NAICS Included vs Excluded Activities: How to Interpret Code Boundaries
Included vs excluded activities is the most important (and most misunderstood) part of using NAICS correctly. NAICS definitions describe what a code covers, but exclusions clarify where common look-alike activities belong instead. Correct use requires reading both to prevent category drift across vendors, datasets, and reporting periods.
Use this page alongside the NAICS Classification & Reference Center to interpret code boundaries consistently.
What “included” means
“Included” activities are examples of work that fits the code’s definition and scope. They help confirm intent, but they are not an exhaustive list. When an activity looks like it fits, you still need to confirm the primary activity and check for exclusions.
What “excluded” means (and why it matters)
Exclusions exist because many real-world businesses span multiple activities. Exclusions define where certain activities should be classified instead, even if the marketing language sounds similar.
Common exclusion patterns
- Channel vs activity: “Distributor” language may describe sales channel, not the primary value-adding activity.
- Service vs manufacturing: repair/installation can be excluded even when related to a manufactured product.
- Retail vs production: selling a product is often excluded from manufacturing codes.
- Component-only vs finished product: making parts may be excluded from finished-goods production codes.
How to avoid misclassification
- Start with hierarchy context: confirm the parent structure aligns with the business’s actual operations.
- Use exclusions as guardrails: treat exclusions as the “do not classify here” list.
- Anchor to primary activity: classify to the activity responsible for the largest share of output/revenue.
- Prefer stability: avoid reclassifying based on branding shifts unless operations change.
Establishment-level note (critical for accurate NAICS)
NAICS is applied at the establishment level (a single physical location where business is conducted), not at a corporate HQ level. Multi-location companies may have different NAICS codes across locations if the primary activity differs.
Practical workflow for interpreting boundaries
- Read the definition first: confirm the activity described matches what the establishment actually does.
- Check included examples: use them as confirmation signals, not as a full checklist.
- Check exclusions: eliminate candidates that explicitly exclude the establishment’s primary activity.
- Validate hierarchy: confirm the selected code fits the correct parent path (sector → national industry).
- Document rationale: note why adjacent codes were excluded to prevent future drift.
Governed consistency standard
For a governed approach to classification consistency (including explainable decisions and drift reduction standards), see the Industry Classification & Verification Framework.
Next step
If you’re selecting a code for a business and want a practical step-by-step, use: How Do I Find My NAICS Code?.
Questions & answers
- Are “included” activities the only things the code covers?
No. Included activities are representative examples. The definition sets scope; exclusions set boundaries. - If a business does an excluded activity and an included activity, what happens?
Classify based on the establishment’s primary activity. Exclusions help prevent assigning a code based on secondary or channel language. - Why do two vendors classify the same business differently?
Differences typically come from how they interpret primary activity, apply exclusions, and validate establishment-level operations over branding text.