Which Industry Makes The Most Money?

A new study from financial information company Sageworks confirmed that accounting-related services are the most profitable job industry. Jobs within this industry include accounting, tax preparation, bookkeeping and payroll services.

The study evaluated the most profitable industries over a 12-month time span, which included pre-tax net profit margins for privately held companies.

"Not all private companies are necessarily shooting for high profitability," Sageworks Analyst Libby Bierman said in a press release. "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)."

Bierman added, "But in most instances, higher profitability is better, and the industries atop this list are getting more from their business investment than others."

Sageworks evaluated specialty services to amass its list of the top 20 profitable industries. Here is the full list of the study's findings:

1. Accounting, Tax Preparation, Bookkeeping, and Payroll Services — 18.4 percent (Net Profit Margin)
2. Lessors of Real Estate — 17.9 percent
3. Legal Services — 17.4 percent
4. Management of Companies and Enterprises — 16.0 percent
5. Activities Related to Real Estate — 14.9 percent
6. Offices of Dentists — 14.8 percent
7. Offices of Real Estate Agents and Brokers — 14.3 percent
8. Nonmetallic Mineral Mining and Quar — 13.2 percent
9. Offices of Other Health Pract — 13.0 percent
10. Religious Organizations — 12.4 percent
11. Medical and Diagnostic Laboratories — 12.1 percent
12. Land Subdivision — 12.1 percent
13. Automotive Equipment Rental and Leasing — 12.0 percent
14. Warehousing and Storage — 11.0 percent
15. Death Care Services — 10.8 percent
16. Other Professional, Scientific, and Technical Services — 10.6 percent
17. Management, Scientific, and Technical Consulting Services — 10.3 percent
18. Specialized Design Services — 10.2 percent
19. Other Schools and Instruction — 9.8 percent
20. Support Activities for Road Transportation — 9.7 percent

Many of the top earners on this year's list are service-related industries that possess particular certification and education requirements upon entry, which is why these industries are permitted to charge customers with a premium fee for its services. These industries — Accounting and Legal Services, etc. — also don't require the need to maintain and purchase expensive inventories or equipment.

The healthcare and dental industry secured a spot on the Sageworks list, but these are industries that require expensive inventory and equipment to be both purchased and maintained. However, Bierman pointed out that the demand for healthcare-related services makes up for the cost and maintenance of essential equipment and inventory needs.

"Obviously healthcare and dental practices do have to invest considerably in technology and supplies," Bierman said. "Their services are inevitably in demand even during slow economic times, which reduces pressure on their profitability levels."

For years, accounting-related services have proved to be a consistent winner on the several profitable industries lists. Why does this industry continue to remain on top? Omar Khedr, an author of a 2015 top industries list created by the National Center for Education Statistics, cited job stability as a reason for the industry's success.

"The Accounting Services industry presents a stable field for recent graduates, especially for accountants and auditors who will go on to earn statutory titles, such as Certified Public Accountant (CPA)," Khedr wrote, according to Accounting Today. "The industry is closely tied to the health of the overall economy, which has been accelerating in recent years."

Bierman told International Business Times Thursday that the industry's business model also enhances its success.

"While there are probably a few contributing factors, a significant driver of that profitability is the industry's business model," Bierman said. "These firms don't have huge inventories to buy or maintain, and they do not have to invest as much into R&D. Rather their assets are their experience, certifications and talented staff. That human capital allows them to operate with high gross margins."

Consultant Allan Koltin pointed out to Accounting Today in 2016 that Level 1 services (compliance services) are slowly dying within the industry. Level 2 (estate planning and tax solutions), Level 3 (advisory work and consulting) and Level 4 (wealth management) services are likely to be in higher demand because they involve necessities that clients are willing to pay advisors more for.

"A Level 1 service is a service a client doesn’t want but needs. A Level 2 service is a service a client both wants and needs, and hence, will pay value for," Koltin said.

It pays to secure a position within the accounting-related services industry. According to Salary.com, the annual salary on average ranges from $49,647 for an entry level accountant to $144,901 for an accounting director.