The effects of the financial crisis continue to be felt by small businesses, according to small and midsized accounting practitioners recently polled by the International Federation of Accountants, but they believe this year will be a better one for their firms.
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Economic uncertainty is still the biggest challenge facing small and midsized entities, said the largest group of respondents—nearly 30 percent—while the burden of regulation ranked a close second. Regulations and standards challenge small and midsized accounting practices as well: over 40 percent said that keeping up with regulations and standards is the most important issue now facing their practice.
Despite the prevalence of economic uncertainty, nearly 40 percent of small and midsized accounting practices expect their practices to perform better this year than last year. Only slightly more (43 percent) expect business to be even with 2010, and 19 percent expect business to shrink in 2011.
Small and midsized practices continue to generate the largest proportion of their revenue from traditional compliance-based services. Nearly 45 percent of respondents indicated that audit and assurance is their biggest source of revenue, followed closely by accounting and compilation (40 percent). Tax and advisory/consulting services comprised only 15 percent combined.