American taxpayers had to pay at least 20% more on average to get their taxes done last year — and accountants aren’t thrilled about it either.
Tax professionals charged an average of $218 for new clients in 2023, a 25% jump from $174 in 2021, the National Association of Tax Professionals found in its 2023 Tax Fee report. Tax pros also bumped repeat clients’ fees to $205, a 22.7% increase from $167 two years ago. This is based on the most common fee structure, where clients are charged a minimum fee plus costs based on the complexity of their return.
Experts are attributing the double-digit price increases to an industry-wide PR crisis. Firms need to raise prices because they can’t find enough staff to work, and they can’t find staff because many college students still believe accountants sit in dark basements punching numbers into calculators.
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“I think, unfortunately, we accountants have never been able to shed the reputation of being number crunchers,” Mike Gillis, CPA and CEO at DMJPS, an accounting firm based in North Carolina, told Yahoo Finance. “It makes me feel a little bit sad because I know what a great career it is.”
“I wish more young professionals would understand [accounting] has lots of opportunity and is financially lucrative as we compete for students against other really cool careers like the data analytics and the software engineers (which have) a little more cool factor.”
A shortage hurt by perception
The total number of candidates finishing bachelor’s degrees in accounting dropped 7.8% in 2022 from 2021 after a steady decline of 1% to 3% annually since 2015, according to the AICPA’s 2023 Trend Report. It also shows that the number of new CPA candidates dipped to 30,251 in 2022, the lowest in 16 years.
“(Fewer) students are going into accounting, and [the students] are coming up with 10 job offers. So it’s becoming so much more competitive to get them,” Gillis said about his firm’s recruiting challenges.
The shrinking talent pipeline is impacting accounting firms across the board. More than 99% of the country’s top CPA firm leaders said they can’t find adequate staffing domestically, a survey by alliantTALENT, a professional service firm addressing CPA talent shortage, shows.
Meanwhile, the demand for accountants has “gone through the roof,” Jim Brady, CEO of alliantTALENT, told Yahoo Finance.
“Since the 80s, you’ve had four decades of incredible economic expansion in the United States,” Brady said, “and what goes with that is capital formation and the need for CPAs, the need for audit professionals, and the need for tax professionals.”
Gillis agreed. “We had about 13% organic growth last year, but we could grow a lot more and a lot faster if we had the staffing.”
One of the main culprits is the perception of accounting vs. other business majors, Brady explained. When pitted against careers such as private equity investing, investment banking, or management consulting, accounting often loses on glamour appeal.
“Those are pretty cool careers to compete with the accounting profession,” Brady said.
Experienced accountants have also been leaving the field. According to US Bureau of Labor Statistics data, 312,000 accountants and auditors left their jobs between 2019 and 2022, a 16% decline. To combat this, accounting firms have been raising salaries, giving out bonuses — like Deloitte’s $20,000 to $35,000 retention pay — and adding benefits to attract and keep talent.
“We have total flexibility with work hours now,” Gillis said. “You can pretty much set what hours you want, you can work remotely. It’s just doing everything we possibly can with flexibility to let people feel like it is a comfortable career.”
The cost of those added benefits have resulted in rising client fees. Even so, demand for accounting work still outpaces talent supply. Nowadays, Gillis’s firm doesn’t negotiate fees.
“Our fees have gone up because of increased salaries,” Gillis said. “If a client is not comfortable with our fees, then they’re just not a good fit for us. We don’t negotiate or get into any fee disputes because it is what it is.”
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A shift to international employees
To alleviate hiring challenges, many small and mid-size accounting firms are joining what many large firms have already been doing for years — working with overseas offices on their US practices.
Over three-quarters of all firms polled by alliantTALENT reported that they were either considering, planning or are already employing international employees. The trend follows larger firms like Deloitte, a Big Four accounting firm, which in 2022 employed over 76,000 workers in India (known as the Deloitte USI workforce) as part of its 200,000 US headcount.
However, the new practice is different from outsourcing, Brady pointed out.
Brady builds overseas offices with recruits on all levels, from junior staff all the way up to senior managers and partners. “We do the most complex work that CPA firms do for their clients like derivative accounting, business combination, going concern uncertainty, so we are fully a part of the CPA firms that hired us,” Brady said.
“We’re doing it this year for the first time,” Gillis said. “A lot of firms have already done it but we are doing it. We are going to have five full-time employees overseas.”
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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