Accounting
Small firm AI plans must balance budget with ambition
Some firms, the ones that constantly grab headlines, are spending billions of dollars to create bespoke artificial intelligence systems to service their Fortune 500 clients who need complex compliance and advisory services to support their global footprint.
In contrast, the vast majority of firms are spending maybe a few thousand dollars to license commercially available models, and perhaps a few thousand more to train staff and integrate systems. Overall, if someone is not building billion-vector custom models housed on a massive server farm, AI is actually quite cheap, especially considering the capacity upgrades it can present.
Firms with about one to 200 people are mostly engaging with the subscription model products right now, according to TJ Lewis, innovation strategist with Rightworks, an accounting-specialized cloud provider. “They’re not building out their own models,” he added. “They’re not securing a bunch of server time or things like that to spin up their own things by and large.”
Andrey Popov/stock.adobe.com
Part of this is because smaller firms don’t have the resources to construct their own custom AI models, especially the oceans of data to feed them, as well as the technical experts to bring it all together, according to Donny Shimamoto, head of IntrapriseTechKnowlogies, a tech advisory practice specializing in CPA firms.
“It kind of makes sense,” he added. “In order for AI to work to a good extent, you need a high volume of data, and smaller firms just don’t have that volume. They need to teach the AI. And they also don’t have simply the teams to be able to build that out cost effectively.”
Another reason is they really don’t need to, he added. Huge sophisticated AI models are generally used for highly complex tasks for highly complex companies, which is why the international-scale firms tend to invest in them. Conversely, the tasks most local accountants are handling for their clients are simpler by many orders of magnitude. In the majority of cases, said Shimamoto, a commercially available model will work fine for their purposes.
“There’s personal AI or personal LLMs that, if a practitioner had a decent amount of content that they wanted to have readily searchable, they could use those LLMs like [Google’s] Notebook [LLM] or something. Those personal LLMs are designed to run off of a laptop, so you won’t see these huge incremental costs coming along,” he said. The cost of commercial AI solutions has also been going down over the years, he added, and many of the ongoing costs of these products are now at the vendor level.
Furey Financial Services, a 38-employee firm in Hoboken, New Jersey, that was also named one of this year’s
“From our perspective we’re not trying to build our own LLMs or infrastructure,” he said. “It was really about how do we from a low-cost perspective leverage some of these models out there and plug them into our workflow, so you can differentiate AI into that platform component. … We’re going to really focus on the application layer and see where we can put these things to use while not trying to build the new AI model ourselves.”
This falls in line with the general advice Shimamoto had for smaller firms looking to invest in AI. It is the same as it is for any other major tech purchase: Firms must start with the use case, then find technology to fill it. Too many firms, he believes, do it the other way around, much to their detriment.
“It’s the same way we’ve prioritized IT spend for the last two decades at least,” he added. “It comes down to where is the business value? What is the business strategy? And how will AI contribute to that? We do have to be careful of AI being a solution looking for a problem, but I have been seeing that a bunch.”
Waller said that when Furey was first thinking through its approach to AI, it considered building its own proprietary model, or to train one using an open source model like Llama as a base. However the firm calculated that this would carry not just a significant one-time cost for development but ongoing expenses such as server space. “We decided not to go that route and really just say ‘Hey, let’s get it plugged into our workflow but let’s hold off on running our own model,'” said Waller. This has helped the firm gain efficiency and productivity bonuses from AI while keeping IT costs low.
However, Furey is more than just a consumer of AI products. While it’s not prepared to drop millions of dollars on custom systems, it has found great cost savings in the form of creating its own API access point for OpenAI’s models. During the development process, Furey estimated its expenses would be hundreds of dollars per month, but as time went on and OpenAI introduced new capacities, the cost began to drop. While the cost savings are nice, Waller said the real benefit is in better quality client services.
“That cost has gone to near zero,” he added. “Once we got our whole team up and running on it, all the clients, we’ve got thousands of [API] calls, [but] we’re in no more than 10 bucks a month. But the investment really is on our team knowing which way to go and connecting the API client to the API gateway in a secure way, doing all that dev work to plug that into our templates on a daily basis and go through that.”
Doug Schrock, managing AI principal for Top 25 Firm Crowe, said small firms should be actively experimenting with AI beyond just buying or licensing a commercial solution, which he called “the homeowner level of AI.” While the investment is much less, there is an upper limit on the value it can create because it does not enable more significant redesigns to processes and tasks that are offered by more complex solutions. Overall, he said, firms should be seeking to innovate and make strategic relationships with some of the larger AI players out there.
While it’s fine for now to stick mostly with what’s on the market, he warned that smaller firms will need to increase their AI capacities soon, or else be outcompeted by other firms. Smaller players who can’t or won’t make these investments, Schrock predicted, will start falling behind. They might need to do things like hire consultants to help get them to that next stage of AI development. “The market is moving and folks like us get a higher level of value allowing us to get more cost competitive and deliver value and speed they maybe can’t,” he added.
“In the next six to 12 months, get your people using the tools tied to your existing system,” Schrock said. “If everyone is running MS Suite, turn on Copilot. It’s $30 bucks a month per user. Have your people start using the AI features built into your core system, then maybe get some spot LLM tools like ChatGPT or some AI-based research tool. They need to get in the game now if they haven’t already.”
President Donald Trump’s drive to enact trillions of dollars in tax cuts and raise the federal debt is on track after he and congressional leaders successfully corralled House Republican lawmakers to approve a
The 216-214 vote Thursday on the budget — which outlines the parameters for the tax cut and
The president worked the holdouts by phone and in a White House meeting. House Speaker Mike Johnson held a press conference to declare himself “committed” to coming up with at least $1.5 trillion in spending cuts. And Senate Republican leader John Thune joined the speaker to announce “a lot of” Republican senators shared the goal, though he stopped short of a commitment.
