The CPA Shortage in Nashville, TN: Examining Its Extensive Effects

The CPA Shortage in Nashville, TN: Examining Its Extensive Effects

Nashville, TN, like many areas across the nation, is experiencing a significant shortage of Certified Public Accountants (CPAs), a challenge magnified by demographic shifts, professional evolution, and a complex regulatory landscape. This shortage not only strains the industry but also deeply impacts the clients relying on these essential services.

A Growing Concern

Data from the American Institute of CPAs (AICPA) highlights a distressing trend: a national decline in CPA exam candidates, including a roughly 5% decrease in test-takers between 2019 and 2020. Nashville's dynamic economy, thriving in sectors such as entertainment, healthcare, and technology, exacerbates the demand for qualified CPAs. Despite projections indicating a need for growth in the accounting and auditing sector, the supply of new CPAs falls short.

Broad Implications for Businesses and Individuals

The CPA shortage significantly affects both businesses and individuals, influencing financial planning, tax planning & compliance, as well as regulatory adherence. One of the most concerning developments amid this shortage is CPAs having to make the difficult decision to drop long-standing clients due to limited capacity. It’s impacts are far-reaching:

Challenges with Banks and Financing: The need for small businesses to provide reviewed or audited financial statements for loans becomes a greater hurdle with fewer CPAs available, leading to increased costs and delays that can stifle business growth.
Compliance and State Regulation Issues: State mandates requiring periodic financial reviews or specific audits are harder to fulfill on time, exposing businesses to potential compliance penalties.
Tax Filing and Planning Delays: The cornerstone services of tax planning and filing are now fraught with longer wait times and rising fees, disrupting personal and business financial management.
Inability to Serve Legacy Clients: Perhaps one of the most direct impacts on individuals is the tough reality of CPAs having to drop long-standing clients. This unprecedented step stems from an overwhelming workload and the need to prioritize services, leaving many loyal clients in search of new accountants during a time of general scarcity.
Advisory Service Limitations: The advisory role CPAs play in financial decisions and strategy is crucial, yet with fewer professionals available, this guidance is becoming increasingly hard to access, compounding the historical issue of firms’ outsized compliance workload leaving little capacity for these services.

The Ripple Effect on the Economy

The ramifications of the CPA shortage reach beyond the immediate sphere of accounting and financial services, impacting the economic fabric of communities. Small businesses unable to expedite financial reviews for loans may delay expansions, indirectly affecting job creation and economic dynamism. Similarly, the financial uncertainties caused by delays in filing tax returns and a lack of financial & tax advisory can influence broader consumer spending trends.

Conclusion

In summary, the CPA shortage in Nashville, TN, and beyond represents a significant challenge with widespread effects on businesses, individuals, and the economy at large. As we navigate this landscape, it's essential to recognize the indispensable role of CPAs and the need for solutions to ensure the profession can meet the demands of a rapidly evolving financial and regulatory environment. And, perhaps now more than ever, it’s a gentle reminder to extend a bit of extra gratitude (and patience) to your CPA—after all, in a world of financial complexities, they're working harder than ever to keep the numbers (and stress levels) in check.

About Dark Horse CPAs

Dark Horse CPAs provides integrated tax, accounting, and CFO services to small businesses and individuals across the U.S. The firm was founded to save small businesses (and their owners) from subpar accounting and tax services and subpar client experiences. These small businesses are Dark Horses among their larger and more well-known competition. Being a Dark Horse CPA means advocating for small businesses by bringing them the tax strategies and accounting insights previously reserved for big business. Get a quote today.

Dark Horse’s Partnership With Gusto Helped Double the CPA Firm’s Revenue in 2023: A Featured Case Study

Dark Horse CPAs is thrilled to announce its selection and participation in a case study by leading human resources solution provider Gusto. This case study shines a spotlight on Dark Horse's adoption of Gusto—specifically, how the platform helped the leading CPA firm nearly double its annual revenue in 2023.

“In only a year, our firm grew from $6 million to $12 million,” said Dark Horse CEO and Co-Founder Chase Birky. “That’s certainly a testament to our team, but Gusto played a key role in that growth. Thanks to Gusto, our team is freed up to focus on what we do best—serve our clients and give them streamlined access to the information and coverage they need.”

