Which industry is most profitable? Just ask your accountant.
(This post originally appeared on The Washington Post)
I’m a Certified Public Accountant. And yes, we deserve the abuse we get. We’re boring. We’re conservative. We’re not exactly the life of the party. But guess what? We know how to make money.
Don’t believe me? Then just ask the people at Sageworks. According to this report, the data-gathering firm has put together its’ annual listing of the most profitable industries. And the most profitable industry for the 12 months that ended June 30th is…accounting. That includes public accounting firms, tax preparation companies as well as bookkeeping and payroll service firms too.
The firms in this industry made an impressive 18.3 percent net profits on revenue during this period, which was more than the second- and third-place industries –real estate rental firms and legal firms. Other close contenders were outpatient care centers and real estate sales offices. This is the third-straight year that accounting firms led the pack. The only downside for accountants is that their profit margins fell from the last report, when the industry showed a 19.6 percent net profit margin.
The least three profitable industries in the Sageworks study were non-metallic mineral mining and quarrying, medical and diagnostic laboratories and other schools and instruction.
In what continues to be disappointing news for manufacturers, the data continue to show that service firms are historically more profitable than companies that make things. “They don’t sell or produce finished goods,” Sageworks analyst James Noe recently recently told Forbes. “They don’t make the tractors to sell to farmers or they don’t buy groceries to sell to consumers. In other words, you don’t need plastic to provide an audit for a company; it’s just mostly human capital that’s being utilized, and that lends to a high margin generally.”
So sure, us accountants aren’t the most exciting bunch around. But we know how to turn a profit.