Editor's Note: This article is part of Inc.'s weekly report on business niches in partnership with financial information company Sageworks.

The Affordable Care Act is heating up business for the accounting industry. 

Accountants and tax preparers are ringing up higher profits as more individuals and companies turn to them for help in complying with the requirements of the ACA and other regulations.

Sales growth for the accounting, tax preparation, bookkeeping and payroll services industry rose to 8.8 percent in 2014, up from 6.9 percent in the prior year, according to Sageworks.

“Increased regulatory pressures on businesses, such as the Affordable Care Act, have increased the demand for accounting services in order to ensure compliance,” says Sageworks analyst Kevin Abbas. “In addition, accounting firms appear to recognize the need to expand their service offerings to more than just tax work. Consulting, advisory and outsourced CFO work are all ways in which traditional accounting firms can and have been able to open new revenue streams in order to continue to sustain their growth rates.”

Under the Affordable Care Act, taxpayers are required for the first time ever to report their health insurance coverage.

“In the midst of continued growth, accounting firms have been able to sustain very high profit margins,"Abbas says. "Due to the low overhead of operating an accounting firm, coupled with the specialized knowledge required for the profession, accountants are able to demand higher prices and thus clear higher margins.” 

The average cost to hire a professional to complete a tax return rose nearly 5 percent last year, from $261 to $273, according to the National Society of Accountants. The average cost to prepare a Form 1040 and state return without itemized deductions has also risen more than 11 percent during the past two years.

“It’s important to remember that sales growth has two contributing factors--the price that is being charged by the accountant or bookkeeper, and the volume of customers that are using these services,” says Sageworks analyst Jenna Weaver.

As of July 2014, the accounting industry ranked first on Sageworks’ list of 15 industries with the highest net profit margin. The most recent data below show that during the last four years, sales growth has doubled.

 inline image


 inline image