoid paying fines. Keeping up with regulations can take a lot of resources. Therefore, it makes sense to outsource the task to a trusted accountant. They can keep an eye on new industry regulations and be ahead of the curve with required changes.
Source: Accounting Today 2022 Survey
9 in 10 accountants from around the world feel there has been a cultural shift
90% of accountants feel like there is a cultural shift towards their profession. The perceived importance of accountants has increased, which means it is easier for them to get work. Therefore, they do not have to sell themselves as hard to get clients to pay for their services.
The accounting market is predicted to reach $735.94 billion by 2025
This means that the accounting industry would have added almost $200 billion worth of value in just 5 years. The impressive predicted growth numbers are a strong indication that accounting is a healthy industry. Therefore, students looking to choose a profession they can rely on for an income cannot go wrong with accounting.
Source: Research and Markets
In the US, the accounting industry generated $110 billion in revenue in 2020
Interestingly, around half of the revenue was generated by the 4 biggest firms. These include Deloitte ($23.2B), PriceWaterhouseCoopers ($18B), Ernst & Young ($15.8B) and KPMG ($9.6B). These accounting firms have held the top positions for many years and continue to outperform the competition in the United States.
29% of businesses with lower than $250 million in revenue use automated accounting software
The companies that are limited in size do not need a comprehensive amount of accounting services. Therefore, it makes more sense for them to invest in automated accounting software to save money.
Profitability is hard to achieve for new companies that are growing, which means cutting costs is paramount to facilitating growth.
Accounting Job-Related Statistics
In this section, we will explore the statistics that provide an indication of how the job market is unfolding. This can help young accountants better understand the industry they are getting into.
California has the largest number of accountants and auditors at 150,050
Young accountants that are deciding where to live for the best jobs should consider moving to the State of California. They will provide opportunities for more jobs and potentially higher wages. However, as the number of businesses leaves California and heads for states like Texas, then that might also shift the number of available opportunities.
Source: Statista – Employment by State
62% of survey respondents feel that running a successful practice in 2030 will not be enough with today’s accountancy training program
Technological developments are constantly challenging industries like accounting to adapt. The professionals that have got their pulse on the latest developments are more likely to provide a better service.
Therefore, it makes sense that current accountancy training methods could be obsolete by the end of the decade. As new technologies arise, accountants will need to learn new skills to provide a modern service.
51% of accounts feel they need to provide financial business advisory services
Services like growth modeling and cash flow are frequently demanded from the modern-day accountant. That’s because these skills go hand-in-hand with other services that accountants provide.
It means that the scope of what accountants do for businesses is increasing. The challenge is learning these new skills, but it also raises the bar on their ability to earn more. Businesses are going to pay more for accountancy services that include business-related advice.
41% of finance and accounting professionals feel that problem-solving gives them the most job satisfaction
The professionals working in the accountancy field are motivated by the challenge of the job. Each client provides a unique opportunity to test their skills. The specifics of the business and industry mean the methods required to solve problems differ.
Source: Robert Half
60% of bigger accountancy firms share that technology is helping with retaining staff
Technology allows accountants to do less work that is considered boring and repetitive. Therefore, they can get on with tasks that are more creative and require critical thinking.
Better work satisfaction allows accounts to stay satisfied with their job for longer at firms that make use of technological advancements. Accountancy firms that want to hold on to their employees for longer should consider upgrading the technologies they use.
Source: Wolters Kluwer
The average annual salary of a CPA is $65,289, while for accountants it is $55,459
The higher salary of CPAs means that it is a more lucrative position for graduates to obtain. However, these are industry averages, which means that there are accountant jobs that can pay much more than CPA positions.
Arguably, accounting positions have a higher earning potential if the best firms in the United States are headhunting you. It also depends on the quality of the clients that the firms are servicing. Some industries provide lucrative payments for accountancy services.
57% share that technology literacy is the main additional skills accountants are training for
In the modern era accountants who cannot use current technology will be useless to businesses. They need to have a grasp of what software businesses are using to manage money. The accountants in demand are those that are familiar with the newest protocols.
However, knowledge of older systems is also important since not every business has completely digitized its operations. It means accountants must be well-rounded in the services they can provide.
CPA accountants have the highest annual average salary at $70,838
Certified public accounts have the highest salary, so it’s one of the most desired positions in the field. In 2nd position is accountant/office manager ($63,748) and then fixed asset accountant ($61,711). Most average accountant salaries are north of $50,000, which means it is one of the higher-paying jobs.
The starting salary for accountants is $56,032
The accounting industry has one of the higher starting salaries when compared to other industries. However, it depends on the level of education that the accountant has received. For instance, a new accountant with an associate degree is $56,174 and one with a graduate degree is $58,639.
Therefore, it pays to get a better education in the accounting industry. But paying attention to the numbers indicates that there is a small difference between the types of degrees the new accountant has.
Source: Indeed and Salary.com
On average it takes 10-15 years for an accounting employee to become a partner in a top firm
There is no shortcut for most employees to reach the partner level in one of the biggest accounting firms in the United States. However, the time investment required for smaller firms is likely to be shorter.
