New Survey of 600+ Main Street Accountants Reveals Steep Drop in Optimism for SMB Clients

The Avalara Accountants Confidence Report shows 64% of trusted advisors bracing clients for economic downturn, and urging cash preservation, debt reduction, and rapid intelligent technology adoption

DURHAM, N.C., June 11, 2025 /PRNewswire/ -- Avalara, Inc., a leader in modern tax compliance automation, today released the 2025 Avalara Accountants Confidence Report, revealing a marked decline in optimism among U.S. accountants advising small and mid-sized businesses (SMBs).

Based on a survey of 623 accounting professionals, the report offers a unique view into the economic outlook, operational pain points, and forward strategies of nearly 158,000 small and midsized business clients, filtered through the trusted advisors who know their finances best.

The 2025 survey highlights 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; by April, just 25% held this view, with a striking 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.

Accountants Sound Off on Triple Threat: Inflation, Tariffs, & Tax Policy Uncertainty

The 2025 Avalara Accountants Confidence Report, produced in conjunction with CPA Trendlines, is the result of a survey of trusted advisors with the clearest view into the financial health of small business clients.  The survey was conducted against a backdrop of historic tariff actions, continued inflationary pressures, a looming recession, unpredictable tax and trade policies, and pressure to focus on short-term challenges at the expense of long-range planning. 

Accounting advisors were decisive on the top issues impacting their clients, with 61% citing inflation, costs and pricing; 60% naming tariffs and trade impacts and uncertainty; 59% pinpointing unease around new tax legislation; 42% identifying ongoing labor supply and wage issues; and 37%  citing technology and AI adoption as a priority.

"Accountants are sounding an urgent alarm," said Rick Telberg, founder of CPA Trendlines. "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."  

A Troubling Outlook: The Main Barriers Facing SMBs

SMBs are under mounting pressure as economic turbulence threatens both their resilience and long-term growth. According to accountants, the most prominent challenges facing SMBs in the year ahead are hiring and retaining talent (60%), keeping pace with technology (55%), and managing rising costs (52%). The added strain of tariffs has handicapped SMBs' adaptability and agility, which is typically their key advantage over larger competitors.

Additional challenges include adapting to disruption (35%), meeting evolving customer expectations (32%), and managing product costs (29%). With recession risks on the rise, many SMBs face a tough road ahead, though some sectors may be better positioned to weather the storm.

Recession Resilience: Which Sectors Are Most (and Least) Prepared?

As recession fears grow, SMBs are taking measures to stay productive and profitable in a slower economy. According to accountants, specialization plays a key role in determining how well an SMB client can navigate disruption.

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 & entertainment (2%) are seen as the most vulnerable sectors. These sectors depend heavily on broader economic performance, and the recent tariffs have further strained their growth and output.

Best Advice for SMBs: Cut Costs, Build Cash

The report distills hundreds of practitioner responses into clear guidance:

• "Cash is king. Protect it."
  
  
• "Avoid taking on debt unless it's revenue-generating."
  
  
• "Have a plan A, B, and C."
  
  
• "Automate wherever possible."
  
  
• "Retain your best people—turnover is expensive."

Firms are pushing 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.

"This year's survey underscores a critical moment for the SMB business sector," said Sona Akmakjian, head of global strategic accountant partnerships at Avalara. "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."

Read more about the 2025 Accountants Confidence Report here – use code avlr.

About the Study

The survey was fielded in waves from November 2024 through April 2025 by CPA Trendlines Research to a proprietary database of practicing tax, accounting and finance professionals, including CPAs, bookkeepers, tax professionals, and business advisors. CPA Trendlines Research collected surveys directly by email invitation and via social channels. Respondents were incentivized by offering a "topline executive summary of the results." Overall margin of error: 3-5 points at a 90% confidence level.

About Avalara

Avalara makes tax compliance faster, easier, and more accurate, reliable, and valuable for 43,000+ business and government customers in over 75 countries. Tax compliance automation software solutions from Avalara leverage 1,400+ signed partner integrations across leading ecommerce, ERP, and other billing systems to power tax calculations, document management, tax return filing, and tax content access. Visit avalara.com to improve your compliance journey.

About CPA Trendlines

CPA Trendlines delivers data-driven, actionable business intelligence to professional tax, accounting, and finance professionals to help build their firms, enhance their careers, and better serve their clients.

SOURCE Avalara, Inc.