Accounting and tax lead most profitable industries

Accounting, tax preparation, bookkeeping and payroll services topped the list of most profitable industries over the past 12 months, according to the financial information company Sageworks.

The ranking was based on pre-tax profit margins for privately held companies. This past year, accounting-related services (including accounting, tax preparation, bookkeeping and payroll service companies) held the highest ranking, with net profits amounting to 18.4 percent of sales, on average for the 12 months ended June 30, 2017.

In second place was real-estate leasing companies, with a 17.9 percent net profit margin, followed closely by legal services, in third place with profitability of 17.4 percent. All three industries placed well above the average for U.S. private companies, which had an average net profit margin of 8.9 percent.

Pre-tax net profit margins aren’t necessarily the most pertinent measures for many businesses, Sageworks pointed out. “Not all private companies are necessarily shooting for high profitability; maybe their industry is price sensitive and rely on volume for growth (like grocery stores) or maybe they are sinking profits back into the business for R&D (growth companies),” said Sageworks analyst Libby Bierman in a statement. “But in most instances, higher profitability is better, and the industries atop this list are getting more from their business investment than others.”