Local, Regional Firms Report Revenue and Practice Growth
Local and regional firms across the U.S. reported revenue growth, salary increases and expansion of core service offerings in 2004 and feel optimistic heading into 2005, according to this year’s PCPS/Texas Society of CPAs (TSPCA) National Management of Accounting Practice (MAP) Survey.
Thirty-two percent of the 2,373 local and regional firms surveyed this year experienced an increase in revenue of at least 10%, while 14% indicated an increase of greater than 20% in their most recent fiscal year.
The average total revenues for CPA firms responding to the survey was $1.48 million. Profits increased slightly as a percentage of total income from 36% to 36.8% over the 2003 results. Consistent with last year’s findings, the three largest sources of income for local and regional firms are tax services (48.5%), compilations (12.5%) and write-up/data processing (12%).
“This year’s survey results confirm what we’ve heard anecdotally – that local and regional CPA firms are thriving in the current business environment,” said Richard J. Caturano, Chair of the PCPS Executive Committee. “This year, PCPS is providing a detailed commentary on CPA best practices, which cements the PCPS/TSCPA MAP Survey as one of the most valuable tools available to help firms run their practices.” Mr. Caturano is President of Vitale, Caturano & Company, a leading CPA firm in Boston.
This year, the top 10 specialized services offered by respondent firms are: estate tax planning (74.1%), not-for-profits (66.6%), payroll processing (59%), forecasts and projections (56.0%), business valuation (47.4%), litigation support (43.3%), personal financial planning (43.2%), M&A consulting (31.9%), strategic planning (27.2%) and IT software selection and implementation (26.8%). The total number of firms offering investment and securities sales decreased from 16% to 10.5%, while payroll processing fell from 65% to 59%.
In this year’s survey, CPA firms were asked about effective marketing techniques. The top three marketing efforts by local and regional firms are newsletters (43.1%), trade group memberships (38.9%) and advertising (35.1%). Tele-prospecting (4.3%) was considered the least effective. A majority of firms have created working partnerships and alliances with other CPA firms (55.1%).
Among other findings:
- Earnings and Rates: Firm employees reaped the benefits of local and regional firm success. The average annual base salary increased 5.7% over last year and bonuses averaged 5.3 % of total salary. On average, owners took home 37% of their firm’s income. The average hourly billing rate for a professional earning $50,000 dropped slightly to $93 from $95 in 2003.
- Retirement Plans: The data reveals that 30% of firms do not have a retirement plan, compared to 26% last year. In addition, just 37% provide for partner retirement, down from 45% in 2003.
- HR Policies: Seventy-seven percent of firms offer their staff flexible work arrangements.
- Outsourcing: Three-quarters of CPA firms said they wouldn’t consider outsourcing individual tax returns, while 16.8% said they would.
- Gender Demographics: Most partners/owners are male (75%). However for all non-owner designations, the majority of CPAs are females.
- Going Paperless: Forty-one percent of respondents indicated that they would consider going paperless, while 20% already are. One-quarter of the firms (25%) are planning to go paperless and 13% will not consider it.
About the Survey
This marks the third consecutive year that PCPS, the AICPA community for CPA firms, has partnered with the Texas Society of CPAs (TSCPA) to produce the survey and the second year the survey was sponsored by Aon Insurance Services, the broker and administrator for the AICPA Insurance Programs. For the first time, additional support was provided by Robert Half Management Resources. Forty-three state CPA societies and the Association for Accounting Administration also played a key role by encouraging their members to respond.
The National MAP Survey Results Report may be purchased for $300 with a $100 discount to participants and a $100 discount for AICPA members. Results are free to PCPS members. The participating firm report includes a customized PDF document as well as access to an online tool that allows firms to format and search the data to best fits their needs. The national report is available to non-participating firms. New this year, a detailed commentary on CPA best practices and management insights will be available. For more information, call 1-800-CPA-FIRM or visit www.pcps.org and click on the 2004 PCPS/TSCPA National MAP Survey logo on the left side of the screen.