It was enough.
With the budget approved, the way is open for a follow-on package to cut taxes by up to $5.3 trillion over a decade and raise the debt ceiling by $5 trillion, in exchange for $4 billion in spending cuts. Republicans can now pass Trump’s tax-cut agenda solely on GOP votes, bypassing the need for negotiations with Democrats.
Trump offered congressional Republicans “Congratulations” in a social media post minutes after the vote.
The vote came a day after Trump announced a 90-day pause on some of his sweeping tariff plans that have roiled markets and sparked predictions of a looming recession. Financial markets — often a barometer of success for the president — initially soared on the news, though U.S. stocks
Republicans are planning to renew Trump’s first-term tax cuts for households and the owners of privately held businesses, and enact a fresh round of reductions, including expanding the state and local tax deduction and eliminating levies on tipped wages.
Conservative hardliners in the House say they want a final package to trim $2 trillion in spending over the next decade, a significant increase over the $4 billion the Senate is directed to cut in the budget passed Saturday. To make those reductions they’ll likely need to curb Medicaid, food stamps and other social programs with tens of millions of beneficiaries.
A group of moderate Republicans sought — and gained — assurances from Johnson during the vote that the final bill would not cut benefits for qualified Medicaid individuals and institutions, said New Jersey Republican Jeff Van Drew.
“We voted late to make the point,” Van Drew said.
The group, however, is open to eligibility reviews and work requirements for Medicaid recipients, he said.
The budget outline punts many of the hard decisions for lawmakers to hammer out later in the tax-cut negotiations. That could lead to a standoff with the Senate at the end of the process, where several members are resistant to large cuts in safety-net programs.
Democrats assailed the plan as cutting benefits for the poor in order to pay for a tax cut skewed toward the wealthy.
“Republicans do nothing to lower the high cost of living,” Democratic Leader Hakeem Jeffries said on the House floor. “In fact, you’re making the affordability crisis in America worse, not better, when you target earned benefits and things that are important to the American people, like Medicaid.”
Senator John Barrasso, the No. 2 Senate Republican, said GOP lawmakers in both chambers are committed to “very serious savings for the American taxpayer.”
Trump hosted Republican holdouts at the White House on Tuesday to urge their backing. He echoed his pleas while speaking later that day at a donor event in Washington, imploring members who were hesitant to vote for the budget to “just get the damn thing done and stop showboating.”
“It is IMPERATIVE that Republicans in the House pass the Tax Cut Bill, NOW! Our Country Will Boom!!!” Trump posted on Truth Social Wednesday.
Johnson has set a target of the end of May to enact the tax bill, while Senate Republicans have talked of being able to complete the process by August. The 2017 tax cuts don’t expire until the end of the year.
Those self-imposed deadlines could be overrun by a fiscal deadline: the debt ceiling.
The nonpartisan Congressional Budget Office estimates that the Treasury will be unable to pay all of its bills in August or September, but that date could come as soon as late May if tax receipts are low.
Baker Tilly, a Top 25 Firm based in Chicago, reportedly is close to a megamerger with Moss Adams, another Top 25 Firm based in Seattle, creating a firm with $3 billion in annual revenue.
The deal, reported Wednesday by
Baker TIlly declined to confirm the deal, but acknowledged it’s always searching for merger candidates.
“We can’t comment on speculation or confidential discussions,” said Baker Tilly spokesperson Nicole Berkeland in an email to Accounting Today. “What we can say is that we’ve been transparent about our strategy to grow through strategic mergers. We are continually exploring opportunities with respected firms that align with our vision and will strengthen our ability to serve the middle market.”
Moss Adams also declined to comment. “It’s our policy not to comment on market speculation,” said Moss Adams spokesperson Greg Kunkel.
Koltin Consulting Group CEO Allan D. Koltin, who has previously advised Baker Tilly and Moss Adams on strategy and M&A, sees major ramifications from the deal. “Just when we thought nothing could get any bigger in CPA firm M&A than Forvis (formerly BKD and Dixon Hughes), and CBIZ (formerly CBIZ and Marcum), here comes Baker Tilly and Moss Adams (potentially) combining to create the sixth largest CPA firm in the country (only behind the Big Four and RSM),” Koltin said in an email. “After the combination, Baker Tilly will become the largest (non-Big Four) CPA firm in the Western region and Moss Adams will become part of a Top 10 Global Network. Additionally, both firms will bring over their unique areas of industry specialization and service line expertise which should provide robust organic growth opportunities to the combined firm. As a 44-year veteran and advisor to the accounting profession, I daresay there has been more change and transformation in the accounting profession in the past 4 years than the 40 prior years combined!”
Another merger expert also sees benefits in the combination. “The primary reason for this reported merger is to expand both firms’ scale and market position,” said Brad Haller, a senior partner in West Monroe’s mergers and acquisitions practice. This move would significantly boost Moss Adams’ scale and provide Baker Tilly with access to Moss Adams’ extensive client base. Together, they would become the sixth largest firm, leapfrogging over Grant Thornton and others. Additionally, this merger would allow Moss Adams to tap into Baker Tilly’s global networks, enabling them to expand their wallet share with clients. While there will be modest synergies in the long term as they combine redundant support services, the immediate benefits of this merger would be substantial.”
Baker Tilly is part of the Baker Tilly International network, based in London, which reported $5.6 billion in worldwide revenue in 2024. Baker Tilly has done several acquisitions since receiving
Last May, it merged in
Moss Adams does not do M&A deals as often, but last December, it entered the Salesforce.com consulting market by acquiring
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