Accounting services, 2020

Released: 2021-11-23

The operating revenue of the accounting, tax preparation, bookkeeping and payroll services industry rose 1.0% to $21.5 billion in 2020, the weakest growth since 2002. The demands on the accounting industry have changed quickly since the beginning of the COVID-19 pandemic. The lockdown began in mid-March 2020, just a few weeks before the income tax filing deadline. In response, the Canada Revenue Agency extended the tax filing deadline to June 30, 2020, and the payment deadline to September 30, 2020. Many businesses relied on newly-instituted government programs to stay in business. On the whole, accounting services were needed for their expertise, to help businesses navigate these programs and uncharted economic times during the pandemic.

Overall, the provincial distribution of operating revenue for accounting, tax preparation, bookkeeping and payroll services remained largely the same as in past years, with Ontario (43.4%) posting the largest share of revenue, followed by Quebec (19.3%), British Columbia (15.1%) and Alberta (13.0%).

Operating expenses increased at a similar pace as operating revenue, up 0.9% to $15.5 billion in 2020. Salaries, wages, commissions and benefits rose 1.9% to $8.7 billion. The number of paid employees in the industry increased slightly from 114,536 in 2019 to 114,819 in 2020, and the profit margin of the accounting industry saw a small uptick to 28.1%. The accounting industry is relatively concentrated, with the top 10 companies generating 46% of all the industry's operating revenue in Canada.

The pandemic forced change, and many accounting companies (86% of respondents) adapted their operating methods because of it. Among these businesses, 55% reported adopting or expanding a contactless business model and 46% asked some or all employees to work from home. Retrofitting the workspace was another adaptation made by 32% of businesses. Of the businesses that responded to the survey, 8% reported reconsidering their business expansion plans because of the economic shock brought about by the pandemic.

Over time, the accounting industry has been expanding into non-traditional lines of business. The pandemic accelerated advisory and consulting business trends even more. Management consulting services showed strong growth in 2020, primarily among the largest companies. In 2020, these services accounted for 17.3% of the industry's total sales, compared with 14.2% in 2019. Tax preparation and representation services generated the most sales, at 28.1% of all sales—a 0.3 percentage point increase. Auditing and other assurance services, the second-largest source of sales, dropped from 27.6% of total sales in 2019 to 25.5% in 2020. Auditing has been falling consistently year over year since a high of 32.1% in 2014. Bookkeeping, financial statement compilation and payroll services fell as well, down 2.6 percentage points to 23.2% of total sales in 2020.

The business sector was the primary client of the accounting, tax preparation, bookkeeping and payroll services industry, generating 68.7% of total sales. This was down from 69.1% in 2019. Sales to individuals and households decreased as well, dropping from 16.4% of total sales in 2019 to 15.9% in 2020. The remaining sales were to governments, not-for-profit organizations and public institutions (9.0%) and to clients outside Canada (6.4%).

Looking ahead to 2021

Early indicators are positive for the accounting, tax preparation, bookkeeping and payroll services industry in 2021. Government business relief programs remained in place until October 2021, and the number of paid employees in the industry has grown by more than 10% from the end of 2020 to August 2021. While the pandemic is not over, economic activity has improved across Canada. As of July 2021, the number of active businesses exceeded pre-pandemic levels, providing impetus for growth for professional business services.

Contact information

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