NAICS stands for “North American Industry Classification System.” This coding system replaced the 1937 Standard Industrial Classification (SIC). It was developed to collect, analyze and publish statistical data about the US economy by Federal Statistical Agencies.
In North America (i.e., the United States, Mexico, and Canada), NAICS codes classify businesses by type so that data can be presented and analyzed uniformly. These codes are reviewed every five years to ensure they remain relevant, accurate, and up-to-date.
SICS vs. NAICS
SIC and NAICS codes are two closely related business classification systems used in the public and private sectors. There is, however, a difference between SIC codes and NAICS codes. SIC codes are less standardized and used more by the public sector, whereas NAICS codes are more accurate and used internationally and by government agencies.
It is common practice for directories to classify their contents based on the SIC code or the NAICS code. Several reasons these classifications can differ from one directory to another. In some cases, numbers are added to the end of codes to provide more specific information about the business.
Furthermore, determining a company’s code can be more of a judgment call, especially for directories using SIC codes. Even though most sources provide indexes to explain their versions of the code, independent resources also provide conversion tables and explanations regarding the codes.
Additionally, the government classifies companies according to both codes, and it is important to ensure your company is categorized correctly. First, it may affect your company’s eligibility for government programs or sourcing since incomes that qualify a company for small business status vary by category. Furthermore, if your company is placed in a higher risk category than it should be, it can affect your ability to obtain financing.
The Purpose of NAICS Codes
Among the many purposes of NAICS codes is that the Small Business Administration uses them to calculate what size of business qualifies for various small business programs. A list of size standards based on NAICS codes is available from the SBA.
You’ll notice that there are different size standards based on industries. Some are based on gross receipts, while others are based on total employees. Moreover, you’ll find that sizes vary a lot.
Your company’s NAICS code may also be important in the following situations:
- Obtaining federal, state, and local government contracts and grants;
- To qualify for disadvantaged business enterprise (DBE) certification requires meeting the SBA size requirements for your NAICS code;
- Getting an SBA certification;
- Obtain VA certification as a veteran-owned small business (VOSB) or a service-disabled veteran-owned small business (SDVOSB);
- If you wish to become a women-owned small business (WOSB); and
- Comparing your business with similar businesses to apply for commercial loans.
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We can provide you with NAICS Codes based on many characteristics: from region to turnover, sector, and the number of employees. Discover some of the options in the overview below and request a free quote via the contact form.
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