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By CPA Trendlines Research
Tax practitioners were looking a bit optimistic last month, according to the early results coming in to the 2023 CPATrendlines Busy Season Barometer.
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But as the second wave of responses comes in, the early-bird optimism seems to be waning.
What’s happening?
The Annual Crunch
The first 110 responses showed an astonishing 67 percent expecting this year to be somewhat or much better than last year. “Better than last year” isn’t a high bar to clear, but still, for accountants hunkering down for the annual crunch, the results were surprisingly optimistic. Barely 14 percent figured on any degree of worsening.
But now another 100 or so have responded, and expectations seem to be tilting south. While those who expect no change are still hovering at about 18 percent, only 64 percent see improvement over last year.
At the other end of the spectrum of hope, we see a slight increase in those who think business will get “somewhat worse,” edging up from just under 13 percent to just over 14 percent.
The numbers for those fearing a “much worse” year remain small, though they jumped from just under 2 percent to just under 3 percent.
So what’s causing this hint of rain on the practitioner parade?
It isn’t concerns over the national economy. Those numbers are pretty consistent.
Concerns for small businesses have nudged up, but only a bit. The main reasons for that concern:
- Dropping revenue and profit
- Burdensome payroll costs
- Access to capital
There’s noticeably less worry over late or unprepared clients, dropping from 55 percent to 49 percent to become the second biggest concern. At the same time, anxiety over IRS operations inched up to become the primary concern, indicated by 53 percent. Numbers for other concerns (crypto, remote staffers, time to plan, security, etc.) remained pretty much the same.
What Tax Pros Are Saying
Explanatory comments are all over place, though staffing came up a lot.
- J. Morgan Nutt, with his own firm in Louisville, notes, “Staffing costs going way up.”
- An anonymous respondent in Illinois doesn’t sound too worried, writing, “We raised our fees 10 percent across the board. There is more work available than we can find staff for.”
- Gregg Lynch, at Lynch Cotton & Associates, sees a downturn but only because last year wasn’t so bad. “Fairly certain that revenue/profit will be down,” he says. “We did a good bit of ERC work last year. Even pricing far lower than the crooked, online marketers, it was highly profitable work.”
So far, 80 percent of respondents are managing partners or sole owners, and 13 percent are partners, senior executives or C-suiters. A proud 47 percent rate their firms at eight or higher on a scale of zero to 10. Only 7 percent think their firms rate a three or lower.
Their average practice clientele numbers look like this:
- Number of individual clients: 529
- Number of business clients: 192
- Number of trusts and estates: 44
- Other services (bookkeeping, payroll, advisory, etc.): 63
And how do things look in your neck of the woods? Please let us and your colleagues know. Take a five-minute break to contribute to the Busy Season Barometer. Tell us how you’re doing.
