Companies in this industry provide services such as auditing, bookkeeping, payroll processing, and tax return preparation. Major companies include the "Big Four" accounting firms: Deloitte Touche Tohmatsu, Ernst & Young, KPMG, and PricewaterhouseCoopers, which all have international operations; other leading companies include US-based Automatic Data Processing (ADP), Paychex, and H&R Block.
Worldwide, the Big Four dominate the market and have expanded in many countries by buying local firms. In countries such as China, the Big Four have affiliated with local firms. However, concern over the share of the audit market held by the Big Four has led European regulators impose new rules meant to enhance competition.
The US accounting services industry includes more than 125,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $135 billion.
Demand for accounting services depends on new business formations, the increasing complexity of corporate business, and personal income. The profitability of individual firms depends on the right mix of services and effective marketing. Large firms have advantages in providing wider ranges of services to large corporate clients and having the resources to serve customers with many locations. Small firms can compete effectively by specializing and providing superior service. The US industry is fragmented: the 50 largest US companies account for just less than 50% of revenue.
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Payroll services account for 25% of US industry revenue; tax preparation and auditing each account for about for...