Opportunity Amid Industry Transformation: New Research on How Accounting Firms Are Evolving

Luke PardueEconomist, Gusto

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This research is based on a survey of 510 executives of accounting firms (Owners, CEOs, Principals, or Managing Partners) that use Gusto for their own firm’s payroll. This survey was conducted online from June 22, 2023, through July 2, 2023.


The past few years have seen a whirlwind of changes in the accounting industry – an ongoing shortage of accounting talent, the rise of new technologies like generative AI, and the growth of remote and hybrid work – each coming with unique challenges and new opportunities.

The most successful firms will be ones that can quickly adapt to these developments, those who find the opportunities within these disruptions – and, in doing so, drive the future of the accounting profession forward.

This report provides accountants with data-backed advice and recommendations, based on insights from more than 500 accounting firms serving small and mid-sized businesses across the U.S.

The result: A guide for accountants seeking to quickly adapt to coming changes to better serve their clients and grow their firm revenues, while driving the future of the accounting industry forward.

Key Findings

  1. The Recruiting Struggle Is Real, But Strategies for Success Remain: Overall, 53% of accounting firm owners have found hiring more difficult than normal in the past year. These firms are raising pay and offering hybrid or remote work, but are also getting creative by allowing four-day workweeks (11% of struggling firms) and looking to candidates with non-traditional backgrounds (50%) – a development that could have long-term benefits in increasing the diversity of the accounting profession.
  1. Technological Advances Bring Opportunities and Obstacles: Over three-quarters (77%) of accountants have adopted some form of new technology over the past year, and 87% say these tools save them time. But many also express dissatisfaction –  32% of firms who adopted new technologies say these tools ultimately hamper meaningful client interactions. Recent advances in artificial intelligence are providing new opportunities as well: 22% of owners report using ChatGPT for daily work at their firms, for tasks from content creation to tax research.
  1. Time Savings Allows Firms to Grow in Advisory Services: By adopting new technologies, firms are able to save time and navigate a tight labor market. They’re also able to better serve their clients – 37% of firm executives say new technology has freed them up to offer clients valuable proactive guidance through advisory services. Recent economic uncertainty has further driven growth in client demand for advisory services, with 52% of owners saying their clients have increased demand for advice about navigating a potential economic downturn.
  1. Remote Work Can Challenge Models of Relationship Building with Employees and Clients: Remote and hybrid work is to stay, as it has been a key tool in attracting and retaining talent while allowing firms to reduce costs. However, distributed work does not come without its pitfalls – over half of accounting firm owners say that remote work presents challenges to mentoring or professional staff development. 14% say these practices make it more difficult to build meaningful client relationships.

I. Unlocking Talent: Talent Attraction in a Tight Labor Market

Accounting talent is still harder to find than normal. Accounting firm leaders are still feeling the squeeze of a tight labor market and slowing talent pipeline. When asked how hiring in 2023 compares to prior years, 53% of firm owners have found hiring slightly or significantly more difficult than normal over the past year, with nearly one quarter (23%) saying it was significantly more difficult. Just 6% have found hiring slightly or significantly less difficult than normal. 

6 in 10 accountants say hiring challenges have harmed growth, leading them to either decline new clients or let go of existing ones. 

Firms are adopting new strategies to combat the talent shortage: 8 in 10 firms have adopted at least one of the strategies below to attract new staff. A majority are increasing pay and flexibility, but half are also looking to non-traditional candidates, including those with less experience and different professional backgrounds, in their search for talent. 

Such strategies can include both finding young accounting professionals with less experience, whom executives invest more time in training, or bringing on candidates with bookkeeping or financial analysis skills to complete tasks that firms may have previously looked to a CPA to complete. 

Executives are also relying on domestic and international contractors to a greater extent, with 37% hiring such workers in the past year to step into roles a full-time employee would normally fill.

Figure 1: Over the past year, accounting firms have been relying on a range of tactics to fill in gaps in their talent needs

Increased pay or flexibility56%
Tried to attract non-traditional candidates (those with less experience, different professional backgrounds, etc.)50%
Upskilled line staff (helped non-accountants on staff become staff accountants)27%
Hired domestic contractor(s) for a role I would normally hire a full-time employee25%
Hired international contractor(s) for a role I would normally hire a full-time employee17%
None of the above or other18%
Source: Gusto 2023 Survey of Accountants.

Four-day workweek on the rise: Raising pay and offering hybrid and remote work are key strategies to compete in the labor market. 

Among folks struggling to hire who have reported offering increased pay or flexibility, most have increased pay (79%) or offered remote or hybrid work (76%). However, one new strategy may be emerging: a four-day workweek. One in five firms looking to hire by increasing pay or flexibility (22%) are offering new hires a four-day workweek, a trend we’ve seen on the rise across the economy.

