Accounting-Top Profitable Industry

Accounting, tax preparation, bookkeeping and payroll services are collectively amongst the most profitable industries.

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Those services collectively had a net profit margin, on a pre-tax basis, of 19.80 percent. In contrast, legal services had a net profit margin of 17.82 percent, oil and gas extraction had a margin of 16.43 percent, commercial and industrial machinery and equipment rental and leasing netted a profit margin of 16.40 percent, and dentist offices had a net profit margin of 14.89 percent. The data was for the period July 1, 2013 to June 30, 2014.

Across all industries, the net profit margin pre-tax was 6.90 percent this year, compared to 5.90 percent last year.

One of the least profitable industries was office supplies, stationery and gift stores, with a net profit margin of just 0.90 percent.

Accounting professionals and dentists have consistently posted the highest net profits, but even death care services (i.e., undertakers and funeral homes) have relatively high profit margins, with 10.70 percent in pre-tax net profits.

Accounting services, legal services, real estate lessors and agents are often among the most profitable industries, potentially because they are able to operate with lower than average overhead, inventory and equipment. Once they pay for their human capital, most of the remaining revenue can funnel through to the bottom line. Offices of dentists and physicians also benefit because their services are requisite and do not depend on discretionary incomes or buying cycles—their services have pretty constant demand.”

Libby Bierman, analyst for Sageworks, noted that some industries that are less profitable than average may be suffering due to consumer trends or because their business is one that relies on volume of sales instead of profit per transaction. “Office supply and gift stores or even electronic stores may be less profitable now than in the past due to competition from online sellers,” she said. “Gas stations, on the other hand, have traditionally had low profit margins and instead make money by bringing more people to the pump and increasing volume.”

 

Source; Accounting Today

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