Recent data shows that accounting practices generate higher average profit than any other industry. Coupled with a strong growth in accounting jobs, this statistic points to a bright future for accounting-related industries.
The financial information company Sageworks has released a study that shows that accounting practices have higher average net profit margins than those in any other industry. The average net profit margin for accounting, payroll services, bookkeeping and tax preparation was 19.8 percent in the year from July 2013 to July 2014. This figure is 2 percent higher than the next-highest profit margin of 17.8 percent, which was earned by the legal services industry.
This growth in profits follows shortly after reports of a boom in accounting jobs. The job growth in the accounting industry could be due in part to the increased administrative demands that the Affordable Care Act is placing on many companies. Recent reports have revealed that the growth in accounting jobs has primarily created opportunities for tax accountants, senior accountants, payroll managers and experienced accounts payable and accounts receivable professionals.
High demand for accounting services is one reason industry profits and accounting jobs are on the rise. Consistently high demand for accountants has helped to keep profits high in this industry, despite the recent economic slump, says Jenna Weaver, an analyst at Sageworks. The greatest job growth is in the Dallas-Fort Worth area, where the number of accounting jobs has increased dramatically, according to a survey by Kforce. Other areas of high demand include New York, Boston, San Diego, Houston, Milwaukee, San Antonio, Tampa, St. Louis and Pittsburgh.
Another reason profits in the accounting industry are so high is the low running cost of many firms in this industry. Many accounting professionals are able to set up their own practices, with some even working from home to keep costs low. Although accounting practices require very specific skills and expertise from their staff, they don't require a great deal of specialist equipment or expensive machinery, unlike companies in many other sectors. As a result, says Weaver, these companies are able to keep their overheads low and their profits high.
The growth in accounting jobs opens plenty of opportunities for suitably qualified professionals to increase their earning potential. According to Weaver, accountants who have expertise in a particular area can charge more for their services. Individuals who have the right skills and qualifications can enjoy high earnings in the accounting industry, either by applying for new accounting jobs or by setting up their own profitable practice
The average net profit margins of accounting practices are more than double the average for privately held U.S. companies. This increase in profits could explain the recent growth in accounting jobs, which has opened opportunities in many parts of the United States.
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