Common Mistakes When Choosing SIC or NAICS (and How to Avoid Them)

Common Mistakes When Choosing SIC or NAICS (and How to Avoid Them) | SICCODE.com

Common Mistakes When Choosing SIC or NAICS (and How to Avoid Them)

Updated: 2025
Reviewed By: SICCODE.com Industry Classification Review Team (regulatory, economic, and data governance specialists)

Classification Methodology | Data Lifecycle Management | Verification Methodology | Review Team

Most industry classification problems are not caused by choosing the “wrong” standard. They are caused by how SIC and NAICS codes are selected, mapped, and maintained over time. The mistakes below are responsible for data drift, audit issues, poor targeting, and compliance risk across organizations.

1. Treating SIC ↔ NAICS mappings as 1:1 conversions

Crosswalks are approximations. Many industries do not map cleanly between SIC and NAICS, especially diversified or service-based businesses.

Better approach: Use mappings as governed references, document exceptions, and preserve the primary business activity decision.

2. Overclassifying based on keywords alone

Keyword-driven automation frequently assigns overly specific codes that do not reflect a company’s primary revenue-generating activity.

Better approach: Base classification on evidence of actual operations, not surface-level descriptions.

3. Ignoring lifecycle changes

Businesses evolve. Static industry codes quickly become inaccurate when products, markets, or operations change.

Better approach: Apply version control and periodic review tied to material business changes.

4. Assuming one standard fits all use cases

Marketing, analytics, compliance, and reporting often rely on different classification conventions.

Better approach: Use dual coding when appropriate, with governed mappings and clear usage rules.

5. Lacking documentation and review paths

Undocumented classification decisions are difficult to defend during audits, reviews, or vendor disputes.

Better approach: Maintain documented rationale, evidence sources, and review ownership.

6. Relying entirely on third-party vendors

Vendors may change logic or refresh cycles without notice, causing unexplained shifts in classification data.

Better approach: Retain ownership of classification governance, even when using external data.

7. Treating industry codes as permanent facts

Industry codes are analytical tools — not immutable truths.

Better approach: Re-evaluate codes as part of ongoing data stewardship and governance processes.

For a governed decision framework and defensible classification practices, see:

This analysis reflects SICCODE.com’s governed classification framework, combining authoritative standards, expert review, and version-controlled data stewardship.