CPAs are the unsung heroes of small business - how can AI help them?

Certified Public Accountants (CPAs) are often seen as the backbone of financial integrity for both businesses and individuals alike. However, what frequently goes unnoticed is the herculean effort these professionals must exert in order to deliver high-quality services while navigating an industry rife with inefficiencies, complexities, and daily demands. The challenges CPAs face today are multi-faceted, ranging from dealing with messy financial records to balancing business development alongside core accounting duties.

In this blog post, we’ll delve into some of the key challenges CPAs encounter, explore how they attempt to grow their practices today, and discuss how the adoption of Artificial Intelligence (AI) could revolutionize the landscape of accounting.

The Unique Challenges CPAs Face

The accounting profession might sound straightforward to outsiders: crunch numbers, prepare accurate reports, file taxes, and move on to the next client. However, the reality is far more complex. CPAs often find themselves grappling with issues that demand attention, patience, and, unfortunately, an exorbitant amount of time—all while juggling high stakes and a dual duty to their clients and regulatory bodies like the IRS. Below, we examine these challenges in detail.

1. Wearing Many Hats

Being a CPA is much more than just number crunching. These professionals are responsible for acquiring new business, retaining existing clients, and doing the meticulous accounting work required to ensure compliance and accuracy. This trifecta implies that CPAs must simultaneously master sales, client relationships, and technical expertise. For many, this is akin to running an entire business single-handedly—a scenario where they must "be everything."

Moreover, success in such a position often involves taking risks, whether it’s hiring staff, managing liabilities associated with errors, or providing services in highly scrutinized industries. One moment they might be strategizing for growth; the next, they’re knee-deep in tax forms or investigating potential fraud.

2. Unclean Financial Records

For any CPA, the reliance on a client’s bookkeeper presents one of the most persistent challenges. In many cases, the financial records handed over to CPAs are incomplete, riddled with errors, or susceptible to fraud. Competent bookkeepers are a rare and expensive resource, and outsourcing this responsibility—while economical—often produces unreliable results. This forces CPAs to spend extra hours sorting through records before proceeding.

To avoid inheriting the liability for any inaccuracies in those books, CPAs often resort to extensive reviews of the client’s finances. This may involve uncovering mistakes, fraudulent entries, omissions, or possible tax avoidance—all of which require a significant upfront investment in time and expertise that can make their services expensive for clients.

3. Communication Expectations

CPAs experience year-round engagement with their clients, often fielding ad-hoc questions related to tax strategy, compliance, or planning. However, answering these inquiries isn’t always simple. Each question typically requires research into the specific circumstances of the client as well as applicable tax regulations. This meticulous workload highlights a dilemma: Should CPAs eat the extra hours required to address these concerns, or charge the customer for every interaction, knowing it risks dissatisfaction?

The balance between being approachable and maintaining profitability is a delicate one, making it difficult to please clients without overextending personal resources.

4. Staffing Dilemmas

The quest for good staff is another significant obstacle. In an industry built on specialized knowledge and certifications, accountants need skilled professionals who deeply understand the complexities of taxation, financial regulations, and accounting best practices. Yet hiring, retaining, and training such individuals is both time-consuming and expensive. Skilled employees are often in high demand, leaving smaller CPA firms struggling to compete in terms of salary and benefits.

The knowledge-based nature of the industry further compounds the problem. Everyone involved must adhere to the dual and oft-conflicting responsibilities: acting in the best interests of the client while maintaining compliance with IRS standards. Any misstep can result in costly consequences for both the CPA and their client.

5. Minimal Profit Margins

Despite charging seemingly high fees, CPAs typically retain a small percentage of what they earn after operational expenses and staff payroll—not to mention the significant amount of administrative work they must handle themselves. The inability to delegate labor-intensive tasks while maintaining profitability leaves CPAs stretched thin. Hence, many often work exceedingly long hours, sacrificing evenings, weekends, holidays, and even vacations.

How CPAs Grow Their Practices Today

Given the formidable challenges they face, how do CPAs attempt to expand their businesses and maintain economic stability? By and large, they turn to traditional methods to grow their services, but these approaches may have diminishing returns in the face of increasing complexity and competition. Here’s a closer look at these strategies:

1. Working Harder and Longer

To meet the constantly evolving demands of the profession, CPAs often stick to the simplest solution: work harder. Many CPAs extend their workdays well into evenings and weekends, even sacrificing holidays or vacations to manage overflowing workloads. While effective in the short term, this approach leads to burnout and fails to sustainably scale their practices.

2. Limiting Scope to High-Value Clients

Faced with time and resource constraints, some CPAs choose to limit their services to high-value clients or clients with simpler tax obligations. While this strategy ensures profitability, it restricts a CPA's ability to diversify their client base and may leave opportunities on the table.

3. Outsourcing Overseas

To increase efficiency while lowering costs, some CPA firms outsource certain labor-intensive tasks (e.g., basic bookkeeping or document preparation) to other countries like India or the Philippines. While this approach may reduce overhead costs, outsourced services are often unreliable, impersonal, or of inconsistent quality—leading to more headaches than solutions for CPAs.

4. Community Engagement and Networking

On the business development side, CPAs may attend conferences, sponsor local events, and actively participate in social media communities to expand their reach and reputation. While valuable in theory, these efforts often take a backseat to operational demands, reducing their efficacy as growth tools.

How AI Can Revolutionize the CPA Industry

In recent years, artificial intelligence has proven capable of transforming traditional industries by automating repetitive tasks, improving accuracy, and optimizing processes. Accounting and tax preparation services are no exception. AI tools designed for CPAs could alleviate many of the profession's grueling challenges, allowing practitioners to work more efficiently while preserving profitability. So, how exactly can AI help CPAs?

1. Automating Repetitive Tasks

One of the most promising applications of AI in accounting is automating laborious or repetitive work. For instance, AI can handle tasks like document organization, data entry, invoice processing, and bookkeeping. These assistant tools reduce the amount of time CPAs spend on administrative chores, freeing them up to focus on higher-value work such as strategic tax planning or client acquisition.

2. Fraud and Error Detection

AI-powered analytics can be employed to detect financial anomalies that may signal fraud, errors, or omissions in the books. By using pattern recognition, machine learning-based solutions could identify irregularities in financial records more accurately and quickly than manual reviews—providing CPAs with a critical resource for risk mitigation.

3. Intelligent Document Automation

Another area where AI shines is intelligent document automation. Advanced AI applications can organize files, retrieve essential forms, request signatures, and even submit compliance-related paperwork to the IRS. This automation minimizes the overhead traditionally required for document management, significantly reducing the risk of human error and saving precious time.

4. Simplified Regulatory Research

Conducting regulatory research is one of the most time-consuming aspects of CPA work, often requiring a deep dive into state or federal tax codes, client specifics, and new rulings. AI tools like Wolters Kluwer CCH or similar platforms can expedite this process by synthesizing relevant regulations and providing contextual insights easily tailored to the client’s needs. This reduces both the time and effort spent on legal and tax code interpretation.

Conclusion: The Path Forward with AI

The CPA profession operates at the intersection of trust, accuracy, and expertise, making it one of the most demanding fields. CPAs juggle numerous responsibilities daily, from cleaning up unorganized financial records to managing their client portfolios, answering complex questions year-round, and navigating compliance with rigorous standards. While they use time-tested strategies to grow their services, these methods often come at great personal and professional cost.

Fortunately, artificial intelligence offers a beacon of hope—enabling CPAs to streamline operations, minimize inefficiencies, and enhance service quality overall. By adopting AI-powered tools that automate repetitive tasks, detect fraud, manage documents, and expedite regulatory research, CPAs stand to increase their productivity while maintaining profitability and reducing burnout.

The future of accounting is not merely about working harder or longer—it’s about working smarter. CPAs who embrace innovation and adopt AI-driven solutions can position themselves ahead of the curve, delivering faster, more cost-effective services while enjoying a higher quality of life. In an industry built on precision and trust, the strategic integration of AI could truly transform how CPAs deliver value in a rapidly evolving financial world.

What challenges do you face as a CPA, and how do you think AI could address them? Let us know in the comments below—we’d love to hear your thoughts!