A new report released on June 11 reveals a steep decline in optimism among U.S. accountants who advise small and midsized businesses.
The 2025 Avalara Accountants Confidence Report—produced by Avalara in conjunction with CPA Trendlines, which features the results of a survey of 623 accounting professionals—shows a significant shift from cautious optimism to heightened pessimism, driven by a host of economic pressures and policy uncertainty.
Between January and April, the net sentiment among accountants swung dramatically—from a positive 19% to a negative 39%. Initially, nearly half (47%) of advisors foresaw improving conditions, but by April, just 25% held this view, with 64% anticipating worsening economic environments.
This shift underscores growing apprehension across Main Street accounting firms serving as frontline advisors on tax, payroll, and compliance decisions, Avalara said.
SMB owners are currently dealing with a plethora of challenges, including but not limited to, historic tariff actions, continued inflationary pressures, a looming recession, unpredictable tax and trade policies, and pressure to focus on short-term problems at the expense of long-range planning.
Accounting professionals were decisive on the top issues impacting their SMB clients, according to the report:
- Inflation, costs, and pricing (61%)
- Tariffs and trade impacts/uncertainty (60%)
- New tax legislation (59%)
- Ongoing labor supply and wage issues (42%)
- Prioritizing technology and artificial intelligence adoption (37%)
“Accountants are sounding an urgent alarm,” Rick Telberg, founder of CPA Trendlines, said in a statement. “They’re advising SMBs to conserve cash, curb discretionary expenses, and resist taking on unnecessary debt. Amid volatility in tariffs, inflation, and complex tax legislation, SMBs face serious barriers to strategic growth and operational stability.”
Looking at a year from now, accountants say the most prominent challenges facing SMBs will be:
- Hiring and retaining talent (60%);
- Keeping pace with technology (55%);
- Managing rising costs (52%);
- Adapting to disruption (35%);
- Meeting evolving customer expectations (32%); and
- Managing product costs (29%).
The added strain of tariffs has handicapped SMBs’ adaptability and agility, which is typically their key advantage over larger competitors, Avalara said. And with recession risks on the rise, many SMBs face a tough road ahead, though some sectors may be better positioned to weather the storm.
Accountants are most confident in the professional services sector—including doctors, lawyers, and other professionals—with 60% believing this sector will thrive during a downturn. Close behind is the technology sector, where 57% of accountants express confidence driven by strong demand for digital solutions and AI that boost operational efficiency and resilience. And the oil, energy, and mining sectors show 39% of respondents optimistic due to recent spikes in supply and demand for these resources.
In contrast, farming (6%), franchising (3%), and arts and entertainment (2%) are seen as the most vulnerable sectors, according to accountants. These sectors depend heavily on broader economic performance, and the recent tariffs have further strained their growth and output.
Accounting firms are pushing their SMB clients to monitor burn rates, trim overhead, and resist unnecessary borrowing. AI and automation are encouraged, not as luxuries but rather survival tools in an era of labor shortages and pricing pressure, Avalara noted.
“This year’s survey underscores a critical moment for the SMB business sector,” Sona Akmakjian, head of global strategic accountant partnerships at Avalara, said in a statement. “Accountants are urging businesses to fortify themselves against ongoing economic turbulence by sharpening their operational focus, adopting intelligent technology, and carefully managing resources. Clients are, more than ever, relying on the accretive business acumen and advisory skills of their trusted advisor for guidance through historic headwinds and uncertainty.”
You can read more about the 2025 Accountants Confidence Report here (use code avlr).
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Tags: accountants, Accounting, Avalara, Small Business
