CPAs Margin Call

So its turns out that besides reorganizing how we interact socially and start worldwide democratic revolutions, social media is also getting more students to study computer science.  The theory is that Facebook, or rather the movie about it’s founder, has made being a geek cool again.  Also, one has to believe in a world where college is expensive and jobs are scarce, studying in this area also makes economic sense.  Still, it’s worth noting that unless you are Mark Zuckerberg or Andrew Mason (GroupOn), according to this blog post from Forbes.com, you might actually be better off majoring in accounting.

 In a February post called “The Most Profitable Small Businesses “ , Forbes assembled a list of the 20 most profitable industries, and CPA’s topped the list!  Who knew?!  (Obviously not me.)  Chiropractors were number 2 followed by “Freestanding Ambulatory Surgical and Emergency Centers”.  Non-CPA accounting services held the number 4 spot and Dentists came in at number 5.  Lawyers were number 8, Portfolio Managers were number 10. Physicians’ offices (except mental health specialists) came in at 20.

I’m sorry, there’s no way I’m going to tell my son that he shouldn’t apply to medical school because he can make more money as an accountant.  I’ve done too many tax returns to have those words leave my mouth.  However, as an accountant, I do have an explanation.  The issue is margin.  Profitability is how many cents out of a dollar your business gets to keep.  People who make lots more gross dollars than any accountant I’ve had the pleasure to meet can work in low margin businesses.  For example current “activist investor” Ron Burkle was in the supermarket business before he had billions left over to invest.  Supermarket margins are known for being razor thin.   

Still, it’s nice to know when it comes to being thrifty accountants rank number one.  Who knows, one day it may even be cool to be “froogle”.