The Bottom Line: 

More firms are feeling the pressure of an increasingly tight talent pipeline. If you’re running an accounting firm, consider looking beyond your existing local talent pool. For example, if you offer remote or hybrid work environments, you could hire accountants in other states or even other countries. 

You might also consider hiring non-accounting professionals to support some of your client needs. For example, you might divide tasks between those trained in accounting, and those without accounting experience.

You could build one team with deeper experience in accounting. This team might be focused on accounting, tax planning, and other work vital to client success. The other team might have little experience in accounting itself – but more transferable skills in client support – and could act as the day-to-day team interfacing with your clients. 

There are unique ways of activating your teams and looking beyond traditional accounting professionals to staff up and ultimately grow your practice – so don’t be afraid to get creative.

II. Unlocking Scale: Today’s Accounting Business Model

Most firms are adopting new technological tools: 77% of firm owners indicated their firm adopted new technological tools over the past year – with the majority in bookkeeping, payroll, and Financial Planning & Analysis services.

87% of firm leaders said adopting technology has provided them with the time or resources to complete more work, or new types of work.

Technology saves time: For nearly 9 in 10 owners (87%), this technology has saved valuable time, allowing them to focus on growing their client base, serving clients in new and better ways, and easing the staffing shortage. 

Two-thirds of firms are using this time to grow by bringing in new clients or helping existing ones grow, and 37% are serving clients through expanded advisory services.

Indeed, as we had predicted in last year’s Guidance Gap report, increased economic uncertainty raises demand from clients for advisory services – 52% of accountants said they saw an increase in the need for advisory services, in response to a potential economic downturn.

Figure 2: New technology has helped accountants embrace new tasks and types of work

Bringing in new clients or helping existing ones grow65%
Complete tasks previously completed by full- or part-time employees37%
Expand the firm into advisory services37%
Spend time on recruiting/upskilling13%
Source: Gusto 2023 Survey of Accountants.

52% of all accounting leaders have noticed an increasing demand for advisory services from clients about navigating a potential economic downturn.

Technology is also creating fatigue among accountants: Technology also comes with pitfalls, with 76% of accountants having experienced at least one form of “app fatigue.” These difficulties are largely coming in the form of challenges in evaluating which technology to adopt (50%) and using this technology to the fullest extent (55%). But 30% also believe these apps can ultimately distract from meaningful client interactions.

1 in 5 accounting leaders are already incorporating generative artificial intelligence, such as ChatGPT, into their day-to-day work.

ChatGPT, CPA: 22% of accounting leaders rely on ChatGPT to complete daily tasks around the firm. The most common form of work ChatGPT completes is content generation (63% use the tool for marketing materials), but one-third of accountants use ChatGPT for tax research.

Figure 3: Accountants are turning to AI tools to complete tasks like content generation and tax research

Creating content such as marketing materials or firm blog posts63%
Automate repetitive tasks (such as data entry, and processing invoices)61%
Tax research32%
Learning about or identifying market trends28%
Learning about or identifying market trends19%
Creating audit reports3%
Source: Gusto 2023 Survey of Accountants.

The bottom line

Technological transformation has been a long-term feature of the accounting landscape, and the pace of advancement is only accelerating. These tools represent an enormous opportunity for accountants, not only to save time but to expand the scope of their services. 

If you’re running an accounting firm, it may be worth exploring how technology can empower your team. Technology can act as an enabler – but never a replacement – for accountants whose value, professional worth, and expertise is far greater than any software stack. It can provide excellent opportunities to firms willing to transform their mindset and services. 

For example, many accountants are currently taking advantage of generative AI tools, such as ChatGPT, and implementing them in a number of ways – e.g. automating tasks like data entry, writing drafts of client emails, creating marketing content, and even in tax research. 

More traditional bookkeeping, payroll, and FP&A tools can allow firms to complete tasks while trained staff can focus on high-value efforts, like advisory services. Indeed, introducing such services today can be incredibly valuable, as clients look for advice on how to navigate this uncertain economic terrain. 

As in any large project, during the evaluation and implementation process, you need to first be clear about what you want to achieve with new software. Is this tool meant to reduce the burden of time-consuming tasks, or is it supposed to enable new insights and facilitate higher-value advisory conversations? Being clear about these goals will make the evaluation process across tools much easier.

Just as importantly, once you’ve implemented these tools at your firm, you should monitor whether they’re achieving the desired goals or simply demanding resources with little in return – and whether they are facilitating or hampering valuable client interactions. 

