Now that the Internal Revenue Service (IRS) has determined that special funds issued by 21 states last year are not subject to federal tax – you may be searching for a good accountant to help file your tax return. Good luck. There is a growing CPA shortage.
Certified Public Accountants (CPAs) have been falling out of the job market like apples falling on Issac Newton.
CPA Shortage Has Been Growing
The number of CPAs, like almost every profession, dwindled during the pandemic.
A 2020 survey by The CPA Journal found that 20 percent of respondents said they had been let go, furloughed, or had their hours reduced to part-time.
That trend has continued with over 300,000 accountants and auditors quitting their jobs over the past two years. To make matters worse, there are not enough accountants graduating from college to plug the gap.
Students graduating with an accounting degree decreased by nine percent in 2020 to about 52,500, according to the Association of International Certified Accountants. However, a bachelor’s degree (120 hours of coursework) is not enough to be a CPA. To earn that designation, students must complete 150 hours of college coursework, pass an exam, and get licensed in the state(s) where they will practice.
The number of candidates sitting for the Uniform CPA Examination peaked at 50,000 in 2010. Subsequently, that number dropped to just over 32,000 in 2021.
Impact on You
You may not think a CPA shortage has an effect on you. After all, there are many options for preparing a simple tax return. You may be able to get away with using only a calculator and a pen with erasable ink. In addition, there are many online and software offerings as well as free services.
However, if you engaged in a new financial venture last year, such as starting a business or a side gig, your taxes will be more complicated than before. As a result, a good CPA can help you stay in good standing with the IRS and may get you a larger return.
Impact on Investments
The CPA shortage may also impact your portfolio.
Accountants and auditors play a vital role in supplying accurate information for regulators, such as the Securities and Exchange Commission (SEC), and investors.
If a company files its audits late or includes errors in its reporting, that can raise red flags for the SEC. In addition, such actions undermine the faith of investors.
CPA Shortage Swamps Small Firms
However, CPAs are swimming against a rising tide. Each year new taxes and regulations add to an accountant’s workload. The CPA shortage just makes things even more difficult.
Those struggles were highlighted in a commentary by Racheal Kats, communications coordinator for the Minnesota Society of Certified Public Accountants (MSCPA). Reporting on a survey of tax practitioners, Kats cited comments from two respondents.
The head of one firm stated their greatest challenge is “juggling the increasing demand from clients and new clients while not having enough staff”.
Another respondent touched on the problem of a workforce that is getting older with fewer successors in sight. That member said, “I am aging, and keeping up with the complexity is an increasing challenge.”
Read More:
- Tips for Preparing and Filing Your Small Business Taxes Correctly
- Effective Ways to Save Money on Business Taxes
- Should You Be Paying to File Your Taxes?
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Max K. Erkiletian began writing for newspapers while still in high school. He went on to become an award-winning journalist and co-founder of the print magazine Free Bird. He has written for a wide range of regional and national publications as well as many on-line publications. That has afforded him the opportunity to interview a variety of prominent figures from former Chairman of the Federal Reserve Bank Paul Volker to Blues musicians Muddy Waters and B. B. King. Max lives in Springfield, MO with his wife Karen and their cat – Pudge. He spends as much time as possible with his kids, grandchildren, and great-grandchildren.
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