Growing Your Accounting Firm: Challenges and Solutions

With a growing shortage of CPAs and an increasing demand for financial services driven by complex tax laws, growing an accounting firm has never looked more promising. Even private equity companies are eyeing accounting practices as lucrative investments.

Scaling an accounting firm is challenging, but with smart strategies and patience, growth is well within reach. This article delves into some common obstacles firms face and offers practical solutions to help you thrive. 

What’s the Right Tech Stack for Your Growing Firm?

Building the right tech stack is crucial for the success of your growing accounting firm. The right combination of tools can streamline workflows, improve client communication, and free up your team to focus on high-value tasks.

The technology you currently use may not be adequate as you set your sights on expanding your firm. The two tech areas you should pay attention to are: practice management and workflow software.

Practice Management Software

If your practice struggles with communication (both among team members and with clients), consider whether your practice management system is adequate. Small firms can get by using spreadsheets or general project management software like Asana or Notion. But as your client roster grows, you’ll need to explore practice management software designed for accounting firms because these general systems require a lot of tinkering to get them to work for your needs.

Keep in mind that project management software isn’t the same as practice management software. Project management focuses on the execution of workflows to complete a project.  

Accounting practice management software centralizes internal and external communications, onboarding clients, sending reports, billing, and monitoring projects. Practice management software, PM software for short, varies in price and features. The most popular ones are Karbon, Firm 360, Canopy, TaxDome, and Financial Cents. 

So how do you choose the right PM software for your growing firm? First, consider the needs of your firm. Do you strictly offer tax compliance? Or are you a CAS firm? A mixture of both? Some PM software is better suited for tax only firms. TaxDome is an example. While you could use it to operate your CAS firm, there are better options available.

Second, assess your current bottlenecks. Do you have challenges with collecting and storing client files? Difficulties in sending reminder emails to clients? Capacity management for your team? Scrutinize your firm’s processes and identify the largest roadblocks.

Workflow Software

A few years ago, most accounting firm owners would have selected their PM software first, and then found a workflow software that complemented it. But today, workflow software has progressed leaps and bounds above what a PM software can do. Most PM software has a basic workflow solution built in. While these workflow options in PM software are bare bones, there are specialized workflow softwares that are more detailed and customizable.

If you’re running a bookkeeping or CAS practice, software like Keeper centralizes dozens of clients’ month-end close. Keeper integrates with QBO and Xero and will analyze transactions for inconsistencies and send financial statements and customized client reports to the client. For tax-centric firms, tax intake software like Stanford Tax and Soraban ask your clients only for the documents you need to complete their tax returns. 

Intake software also integrates with most of the common tax preparation software, like Drake, UltraTax, and CCH. Workflow software generally charges per clients/returns. While you will want to work within your budget, price should not be the only consideration. A cheap workflow software can prove expensive in the long run and leave you with many avoidable headaches.

Staffing Considerations for Growing Firms

Getting excellent workers and keeping them is increasingly difficult, especially for accountants. To show how dire the situation is, 52% of respondents in a 2024 ICAEW survey mentioned talent shortages are driving changes to the accounting profession. 

Admin Staff is Necessary

According to the survey by TOA Global (cited above), most accountants are not as productive as they want to be. Most of them pin this down on the time consumed by administrative tasks like answering calls and handling emails. In fact, accountants complain that emails and calls are the most time-consuming tasks (45%), followed by client issues (23%), and meetings (14%). 

With these kinds of statistics, the case for hiring admin staff is compelling. The return on investment in admin staff becomes clear when you consider the opportunity cost. Every minute an accountant spends on non-billable tasks is a minute not spent adding deeper value for clients or strengthening your firm’s competitive edge. 

By delegating administrative responsibilities, you can improve productivity and team morale, ultimately positioning your practice for sustainable growth.

Polish Your Client Relationship Management

You can’t scale your practice with unhappy clients. It’s only a matter of time before they leave you. A satisfied client can benefit your firm directly by paying you higher fees to provide higher value work. And indirectly, they are more likely to refer others to you. 

To intentionally grow your practice, institute a client-centric culture and develop a clear client relationship management (CRM) policy. Policies like responding to client emails within 48 hours and having a dedicated point of contact for each client are examples of a great client experience.

Consider AI, Where Appropriate

A tech-savvy accounting firm can use AI to create and send an introductory email to a client, automate the extraction and analysis of data, predict future financial trends, automate approvals, and scan large databases. 

However, the accounting industry has not widely embraced AI yet. For example, according to the 2024 Generative AI in Professional Services Report from the Thomson Reuters Institute, 30% of accounting firms are still considering whether to use GenAI tools, while 49% have no current plans. Interestingly, most firms are implementing GenAI open-source tools, like ChatGPT, not more contextual, industry-specific applications. 

There’s still a huge potential here to use AI to scale your firm, although reluctance persists because of data security fears, cost considerations (AI can be expensive), and skill gap. 

Ultimately, whether AI is right for your firm depends on your specific goals, budget, and risk tolerance. With the right strategy and safeguards in place, AI can enable your firm to stay competitive and position you as a forward-thinking partner for clients.

Curate Your Client List for Your Growing Firm

Another major challenge accounting firms face is which clients to take on, which to decline, and which to drop along the way. You may have a lengthy client roster but the quality might be rock bottom. 

The 2024 Rosenberg National Survey of CPA Firms found that almost 60% of firms with net fees between $2 million and $5 million culled their client list to keep up with the workload without burning out. Interestingly, even after cutting clients, these firms witnessed an increase in revenue by offering higher value services to the remaining clients.

Compete on Value vs. Price

Many accounting firms compete solely on price. While offering lower fees can provide a short-term boost in client acquisition, this approach often undermines long-term profitability and may compromise service quality. 

Over time, it can lead to a “race to the bottom,” where the most significant differentiator is the lowest possible price, rather than expertise, relationship-building, or value-added services.

To avoid this pitfall, focus on demonstrating the value you bring to clients—whether that’s personalized advisory services, specialized industry knowledge, or technological capabilities.

By shifting the conversation to value-based benefits like proactive problem-solving and forward-thinking recommendations, accounting firms can establish themselves as trusted advisors rather than mere service providers. This approach not only elevates brand perception but also cultivates deeper, longer-term client relationships, translating into sustainable growth and profitability.

Carefully Filter Referrals

Another reason to curate and cull your client list is to increase the quality of referrals you’ll receive. A top tier client who values the work you do for them and pays you accordingly is likely to provide you a referral that’s like them.  So an easy way to filter your referrals is working with top-notch clients. As your firm grows, you’ll appreciate having this built-in referral filter in place. 

Review Client Profitability

Along with cutting the clients who don’t value your work or aren’t a good fit for your services, you’ll want to consider your pricing structure and where you can bring the most value. As your firm grows, you’ll need to have minimum profit margin thresholds to not overwork yourself or your staff. Grinding out thousands of 1040s for $200 each is a surefire way to burnout staff. 

Ready to Take the Leap?

Scaling your accounting firm successfully requires a holistic approach, from handpicking the right technology stack to curating your client list with a focus on high-quality relationships. Yet there’s another powerful avenue to enhance both your firm’s growth and your clients’ success: partnering with a Professional Employer Organization (PEO). 

By offering PEO services as part of your advisory toolkit, you not only streamline your own HR and administrative needs, but you also provide your small business clients with access to specialized HR, payroll, and compliance expertise. Get started today!