By leveraging Gusto's cloud-based platform, Dark Horse CPAs has significantly improved its operational efficiency. The transition from ADP to Gusto has helped the firm reduce payroll and tax inefficiencies by as much as 80%.

This efficiency is just one more way that the firm continues to differentiate itself, surprising both clients and the competition.

“We were honored to participate in this case study,” said Dark Horse Chief Operating Officer and Co-Founder Max Fritz. “This is another great example of how our firm will continue to innovate in 2024, ensuring our CPAs are front and center with their clients, giving them exactly what they need, when they need it.”

Learn more by visiting gusto.com.

ABOUT DARK HORSE CPAs

Dark Horse CPAs provides integrated tax, accounting, and CFO services to small businesses and individuals across the U.S. The firm was founded to save small businesses (and their owners) from subpar accounting and tax services and subpar client experiences. These small businesses are Dark Horses among their larger and more well-known competition. Being a Dark Horse CPA means advocating for small businesses by bringing to them the tax strategies and accounting insights previously reserved for big business.

About Dark Horse CPAs

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Mar 22, 2022

Retirement Contribution Madness!

Well, it certainly is that time of year again. Where there WAS sleep, there IS coffee, and without the latter, the former is inevitable. Suffice to say that we are looking forward to reuniting with our families after April 17th! In the meantime, there is work to be done!

Each tax season, we field countless questions on retirement contributions, whether it is, “how much can I contribute?” or “how much can I deduct?” or “when is the deadline for contributions?” or “when is the deadline to establish the account?” or some other variant of the aforementioned. As is the case with most tax questions, the answers are many and often nuanced.

Take, for example, a husband and wife, who want to max out their 401k and IRA. How much can they contribute? Well, it depends. If both have a 401k sponsored by their employer, then they can both max those suckers out with $18K in contributions in 2017 ($18,500 in 2018). When it comes to the IRA? Well, that’s going to depend on their income level. If their MAGI (Modified Adjusted Gross Income) is less than $99K in 2017 ($101K in 2018), then they can each contribute and deduct $5,500. If they earn between $99K-$119K, then they can contribute the full amount, but their deduction will be limited. If they are above $119K, then they can contribute the full amount but can deduct none of it. Why would you contribute into an IRA if you couldn’t deduct the contributions? So you can backdoor it into a Roth IRA, duh! Granted, you’d only do that if, as a Married Filing Joint Couple, your MAGI was greater than $196K, which prevented you from contributing straight to the Roth in the first place.

There are many twists to the above example, such as when one spouse isn’t covered by a 401k plan, or if both aren’t, or if you’re single, etc.

What about when it comes to a SEP-IRA? Well, you can establish those up to the date you file your tax return, including extensions. The same timeline holds true for contributions to the account. This means that you can get a tax deduction for 2017 with a contribution made as late as October 15th, 2018 (September 15th for Partnerships and S-Corps). Pretty wild huh? How much can you contribute? This depends on your entity type. If you’re an S-Corp, then you can make a contribution of up to 25% of the W-2 wages you paid yourself up to $54K for 2017 ($55K for 2018). If you have an LLC or sole proprietorship, then you can contribute up to 20% of your net taxable income (without respect to the contribution itself), once again to the same maximums as that of S-Corps.

But what about a Solo 401k? Ah yes, this typically allows for higher contributions than a SEP. This is because you are not bottle-necked as greatly by the company’s profitability. Under a Solo K, you can contribute on the employee side up to $18K in the same way as the very first example above. This is true even if the company has no taxable net income. On the employer side, you can contribute 25% of W-2 wages (or 20% of taxable income for LLCs/Sole Props) in the same way you do for a SEP-IRA. You are still capped at $54K between EE and ER, but a quick example will illustrate the advantage.

An S-Corp pays its shareholder $100K in W-2 wages. In a SEP, the maximum contribution is $25K. In a Solo K, it is $43K ($18K on the employee side PLUS $25K on the employer side).

The point here is that so much of how much you can contribute is situational and not a simple black and white rule. If you need help in this area, we are here to help!