The biggest challenge facing small tax firms isn't finding entry-level staff—it's securing experienced professionals who can drive growth. Jeremy Vokt from Bland & Associates captures the frustration many small firm owners feel: "We don't have an issue hiring new people out of college or interns. But how do you find another five or 10 manager-level people, a five-year person, that would allow us to grow even more?"
This mid-level talent shortage is compounded by an aging profession. At firms like MahoneySabol, partners are averaging 60-62 years old, creating succession planning nightmares. The challenge isn't just finding technical competence—it's finding professionals willing to take on the entrepreneurial responsibilities of running a practice.
Private Equity Changes the Game
The competitive landscape has shifted dramatically as private equity money floods the accounting space. Firms like Smith + Howard and Prosperity Partners are aggressively acquiring practices, driving up valuations and making it harder for smaller firms to grow through acquisition.
"In the last 12 months, the acquisition game has become very, very competitive," explains Jeremy Dubow of Prosperity Partners. "Everyone that we're talking to, all of a sudden we've got seven or eight firms that are also interested in those businesses."
For small firms without PE backing, this creates a difficult choice: sell to a larger platform or find ways to compete organically.
Technology: Keep Up or Fall Behind
Artificial intelligence is reshaping client expectations faster than many small firms can adapt. While AI offers efficiency gains, it's also creating more sophisticated clients who think they can handle tax work themselves.
Alberto Guzman from AbitOs warns that firms now compete "not only against other firms and the client, but the actual technology itself." Small practices must invest in AI tools to remain relevant while ensuring they can still demonstrate clear value beyond what clients can achieve with consumer tax software.
External Pressures Mount
Beyond internal challenges, small tax firms face market forces they can't control. Tariff uncertainty affects business clients' planning needs, while commodity price volatility impacts agricultural practices. These external pressures create both challenges and opportunities for firms that can provide strategic guidance during uncertain times.
Maintaining the Personal Touch
Perhaps most critically for small firms, growth must not come at the expense of client relationships. Lee Cohen of LMC Advisors emphasizes the need for "concentrating and making sure that we don't lose the white-glove service and personal touch that we've always given."
Small firms' competitive advantage often lies in personalized service that larger platforms struggle to replicate. Protecting this advantage while scaling operations requires careful attention to systems and training.
The Path Forward
Successful small tax firms are focusing on three key areas: developing mid-level talent through mentorship and leadership training, implementing technology that enhances rather than replaces human expertise, and doubling down on the personal relationships that larger firms can't match. The firms that navigate these challenges will find opportunities as the industry consolidates around quality and specialization.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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