Solving top challenges for small firms

Every two years, the PCPS CPA Firm Top Issues Survey provides fresh insights into the problems and opportunities that practitioners are facing. Because the results are categorized by firm size, the survey offers a unique picture of the current landscape for our small firm members and the issues that may be most in need of practitioners’ attention (see “2026 CPA Firm Top Issues: Small Firm Results”). Here are some of the key trends and takeaways for these firms identified this year.

Technology is an immediate and ongoing imperative. A variety of technology-related topics — keeping up with new tools, leveraging and integrating them, and managing workflow and cyber issues — were among the top concerns for small firms. While firms might once have tagged technology as something to think about annually or sometime in the future, they are now regularly evaluating how AI, automation, and digital workflows can help them better serve clients and operate their practices.

To stay up to date, firms should avoid the temptation to chase the newest solution. Instead, they should develop a technology strategy that aligns with their objectives, such as better client service, improved efficiency, stronger profitability, reduced burnout, and sustainable growth. The most successful firms are not necessarily the ones with the most technology. They are the ones that thoughtfully align technology, people, processes, and strategy to support their long-term goals. Identify the biggest pain points ¾ such as workflow bottlenecks, staff capacity constraints, tax return turnaround times, document management challenges, or client communication issues ¾ then determine which technologies can solve those problems.

The good news is that because small firms don’t have layers of bureaucracy, they can move quickly to embrace innovation by piloting new technologies and determining what’s best for them. As they implement new tools, firms should provide staff with guidance on approved technologies, data privacy considerations, client confidentiality requirements, and appropriate review procedures.

Technology and other smart strategies can help alleviate tax season challenges. In past surveys, the smallest firms regularly cited increasing tax complexity and IRS challenges as key concerns, and that was the case once again this year. Although firms can’t control tax legislation or the IRS, they can use AI and other new tools to build a firm that is more agile, efficient, and resilient in responding to challenges. AI can be used to free up valuable capacity by:

• Reducing tax research time and effort, including tracking IRS notices

• Monitoring deadlines

• Simplifying and speeding workflows

• Reducing administrative chores

• Summarizing new tax guidance

• Managing client communication on important changes

• Developing internal training materials

Creating a knowledge-sharing culture and repeatable processes can also help keep everyone in the firm current on new developments and can minimize redundancy. Rather than relying on a single tax expert, firms can document procedures, develop internal resource libraries, and schedule regular team discussions on emerging tax developments.

In addition, clear and regular client communications can ensure smoother engagements and less stress for firms and clients. If firms proactively educate clients about legislative uncertainty, IRS delays, and documentation requirements, they will encounter fewer surprises later.

Firms are succeeding at retention. Holding on to talented people has been a top issue for most firm size segments in recent surveys, but it did not make smaller firms’ top five lists this year. Over the past several years, small firms have become much more intentional about investing in their people, often in ways that don't require significant financial resources. Today's professionals are looking for more than a paycheck. They want growth opportunities, flexibility, purpose, and a sense that their work contributes to something larger than themselves. Small firms are often uniquely positioned to provide those experiences.

At the same time, firms of virtually every size thought that staff retention would be an issue in the next five years (see “What’s on the Horizon?”). Going forward, career development conversations, clear leadership pathways, and attention to well-being can help reinforce the benefits your firm has to offer.

Don’t neglect the basics. Smaller firm top results this year did not include some of the people-centered and forward-looking practice management items that we’ve seen on past lists. The findings suggest that issues such as technology, AI, cybersecurity, tax complexity, and IRS challenges are demanding a significant amount of attention from firm leaders. In the meantime, it’s important to remember that challenges like succession planning, developing future leaders, staff compensation, and managing seasonality haven't disappeared.

In fact, many of these areas are deeply connected to a firm's long-term sustainability. A firm can successfully implement AI and modernize its technology stack, but if it doesn't have a pipeline of future leaders or a succession plan, it may still struggle in the years ahead. Similarly, technology may help improve workflow and smooth some seasonal demands, but it doesn't eliminate the need to build a strong team and a healthy firm culture.

One of the best ways firms can remain focused on these important issues is to intentionally separate strategic planning from day-to-day operations. Too often, leadership meetings become consumed by immediate client needs, staffing challenges, deadlines, and technology decisions. Firms benefit from setting aside dedicated time ¾ quarterly, semiannually, or annually ¾ to discuss longer-term priorities such as succession, leadership development, compensation philosophy, and growth plans. If these topics get attention only when there is a crisis, firms are reacting rather than planning.

Planning for the long term

The most successful firms will strike a balance between managing today's challenges and preparing for tomorrow's opportunities. The issues that dominate the headlines today may change over time. Technology will evolve. Regulatory requirements will shift. New challenges will emerge. But firms that continue investing in leadership, succession, talent development, and culture will be better positioned to navigate whatever comes next.

Related resources:

Managing change in real time: The 2026 PCPS CPA Firm Top Issues Survey commentary

PCPS Employee Development, Engagement and Retention resources

PCPS and Succession Institute’s Succession Planning Survey

PCPS Employee Compensation Toolset

2026 CPA firm top issues: Small firm results

Sole practitioners

1. Keeping up with changes and complexity of tax laws

2. Tie:

• Keeping up with changes in technology/artificial intelligence and managing associated costs

• Cybersecurity risks/exposure of client data

4. Challenges when working with the IRS

5. Leveraging technology to enhance client service

6. Technical training of owners/partners and staff

7. Meeting clients’ expectations

8. Tie:

• Public perception of the value of a CPA, confusion regarding other service providers and the term “trusted adviser”

• Adopting and integrating technologies (e.g., automation, data analytics, AI including gen AI platforms, etc.)

10. Client perception of value and willingness to pay for additional work (e.g., out of scope work/expectations including standards and regulatory changes)

Firms with 2 to 10 professionals

1. Keeping up with changes and complexity of tax laws

2. Challenges when working with the IRS

3. Keeping up with changes in technology/artificial intelligence and managing associated costs

4. Cybersecurity risks/exposure of client data

5. Leveraging technology to enhance client service

6. Seasonality/layering of deadlines

7. Adopting and integrating technologies (e.g., automation, data analytics, AI including gen AI platforms, etc.)

8. Finding qualified staff (experienced)

9. Client perception of value and willingness to pay for additional work (e.g., out of scope work/expectations including standards and regulatory changes)

10. Management of staff workload and capacity (leveraging staff appropriately, workplace flexibility, reducing burnout)

Firms with 11 to 30 professionals

1. Finding qualified staff (experienced)

2. Keeping up with changes in technology/artificial intelligence and managing associated costs

3. Tie:

• Challenges when working with the IRS

• Management of staff workload and capacity (leveraging staff appropriately, workplace flexibility, reducing burnout)

5. Developing the next generation of firm leadership

6. Leveraging technology to enhance client service

7. Seasonality/layering of deadlines

8. Adopting and integrating technologies (e.g., automation, data analytics, AI including gen AI platforms, etc.)

9. Managing workflow throughout the firm

10. Keeping up with changes and complexity of tax laws

What’s on the horizon?

Survey respondents were asked which concerns they believe will be the most important for their firms over the next five years: