Know Your NAICS/SIC Code
You may not be aware that in 1997, the North American Industry Classification System (NAICS) was adopted as the standard for classifying business establishments. Developed jointly by the United States, Canada, and Mexico, NAICS provides new comparability in statistics about business activity across North America. NAICS replaced the old Standard Industrial Classification (SIC) system.
Each company’s code is determined by that company’s primary business activity – the one that generates the most revenue for the company. This code is then used by various government agencies to collect, tabulate, analyze, and disseminate statistical data describing the economy of the United States. Generally, a company’s code is derived from information that the company has provided on administrative, survey or census reports.
This methodology can be somewhat challenging if your business model and revenue generating activities change, as your company will likely continue to be classified according to old data provided to the Census Bureau.
While there is currently no official procedure for having a company’s SIC or NAICS code changed, if you strongly disagree with your company’s classification, you can contact the agency that has assigned your code. Various government agencies maintain their own lists of business establishments and assign classification codes based on their own programmatic needs.
— Laurie Berman, Senior Vice President, lberman@pondel.com
