Xero, the global small business platform, released its US State of the Industry Report for accounting and bookkeeping (AB) practices in 2025, revealing an optimistic outlook driven by “evolving service offerings and strong performance metrics year-over-year.”
The report highlights a significant upswing in the industry, “with nearly three-quarters (73%) of practices reporting increased profits in the past year.”
This success is supported by the fact that “more than half (56%) added new clients due to enhanced operational efficiency and expanded service offerings, driven in part by the integration of innovative technologies and a deeper focus on client relationships.”
Xero’s report underscores the growing “significance of client advisory services, now offered by a strong 85% of surveyed practices, a significant jump from 41% in our 2023 survey.”
Ranked as the second most promising industry opportunity, client advisory services – “encompassing forecasting, budgeting and financial strategy – are proving vital in helping firms meet their clients’ evolving needs, strengthen client retention, and build deeper trust.”
Kelly Watson, Accounting Services Director, BNA CPA
“Implementing our new advisory model involved a collaborative approach, and we started by investing in advanced technology, like Xero, and upskilling our team. This included comprehensive training sessions, certifications and workshops to ensure our staff could proficiently use the Xero platform to address complex client needs. But the outcome was well worth it – we are now able to provide clients with true up-to-date financial insights and deeper, more well-informed advisory.”
AI has rapidly become a game-changer, “identified as a top opportunity by US accounting firms, with an overwhelming 80% anticipating a positive impact on their practice.”
Currently, the most common use cases “for AI include: delivering faster and more responsive client services (33%), enhancing accuracy by reducing bookkeeping and accounting errors (33%), and streamlining workflows through the automation of routine tasks (32%).”
Ben Richmond, Managing Director, North America at Xero
“The widespread adoption of AI has been a turning point for the accounting profession, giving accountants an opportunity to scale their impact and take on a more strategic advisory role. The real value lies not just in working more efficiently, but working smarter, freeing up time to elevate the human element of the profession and in turn, strengthen client relationships.”
Cloud accounting remains a critical “enabler for industry success.”
While 85% of firms have embraced cloud platforms, “a notable portion still lag behind, missing out on key advantages such as easier data access from anywhere (40%) and enhanced security (36%).”
The strategic focus on client advisory services and increased adoption of AI are clearly “driving growth and profitability within the US accounting and bookkeeping sector.”
However, Xero’s State of the Industry Report highlights challenges that firms are currently navigating, including “economic uncertainty (38%), the ongoing need to understand and effectively utilize AI (36%), and the continuous pressure of evolving client expectations, with clients now expecting more forward-looking strategic insights and business advice (35%). Addressing these challenges will be crucial for sustained success in the evolving landscape.”
Survey Methodology
Between December 19, 2024 and January 8, 2025, Quadrant Strategies, commissioned by Xero, surveyed “250 accountants and bookkeepers working in practices across the U.S.”
Respondents were reportedly found via independent panels and data has been weighted by “practice size – more details can be found in the methodology section of the report.”