The Top 5 Most Profitable Small Business Industries in the U.S.

June 17, 2016
“In this world nothing can be said to be certain, except death and taxes.” Ironically, today, accounting and tax services is the most profitable type of small business.

There are always industries that are recession-proof and no matter how bad the economy is, they will usually make a profit. For example, the funeral business, as approximately 151,600 people die each day, or 55.3 million each year, and for most people properly sending off their deceased loved ones is one of the most important things they can do to celebrate their life. Benjamin Franklin famously quipped, “In this world nothing can be said to be certain, except death and taxes.” Ironically, today, accounting and tax services is the most profitable type of small business.  

Sageworks, a financial data service, analyzed the net profit margin of more than 16,000 small businesses in the United States between September 2014 and August 2015 and found that the following types of small business industries were the most profitable.

No. 1: Accounting, tax preparation, bookkeeping and payroll services. According to Sageworks’ findings, accounting and tax services is the most profitable type of small business with a 20.5% net profit margin. One of the reasons this industry is ranked at the top is because accounting and tax services tends to have low overhead and repeat clients.

No. 2: Automotive equipment rental and leasing. At 20.4%, this industry is neck and neck net profit margin-wise with the top contender. Sageworks attributes this to a rising on-demand economy, as more and more people are leasing and renting more cars using on-demand services such as Zipcar, in addition to venerated agencies such as Hertz.

No. 3: Lessors of real estate. This industry received the bronze medal with 16%, due in no small part to low operating costs and the fact that all one needs to do to get started is to obtain an agent or brokerage license. This third-place finish can also be attributed to the approximately 501,000 new homes sold in 2015, an increase of 14.5% from 2014 and the highest annual figure the domestic real estate market has seen in eight years.

No. 4: Offices of dentists. This fourth-place finisher has a 15.4% net profit margin, due to the fact that most people at some point in their life need to see a dentist, many on a regular basis. Everyone wants to keep their teeth for as long as possible, and there are approximately 200,000 dentists in the United States to ensure they do.

No. 5: Legal services. Coming in fifth close on the heels of dentists is legal services with 15.2% net profit margin. Similar to accounting, this industry typically has low operating costs and repeat clients, and hiring an attorney, whether they be from a boutique or major law firm, is usually rather expensive.

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