That’s because there are fewer employees who are trying to receive the top jobs at the firm. Also, smaller firms do not have the same pull to attract the top talent from the job marketplace.
Source: Journal of Accountancy – Path to Partner
Accounting Service Trends
Now let’s dive a little deeper into the accounting trends that show how the industry is changing. These allow you to determine where the industry is going so that you can make informed decisions about the future.
Tax (38.9%) and auditing services (42.1%) are the biggest performers in the accounting industry
Regulations and tax laws are the biggest drivers for accounting services. Companies and private individuals want to make sure that they have got their finances in order to avoid getting in trouble with the law. Therefore, the accounting services that support these concerns will be the most requested.
Source: IBISWorld Industry Report
The Covid-19 pandemic was a catalyst for moving from paper to digital payments according to 58% of finance professionals
The movement from paper to digital during the pandemic has transformed many facets of businesses and the way consumers interact with them. The increase in digital payments provides accountants with better systems to follow transactions and organize them for tax audits.
The change also increases the ease with which software can be used to replace accountants for everyday tasks. The commonly digitized tasks include processing check payments to vendors and invoicing customers.
Coronavirus-related accounting services are offered by 79% of firms
This service type is not the biggest earner in the industry but has been the most widely offered since the start of the pandemic. In contrast, only 58% of accounting firms offer bookkeeping services.
The high number of services offering COVID-related accounting reflects the number of businesses that need help overcoming the new regulations. Accounting companies have played a key role in helping businesses get over the difficulties the pandemic has presented.
Source: Accounting Today
Small Business Accounting Stats
Now let’s turn our attention to the accounting statistics that reflect the state of small businesses. Many small businesses put off hiring a good accounting firm for too long. They are a vital part of creating a profitable company by helping them grow.
In 2017, the number of businesses that filed as S-Corp tax returns is 4.7 million businesses
This statistic indicates that there are just under 5 million small businesses in the United States. However, 4.3 of these small businesses report as having less than $1 million in assets. This means that most businesses are very small and in their first stages of growth.
This is a turbulent period for most companies since they need to have funds to weather potential storms.
Source: IRS SOI Tax Stats
50% of businesses have increased the use of ACH payments from 2020 to 2021
Accounting is far easier when digital systems are used for making payments or sending money to employees. This statistic indicates that an increasing number of companies are using ACH for payments.
However, around 45% of businesses still use paper checks for the majority of their payments. This is inefficient for accountants and reduces the viability of automated accounting systems to be set up.
Around 70% of small businesses don’t have an account
Many small businesses put off getting an accountant believing that it is an expense that is not necessary. That’s why over half of small businesses rely on managers or owners to complete accountancy tasks.
However, accountants can improve the running of a business by providing financial guidance. It means they can improve the profitability of a small business, effectively paying for themselves.
49% of small businesses share that recommendations are the top deciding factor for choosing an accountant
This statistic indicates that having a good reputation is one of the best ways that accountants can secure new clients. Therefore, asking for more reviews from satisfied clients will improve online review portals like TrustPilot and Google Reviews.
Online reputation services exist that can help improve the overall perception of an accounting company. They specialize in managing reviews and raising a positive profile.
Remote Work Accountancy Statistics
The increase in remote work is also evident in the accountancy industry. These statistics highlight a few important trends about how accountants are adapting to the remote work culture.
43% of accountancy firms are increasing the amount of work that is done virtually
The benefits of remote work include increased productivity, higher job satisfaction, more flexibility, and a higher pool of workers. Therefore, it makes sense for accountancy firms to embrace the remote work trend - at least partially.
However, there are challenges with remote work, which include providing equipment and getting rid of distractions. Some homes might be too distracting for remote workers if there is no dedicated office space.
Source: Wolters Kluwer
The majority of tax returns were prepared without in-office contact, and fewer face-to-face interactions were observed during audits in 2021
The pandemic has forced many people to reduce the number of in-person interactions for services. However, as the rules for social distancing are relaxing, people continue to use digital means for many services. That’s because in many cases it is more beneficial to save time and do things online instead of traveling to a location.
Source: Wolters Kluwer
81% of accountancy firms feel that there will be a big increase in remote work after the pandemic
Companies understand that the work culture is shifting and working remotely is becoming one of the most desirable aspects of a job. This means that employers need to think strongly about the way their business is set up.
Many companies are having success with a hybrid model where a few days of the week employees must come in for work and the rest of the time they are free to be at home. This offers the best of both worlds since face-to-face interactions are not completely eliminated.
Source: Anywhere Work Survey
The statistics on this page indicate that accountancy is an in-demand service by small and big businesses alike. Also, there is a trend towards remote work, which is a reflection of the times. The average job salary of over $50,000 means that the work is well-compensated compared to most other industries.
As technological advancements in the accounting industry develop, expect the statistics to change. Accountancy is in a healthy place because there are many businesses that require financial oversight to improve profitability. This provides accountants with more work opportunities than in previous years.
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