How to Choose the Correct NAICS or SIC Code
Use this page when you need to choose the correct NAICS or SIC code for a business. The most reliable approach is to identify the business’s primary activity (what generates the most revenue or best represents operations) and then select the code that most precisely matches that activity. For multi-activity businesses, prioritize the activity that defines the business in the market, not incidental support functions.
On this page
A practical 5-step selection process
Write a one-sentence activity statement
Describe what the business primarily does in plain language.
- Focus on outputs/services delivered to customers.
- Avoid internal departments (HR, accounting, IT) unless the business sells those services.
Confirm the primary activity
Choose the activity that best represents the business’s market identity and operational reality.
- Use revenue share when available; otherwise use operational emphasis.
- If locations differ, classify each establishment separately when appropriate.
Match to the most specific description
Select the code whose description aligns closest to the primary activity.
- Prefer narrower descriptions over broad “other” categories when you have clarity.
- Check included and excluded activities where available.
Validate against real-world signals
Cross-check the selection with how the business describes itself.
- Products/services list, customer types, and operating model.
- Public descriptions (site copy, filings, brochures) when available.
Document the “why”
Record the rationale so the code choice is explainable and repeatable.
- Primary activity statement + key supporting facts.
- Any exclusions or alternatives considered.
How to identify the primary activity
The strongest classifications start with a defensible definition of the business’s primary activity. In practice, primary activity is the activity that best explains what the business is to customers and the market. When you have data, revenue share is a strong signal; when you do not, use operational emphasis and customer-facing outputs.
Multi-activity businesses and edge cases
Multi-service firms
If a business offers multiple services, choose the code for the service line that dominates the business model. If services are truly balanced, classify the establishment that drives the primary market identity.
- “Consulting + software” is classified differently depending on what is sold and delivered.
- Separate establishments can legitimately have separate codes.
Vertical integration
When a business controls multiple stages (production → distribution → retail), classify the establishment based on the function performed at that location.
- Plant: production activity
- Warehouse: logistics activity
- Storefront: retail activity
“Other” and “not elsewhere classified”
Use “other” categories only when the business activity does not match a more specific description. They are valid classifications, but they often indicate missing detail.
- Re-check the activity statement and look for a narrower fit first.
- Document why the “other” category is appropriate.
Code changes over time
Businesses evolve. A code that fit in 2019 may not fit in 2025. Re-validate the code when the business model, products, or customer base changes.
- New product lines
- Mergers / acquisitions
- Major changes in revenue mix
Common code-selection mistakes
- Choosing based on a job title: classify the business activity, not the owner’s role.
- Choosing based on a single product keyword: many products exist across multiple industries; match the operating model and outputs.
- Using a broad category because it “sounds right”: prefer the most specific match you can justify.
- Classifying a brand, not an establishment: one company can legitimately have multiple codes across locations.
- Ignoring exclusions: if an activity is explicitly excluded, it should not be classified there.
Examples
Example 1: Contractor vs specialty trade
A firm that primarily manages entire build projects is classified differently than a firm that only performs a specialized trade (e.g., plumbing, electrical). The deciding factor is what the firm sells and delivers as the primary service.
Example 2: Manufacturer with a retail storefront
If a location’s primary activity is manufacturing, classify the plant accordingly. If a separate location sells direct-to-consumer, classify the storefront under the relevant retail activity.
Example 3: Software company with consulting services
If the primary activity is selling software subscriptions/products, classify under the appropriate software publishing activity. If the primary revenue driver is implementing and advising, the consulting activity may be the best fit.
Example 4: Healthcare practice with multiple services
A clinic may offer imaging, labs, and outpatient care. Classify based on the dominant patient-facing service at that establishment, or separate establishments if operations are segmented by location.
When to request a verified classification
If your choice affects compliance, lending, insurance, vendor qualification, or regulated reporting, it can be worth obtaining a verified classification rather than relying on a best guess. This is especially true for multi-activity businesses, complex operating models, or cases where “other” categories are the only apparent fit.
FAQ
- How do I choose the correct NAICS code if my business does multiple things? Choose the code that matches the primary activity—typically the activity that best represents the business’s market identity and/or revenue-driving operations. If separate locations operate differently, classify each establishment separately.
- What if two NAICS or SIC descriptions both seem to fit? Compare the wording for specificity, check included/excluded activities when available, and validate against what the business actually sells and delivers. Document the rationale for the final choice.
- Is it bad to use an “other” category? Not necessarily. “Other” categories are valid when the activity truly does not match a more specific description. They can also indicate missing detail, so it’s worth re-checking the primary activity statement first.
- Should a company have more than one code? A single company can have multiple codes across establishments (locations). For many use cases, the correct code is establishment-based, not brand-based.
- When should I re-check my NAICS or SIC code? Re-validate after major changes in products/services, revenue mix, customer base, acquisitions, or operating model—especially when the code is used for compliance or reporting.