Providing general accounting services may seem like a good approach to make sure you have a steady stream of clients, but is it really sustainable in the long run?
Being a Jack of all trades (but a master of none) is getting harder, especially if you have to compete with some of the biggest accounting firms. That’s why many accounting professionals take a different approach by focusing on one particular industry.
This can help you stand out in a crowded market while providing unparalleled value to your clients. But what are some of the best accounting niches for your CPA firm?
Let’s take a look!
What is an accounting niche?
A niche is a specialized segment within the broader field of accounting services.
It's a subset of accounting that focuses on specific types of industries or clients. Simply put, niche accounting practices serve a particular market with unique requirements. This has a range of practical advantages (more on that in the coming sections).
Industry niche vs. transformational niche
An industry niche is a well-defined market segment with a relatively narrow target audience. For instance, your firm can focus on eCommerce companies or the restaurant niche.
A transformational niche, on the other hand, refers to the specific services that your accounting practice provides. For example, it means your CPA firm specializes in tax services, wealth management, or payroll processing.
Top 10 niches for accounting firms
Choosing the right niche will help you gain a competitive advantage, especially if you’re running a small accounting firm. Here are our top 10 recommendations of niches you can focus on for the highest return.
1. Software providers
Many SaaS companies develop subscription-based business models that require a slightly different approach to revenue recognition. This which means they also need specialized accounting services like:
- Advisory services
- Cash flow analytics
- Tax preparation
- Research and development (R&D) tax credits
This niche is also one of the biggest markets in the world, with an estimated size of nearly $600 billion in 2022. What’s best, the industry is projected to triple in the following decade, so it’s definitely worth investing your resources into.
Are you willing to try a slightly offbeat accounting niche? If yes, you might as well focus on the cannabis market. According to the report, the global cannabis market size is worth over $57 billion, but it is expected to grow to a staggering $444 billion by 2030.
The cannabis industry operates within a highly-regulated environment, but regulations vary from one jurisdiction to another. This complexity creates a need for specialized accounting services to ensure compliance.
3. Real estate
Real estate is another lucrative niche for your accounting firm. This sector covers everything from property valuation to real estate development, which requires specific accounting expertise. Here are just a few major elements of accounting in real estate:
- Lease accounting
- Assessing the financial feasibility of real estate investments
- 1031 exchanges
- Financial reporting for different types of stakeholders
Related: Real estate questionnaire for buyers
4. Hospitality industry
The hospitality industry is extremely colorful, covering everything from hotels and F&B companies to transportation and travel agencies. In other words, there’s a lot of room for you to sub-specialize. Companies in this sector have unique accounting needs such as:
- Revenue recognition
- Cost and inventory management
- Industry-specific tax compliance
In addition, this industry usually goes through seasonal fluctuations in revenue and expenses, so your accounting practice can help clients navigate these challenges.
5. Dental and medical practices
Healthcare providers operate in a highly specific environment. They have to deal with things like insurance reimbursements, patient billing, government regulations, and versatile revenue streams.
It’s a complex system that demands the highest level of precision and regulatory compliance. More importantly, we are talking about a $11.9 trillion market that may as well be the most profitable accounting niche.
6. Home service firms
Home service companies are a colorful bunch. They encompass all sorts of firms such as:
- HVAC contractors
- Landscaping businesses
If you specialize in these (or some other) home service companies, you’ll clearly understand the industry’s terminology and business models. That way, you can differentiate and provide more targeted services.
7. Cryptocurrency and blockchain
Blockchain is a relatively new technology that powers complex cryptocurrency transactions. This niche requires a deep understanding of blockchain technology and the associated accounting and tax implications.
And cryptocurrencies are just the tip of the iceberg. Though it’s still in the early stages of adoption, it’s clear that blockchain has massive potential in different kinds of businesses. As such, it also makes a promising market for accounting firms.
8. Law firms
Two things make accounting for legal professionals unique:
- The industry itself is subject to strict compliance requirements
- Law firms use multiple billing methods (hourly rates, contingency fees, and flat fees)
In addition, legal practitioners typically manage client funds in trust accounts. This is done through different accounting procedures to keep the client’s funds separated from the company’s operating funds.
Law firms clearly pose a unique challenge for accounting practices — but the niche is packed with profitable companies.
9. Property management firms
Property management companies have a recurring revenue stream from rent collection, and such predictable income makes them attractive clients for accounting firms — it’s a good foundation for building successful and long-term client relationships.
The best thing is that property management companies often have a broad portfolio of clients. If you serve them, you may as well gain access to a wider client base within the real estate sector.
The number of independent workers reached well over 50 million in the US alone. It’s a massive resource of potential clients for CPAs who are still searching for a lucrative accounting niche.
It’s also one of the easiest markets because solopreneurs undertake simpler financial transactions compared to larger businesses. They often have fewer sources of income, expenses, and financial complexities, making their accounting needs more straightforward.
Advantages of picking the right accounting niche
Why niche accounting? If the answer isn’t obvious to you yet, we’ll go the extra mile to explain some benefits that may not seem so clear at first.
- Niche accounting helps you develop expertise in a given field. This can lead to a deeper understanding of the industry, its unique challenges, and accounting standards that apply.
- Specializing in a niche makes you more attractive to clients within that industry. That’s because businesses prefer accountants who understand the nuances of their work.
- Niche-focused service offerings set you apart from generalist accountants and practices. It can be a unique selling proposition that helps you stand out in a saturated market.
- Niche accountants often charge more for their expertise. After all, most clients are willing to pay a premium for CPAs who provide tailored solutions.
- Focusing on a specific niche makes it easier to promote your firm. For example, it allows you to target a highly specific audience or to concentrate on fewer communication channels compared to other practices.
- This kind of work often leads to better client relationships. You can become a trusted advisor who understands their industry inside and out.
- Niche accounting can lead to more referral opportunities because satisfied clients are more likely to refer others who need accounting services in the same field.
- Specialization also helps you connect with other professionals in the same niche, including lawyers, consultants, and industry associations. This can lead to valuable networking opportunities and partnerships.
- It encourages ongoing learning and professional development because you'll need to stay updated on industry trends, regulations, and best practices.
- Working in a niche that you are passionate about or interested in can lead to greater job satisfaction. You're more likely to enjoy your work when you have a genuine interest in the industries you serve.
Word of caution: Niche accounting can be risky
We strongly believe that choosing a specific industry is generally good for accounting professionals (for reasons mentioned above). However, it’s fair to state that niche accounting can also be risky if something unexpected happens in a given industry.
For example, the COVID-19 pandemic had a profound impact on the hospitality industry. Many clients in the hospitality sector faced insolvency and bankruptcy threats, which also influenced accountants specializing in this niche.
Disasters like this one are not too common, but they are definitely worth noting.
Boost profitability by becoming a niche accountant
Accounting work — niche or generalist — is never easy, but the difference between the two approaches is huge. The best accounting niches give you tremendous (l)earning potential, so it’s only a matter of picking the one that suits your professional interests.
Which one would you choose?