Most entrepreneurs have given a lot of thought into the sector they choose to invest in and the type of business they want to run. Recently experts have said that running an accounting firm could have better chances of success than other types of businesses. This is in comparison to the second most profitable sector, which as you can possibly guess right away is, real estate.
So how come accounting and taxes are more profitable than real estate? If experts are to be believed the top challenges of running a small business are economic uncertainty, lower customer spending and cost of health insurance. All these three challenges are financial in nature which means entrepreneurs hire accountants and tax professionals to deal with these issues.
Any good entrepreneur knows that paying good money for a quality accountant can help your business by leaps and bounds. Not only can a good accountant help your business expand, they can also help find ways to cut costs.
Many startups fail because they don’t have a health cash flow. The reason for this is often that they don’t have cash reserves for various expenses that arise in the company. Furthermore when a client delays paying, they take a hit in the form of a cash deficit. Businesses seek out loans and overdrafts during these times of cash crunch but have to deal with expensive interest rates that can ultimately lead to the demise of the business. For a short term loan the average time required is usually less than 10 days.
Small business owners often remain optimistic about the future of their startups even under turbulent financial conditions which means they still rely on accountants and tax services during the time. If accountants and tax professionals can capitalize on their successes and maximize profits they can stay afloat even during the worst financial times.
A recent survey said that accounting and taxation related business is the most profitable type of small business with around 18.4 percent net profit margin. The survey rated real estate as the second most profitable at a close 15.2 percent net profit margin.