III. Unlocking Your Team Experience: Building a great team, wherever they may be

In terms of how we work, there has been perhaps no transformation as swift and lasting in recent years as the shift to remote and hybrid work. Three years after the emergence of the global pandemic, it is clear these flexible work settings will be a lasting feature for much of the job market. 

The accounting industry is no different: our research found 89% of accounting firms are currently offering remote or hybrid work. 

9 in 10 accounting firms offer remote and hybrid work arrangements to their staff.

Much like other technological shifts, these flexible arrangements provide opportunities for both employers and workers, but they also present challenges to ways of traditionally doing work. Remote and hybrid work is here to stay largely because these settings allow firms to cut down on overhead costs and compete for top talent. When asked why these executives offer remote or hybrid work, 52% said it allowed them to cut down on office space – the top-selected reason. The ability to reduce a firm’s footprint, even partially for hybrid teams, can generate significant, ongoing cost savings. 

Second, 43% of firm leaders said such flexibility allows them to attract talent from across the country. Amid a generational shortage of new accountants, owners are taking a look at all reasonable steps to find new staff. But even in a much cooler job market, the value that remote and hybrid arrangements provide to workers will make such benefits a lasting feature of the talent attraction landscape.

Even among accounting leaders themselves, this gain in flexibility is by far the top reason for remote work. When asked to choose the number one reason for remote work – from savings in office space to talent attraction to flexibility – 71% of firm executives said that flexibility in their own working hours or location was the biggest advantage of remote or hybrid work.

Figure 4: For accounting leaders, personal flexibility in working hours and location is the biggest advantage of remote or hybrid work

Flexibility in your own working hours or location71%
Meeting clients remotely is easier19%
Reducing office footprint5%
Attracting talent6%
Source: Gusto 2023 Survey of Accountants.

That is not to say that this transformation has come without costs. Indeed, employees and employers have run up against the challenges of working in this new way. The most important disadvantage leaders have identified is the added barriers to mentorship and staff development, with over half (51%) deeming those disadvantages to be the largest. Many firms are also still struggling to build a firm culture (36% deem this to be the biggest disadvantage) and build client relationships remotely (14%).

Amid a historic staffing shortage, mentorship has never been more important both to developing and retaining staff. Almost all firm leaders spend at least some time on mentorship and staff development (94%), with half of firm owners spending approximately 10% of their time on development. 

While many leaders focus staff development efforts on teaching hard skills, like operating the firm’s tech stack, a large portion of owners (38%) say their top area of mentorship is on soft skills involving people management or client relations – skills that are not necessarily taught to more junior staff.

Figure 5: For accounting leaders, teaching both “hard” and “soft” skills are top priorities when mentoring staff

Technical skills, such as operating the firm’s technology stack49%
“Soft skills,” such as managing people, handling negotiations, resolving personnel conflicts, or interacting with clients38%
Expanding CPAs into new specialty areas (such as ESG or cryptocurrency advisory services)4%
Source: Gusto 2023 Survey of Accountants.

The bottom line:

The majority of accounting firms currently offer employees remote and hybrid work options. It’s clear there are benefits to attracting and retaining top talent, as well as potential cost savings. 

But it’s also important to design a positive work culture for remote and hybrid employees and to ensure they feel connected to your firm’s mission and to each other as colleagues. 

If you offer remote and hybrid work to your team, make sure you are intentional about creating conditions for your staff to thrive. For example, you may consider carving out dedicated time for training or mentorship with your teams. You may also want to train your managers specifically on building deeper relationships with their direct reports. It may also be worth setting up time and space for your teams to gather in–person, once every few months or even once a year.

In previous research, we have found a number of best practices for working effectively and efficiently in a remote or hybrid work environment. 

First, ensuring that you are capturing and documenting all-important knowledge and best practices, rather than relying on institutional knowledge passed around a physical office, is crucial so that teams can learn from each other and find answers to questions quickly. 

Second, having regular celebrations – even in a virtual environment – can help to build company culture and foster deeper connections between employees.

For more tips and best practices, see also Gusto’s guide for SMBs  – “Making the Most of Remote and Hybrid Work.”


As our research demonstrates, time and time again, accountants have been leaders in innovative business solutions. From overcoming the tight labor market, to experimenting with new technology, to building a healthy team culture amid the remote work revolution, leaders across the industry have swerved with every curve. As accountants continue to approach disruptions with creativity, they are charting the path for the accounting profession’s future.

Luke Pardue Luke Pardue was an Economist at Gusto, researching how public policies help small businesses and their workers thrive. He received his Ph.D. from the University of Maryland, where he studied the effects of government programs on disadvantaged populations’ housing and labor market outcomes.
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