2004 was a banner year for local and regional firms across the U.S., with many reporting salary increases and double-digit revenue growth, according to this year's PCPS/Texas Society of CPAs National Management of an Accounting Practice Survey.
While 32 percent of the 2,373 local and regional firms surveyed saw no change or a modest change in gross fees this year, the same number experienced an increase in revenue of at least 10 percent, while 14 percent indicated an increase of greater than 20 percent in their most recent fiscal year. Nearly half (48.3 percent) had an increase of at least 6 percent. Average total revenues for firms responding to the survey were $1.48 million.
Total average profits in 2004 were $541,488, up significantly from $467,000 in 2003. On average, profits represented 36.8 percent of total income this year, compared with 36 percent last year.
The three largest sources of income for firms remained the same in 2004, led by tax services (48.5 percent), compilations (12.5 percent) and write-up/data processing (12 percent). Consulting services accounted for 8 percent of fees.
"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 and president of Boston-based Vitale, Caturano & Co.
This year, the top 10 specialized services offered by respondent firms were: estate tax planning (74.1 percent), not-for-profits (66.6 percent), payroll processing (59 percent), forecasts and projections (56.0 percent), business valuation (47.4 percent), litigation support (43.3 percent), personal financial planning (43.2 percent), mergers and acquisitions consulting (31.9 percent), strategic planning (27.2 percent) and information technology software selection and implementation (26.8 percent). The number of firms offering investment and securities sales dropped from 16 percent last year to 10.5 percent, while payroll processing fell from 65 percent to 59 percent.
Employees earned slightly more in 2004, but billed fewer hours, according to survey results. The average annual base salary rose 5.7 percent over last year, with bonuses averaging 5.3 percent of total salary. On average, owners took home 37 percent of their firm's income. The average number of hours billed ranged from 1,260 for an owner -- down slightly from 1,272 -- to 1,492 for a CPA with four to five years' experience, off slightly from 1,509 last year. On average, firms bill roughly 80 percent of their fees using hourly billing, according to the report.
The survey also found that 30 percent of firms don't have a retirement plan, compared to 26 percent last year, and just 37 percent provide for partner retirement, down from 45 percent in 2003.
The National MAP Survey Results Report is free to PCPS members, and may be purchased for $300 with a $100 discount for participants and for members of the American Institute of CPAs. For information, call (800) CPA-FIRM or visit www.pcps.org and click on the 2004 PCPS/TSCPA National MAP Survey logo.
