A profession splitting in three.
By CPA Trendlines Research
The U.S. accounting profession is no longer moving along a single growth continuum. It is splitting into three distinct economic paths—each governed by a different logic, facing different challenges, and offering different prospects. In 2026, these paths are likely to diverge further.
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At one end, solo and micro-firm accountants are increasingly choosing independence and control over scale. At the other end, large firms backed by private equity are consolidating aggressively in areas where profits are already concentrated. Between them sits the traditional mid-size firm, caught between two models that are pulling the profession apart.
For many mid-size firms, 2026 will force a choice: Grow larger and enter the consolidation race? Or deliberately shrink, specialize, and adopt a more solo-like economic model?
For smaller practices, it means they will find a supportive environment, provided they specialize and price their services intelligently. Large firms will accelerate consolidation and extract scale-driven returns. And mid-size firms will face increasing pressure to choose a direction.
The small-firm end: independence as optimization
CPA Trendlines statistics show that business applications in accounting and tax services remain materially above their 2017–2019 average, even after cooling from the 2021–2022 surge. By contrast, employer formations (firms adding payroll) have risen far more modestly and, in some periods, are only marginally above 2019 levels.
At the same time, the data show that roughly 60–70% of accounting and tax firms operate with no employees, a sector that’s been been structurally stable for decades, not a post-pandemic anomaly. Non-employer firms have dominated net growth in firm counts since 2020, with about 8,000 new start-ups in November alone, 20% ahead of year-ago levels. The implication is critical: most new accounting firms are designed to optimize around solo ownership.
Economically, the solo model is becoming even more viable—not less. Over the past decade, technology has reduced the need for junior labor. Remote service delivery has widened geographic reach. And, persistent staffing shortages have turned the absence of payroll into a competitive advantage.
For solo accountants, 2026 is shaping up to be a golden moment, offering stable income, pricing power within a niche, and autonomy. Demand remains strong. Fixed costs remain low. Risk is tightly controlled.
The high end: why private equity keeps pushing upward
Long-running CPA Trendlines benchmarking surveys consistently show that the largest 5% to 10% of accounting firms capture a disproportionately large share of total industry profits, revenue per employee rises sharply with firm size, while compensation growth is flatter, and operating margins at the top tier are meaningfully higher than those of small and mid-size firms. This widening gap explains the behavior of private equity.
Private equity is not betting on fragmentation. It is betting on pre-existing profit concentration, which can be accelerated through acquisitions, service mix expansion, centralized technology, and pricing discipline. For large firms, consolidation is not about survival. It is about scaling an existing advantage.
In 2026, the top end of the profession is likely to become more concentrated, more capitalized, and more economically distant from the rest of the market.
The middle: where pressure is greatest
Mid-size firms face the worst of both worlds. Too large to operate like solos, yet too small to fully enjoy the benefits of scale, these firms are exposed to nearly all the costs of growth without capturing its full rewards.
Labor data underscore the challenge. Bureau of Labor Statistics figures show that wages for accounting professionals have grown faster than overall inflation in recent years, raising costs across the industry. For many mid-size firms, CPA Trendlines surveys indicate that wage growth has outpaced fee growth, compressing margins.
At the same time, mid-size firms face pressure from below, as solo and micro-firms siphon off commodity compliance work, small-business tax clients, and price-sensitive engagements. Technology investments, meanwhile, are approaching large-firm levels without delivering comparable margin improvements.
The result is strategic ambiguity. The most important question for accounting firms is no longer how fast they should grow, but which economic model they are actually pursuing.
The profession is no longer organized around a single path from small to large. It is organized around choice—and the consequences of avoiding it.