Sales Adding Up For Accountants And Tax Preparers
Accountants and tax preparers – already one of the top-performing types of U.S. businesses — are tallying higher sales and profits as more businesses and individuals seek help complying with requirements of the Affordable Care Act and other regulations.
New data from Sageworks, a financial information company, show that sales for the accounting, tax preparation, bookkeeping and payroll services industry (NAICS 5412) have increased by 8.8% on average in the last 12 months. That’s stronger than the 6.9% average increase in sales recorded during the comparable period a year earlier, according to Sageworks’ financial statement analysis.
At the same time, net profit margins have improved for the third year in a row and are among the strongest of all industries. For the 12 months ended Dec. 30, accounting, tax preparation, bookkeeping and payroll services firms generated nearly 18 cents of profit for every dollar in sales. Profit margins have improved steadily from about 15% in the 12 months ended Dec. 30, 2011.
Profitability has helped land the accounting, tax prep, bookkeeping and payroll industry on previous financial-based rankings by Sageworks, including lists of industries with the best financial performance, strongest profitability and highest return on equity.
“Increased regulatory pressures on businesses, such as the Affordable Care Act, have increased the demand for accounting services in order to ensure compliance,” according to Sageworks analyst Kevin Abbas.
Under the Affordable Care Act, also known as Obamacare, taxpayers are required for the first time ever to report their health insurance coverage. While the IRS says most taxpayers will simply have to check a new box of their tax forms to comply with the ACA, others who utilize tax credits, claim exemptions or make payments in lieu of coverage may seek help to figure out the changes.
Shown Sageworks’ data on sales and profitability trends, a spokeswoman for the National Association of Tax Professionals said the group had no official information on why tax preparers and accountants are seeing stronger sales and profit margins. “Anecdotally we assume it’s due to the complexities and requirements under the Affordable Care Act, FATCA [Foreign Account Tax Compliance] rules, and the new repair v. capitalization regulations,” a spokeswoman said by email.
The association’s latest survey of tax professionals found that 43% of respondents are preparing more tax returns than two years ago. Forty-six percent reported no change in the number, while only 11% said they are preparing fewer returns than two years ago.
