What Is a NAICS Code? Tips for NAICS Code Lookup

A NAICS code classifies companies in the United States, Canada, and Mexico by type of business. NAICS stands for North American Industry Classification System. Federal agencies and businesses use this six-digit code to standardize and classify companies when collecting and sharing data on the US economy. Under NAICS, each business establishment has a self-assigned code describing its primary business activity. Various government agencies host corporate registries that use NAICS codes.

In 1997, the NAICS system replaced the SIC code (Standard Industrial Classification), which was the previous classification system. The new system includes more specific details and better suits modern corporations and current economic activity.

Business owners determine their NAICS code number based on the industry, sector, and specialty that best describes the company’s line of business. Businesses and federal agencies can use NAICS codes for several different purposes, such as:

1. 1. To bid for government contract work: If your company is seeking a government contract, it will be necessary to have a correct NAICS code. Likewise, being able to recognize NAICS codes on a list of various government contracts and eligible companies will simplify the process. Furthermore, the SBA (Small Business Administration) uses NAICS industry codes to designate size standards for businesses eligible for contracting programs.
2. 2. To file taxes: The Internal Revenue Service (IRS), the Office of Management and Budget (OMB), the US Census Bureau, and other US government agencies—as well as the related government agencies in Mexico and Canada, such as Statistics Canada—all use NAICS codes for purposes of taxation and tax credits.
3. 3. To find and identify customers: Many businesses sell goods and services to other companies. Businesses can use NAICS codes for customer acquisition or categorizing and collecting information about current customers.
4. 4. To submit regulatory paperwork: Paperwork for permits or zoning follows specific environmental rules and requires a company’s NAICS code.

To determine the proper NAICS code for your business, consider the components of the code:

• Sector: The first two numbers refer to the economic sector in which the business operates. Consider the NAICS code 111411. The first two digits—11—denote the sector of agriculture, forestry, fishing, and hunting. Numbers 31-33 are for manufacturing, 61 is for educational services, and 71 is for the arts, entertainment, and recreation sector.
• Subsector: The third number in the NAICS code refers to the business's subsector. For instance, in NAICS code 111411, the third digit specifies the business is crop production, a subsector of the agricultural sector.
• Industry group: The fourth digit refers to the industry group. For example, in the NAICS code 111411, the 4 refers to greenhouse, nursery, and floriculture production, further refining the business description.
• Industry: The fifth digit refers to the company’s industry. For example, NAICS code 111411 indicates the business chiefly operates in the industry category of food crops growing under cover, like mushrooms.
• National industry: This sixth and final number refers to the specific industry and its nation. For instance, the number 1 signifies the United States. NAICS code 111411 might, therefore, describe a mushroom cultivation business in the US.

In the United States, the census website at census.gov features a database that enables you to search for businesses by company name or NAICS number. In addition to the company lookup tool, the website includes information about the codes and FAQs for additional information.

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