Avalara’s Accountant Confidence Report notes to the difficulties that lie ahead for small businesses Hire and retain employees, manage costs, increase prices, and keep up with AI-powered technology
Almost 50% of The accountants surveyed believe the outlook for the more than 80,000 small business clients they represent will worsen over the next 12 to 18 months.
DURHAM, NORTH CAROLINA, August 12, 2024 /PRNewswire/ — Avalara, Inc.a leading provider of tax compliance automation software for businesses of all sizes, today announced the results of a new survey of more than 347 Main Street accountants that provides visibility into the tax, financial and accounting situations of approximately 86,999 small businesses. Survey responses revealed that continued economic headwinds could create challenges for small businesses over the next 12 to 18 months. The survey, conducted during the 2024 tax season as accountants were reviewing client financials, captures a snapshot of accountants’ sentiment about business conditions and the economic outlook for the small businesses they serve, and shows accounting professionals raising warning signs about key business issues, leading with clients’ abilities to hire and retain employees, manage costs and price increases and keep pace with technological changes brought on by artificial intelligence.
The Avalara Accountant Confidence Report 2024, produced in collaboration with CPA Trend Linesis the result of a survey of trusted advisors with the clearest insight into the financial health of small business clients. The survey was conducted against a backdrop of continued high inflation, rising interest rates, a looming recession, tight credit and pressure to focus on short-term challenges at the expense of long-term planning.
Accountants for small business clients: cutting costs, applying new financial discipline
According to the report, Main Street accountants are offering cautionary advice to small businesses amid uncertain or deteriorating economic and business conditions. 48.6% of the 347 accountants surveyed believe the outlook for the 86,999 small business clients they represent will worsen over the next 12 to 18 months, while just 17.7% expect a change for the better and 33.6% predict no change.
The survey of practicing accounting, tax and finance professionals (including CPAs, bookkeepers, wealth managers, payroll agencies and tax professionals) also shows that 49.7% expect the U.S. economy as a whole to slow down, while only 16.8% expect an improvement and 33.6% see no change.
Main Street accountants are only optimistic about professional services and “small tech companies”
The survey showed that the dynamics of the economy are already highlighting some winners and losers. Accountants see some of the best outlook for the economy for professional services firms, such as law firms and medical practices, and for local IT service providers and the small local technology manufacturers and distributors that other small businesses will have to rely on as they restructure for the next phases of the economy and technology. At the other end of the spectrum, they are not as optimistic about auto dealerships, franchises, retail, the arts and entertainment industries and a long list of additional business types.
Extended outlook bearish on the overall economy
Accountants offered a wide range of advice to small business owners, urging clients to cut costs where possible and apply new financial discipline in running their companies, as well as embrace technology and adjust labor policies to find and retain the best employees. The survey was conducted during an election year, adding another element of uncertainty to tax policy and planning and government regulatory activities. In written comments, respondents advised their clients on a variety of areas, from cost management to financial discipline and reporting, customer relations, tax and regulatory awareness, personnel management, and the use of technology and artificial intelligence:
- “Stay up to date on labor laws”
- “Get your house in order to prepare for more IRS audits”
- “Keep your employees happy or you won’t have a business to run”
- “Manage your expenses and make yourself unique”
- “Expect big companies to be your long-term competition”
- “Raise your prices! If they really need you, they will pay you”
- “Leverage AI to increase productivity and save time”
- “Look for different methods to achieve goals and take advantage of technology to be more productive”
“Main Street accountants have perhaps the most accurate insight into the health of small businesses in local economies, so our 2024 Accountant Confidence Report provides a unique aggregate snapshot of how businesses are faring, now and in the near future,” he said. Sona AkmakjianGlobal Director of Accounting Strategic Alliances at Avalara“This new data on accountant sentiment also demonstrates the extent to which small businesses rely on the business acumen and advice of their trusted accountancy professional, who must now take on many roles to help clients overcome obstacles such as staff shortages, continued inflation and a better understanding of technology, including artificial intelligence, to meet current and future challenges.”
Read more about the 2024 Accounting Confidence Report here – use the avlr code.
About the study:
The online survey was conducted at the height of tax season in March and April 2024 Survey respondents were surveyed by CPA Trendlines Research to CPA Trendlines’ proprietary database of readers, followers and subscribers of tax, accounting and finance professional services firms, including CPAs, bookkeepers, tax professionals and business advisors. Sent directly by email invitation and through social channels comprising over 155,000 followers, respondents were incentivized by offering them a “top-line executive summary of the results.” The study has a margin of error of 3 to 5 points with a 90% confidence level.
CPA Trendlines Research (cpatrendlines.com) is an independent think tank and information services firm focused exclusively on providing actionable intelligence to the tax, accounting and finance professional community and the providers that serve them.
About Avalara
Avalara makes tax compliance faster, easier, more accurate, and more reliable for over 41,000 business and government customers in over 75 countries. Avalara’s tax compliance automation software solutions leverage over 1,200 signed partner integrations across leading e-commerce, ERP, and other billing systems to power tax calculations, document management, tax return filing, and access to tax content. Visit avalara.com to improve your compliance process.
About CPA Trendlines
CPA Trendlines delivers actionable, data-driven business intelligence to tax, accounting and finance professionals to help them build their businesses, advance their careers and better serve their clients.
SOURCE Avalara, Inc.
