What Is a NAICS Code? NAICS Structure, Hierarchy & How to Read NAICS Codes
Governed reference
In simple terms: A NAICS code is the standard way government and many data systems label what a specific business location primarily does.
NAICS code definition: A NAICS code (North American Industry Classification System code) is the official 6-digit industry classification used in the United States, Canada, and Mexico to classify an establishment (a single operating location) by its primary economic activity.
- What it measures: the activity with the largest share of output at that location (often revenue/value of shipments; other proxies can be used when needed).
- How it groups industries: by similar production processes, not brand labels or product names alone.
- Verification: confirm the 6-digit definition and scope notes (included/excluded) on the code detail page when accuracy matters.
For methodology and boundary interpretation, use: NAICS Classification & Reference Center. To browse the hierarchy, use the NAICS Code Lookup Directory.
- What a NAICS code is (and what it’s not)
- NAICS structure: 2-digit to 6-digit
- Why the 6th digit matters (National Industry level)
- Process-based vs product-based (baker vs retailer)
- How to read a NAICS code (worked example)
- Primary NAICS code and the establishment rule
- Dominant activity (plurality rule)
- Helpful NAICS tools
- 8-digit “extended” NAICS codes (marketing use)
- NAICS history and updates
- How NAICS is used
- FAQ
What a NAICS Code Is (And What It’s Not)
NAICS (the North American Industry Classification System) is a standardized framework used to classify economic activity in a consistent way across North America. A NAICS code describes what a specific location does as its primary activity, using a hierarchy that becomes more specific as digits are added.
A NAICS code is…
- A standardized, hierarchical code for industry classification
- Assigned at the establishment level (one operating location)
- Designed to group establishments by similar production processes
A NAICS code is not…
- A marketing slogan, brand label, or product category
- A company-wide tag that must apply to every location
- A full description of every line of business at a multi-activity site
If you need the legacy system, see What Is a SIC Code?. For direct comparison, see SIC Codes vs NAICS Codes.
NAICS Structure: 2-Digit to 6-Digit
NAICS is hierarchical. Each additional digit narrows the definition—from broad sectors to a specific national industry. The goal is to get to the most specific 6-digit definition that matches the establishment’s dominant activity.
In many programs and operational workflows, the working standard is the 6-digit NAICS code.
Example drill-down (real code path)
Sector (2)
11 Agriculture, Forestry, Fishing & Hunting
Subsector (3)
111 Crop Production
Industry Group (4)
1113 Fruit & Tree Nut Farming
Industry (5)
11133 Noncitrus Fruit & Tree Nut Farming
National Industry (6)
111331 Apple Orchards
Use the same “general → specific” logic for any sector.
Official NAICS background is published by the U.S. Census Bureau: U.S. Census NAICS page.
Why the 6th Digit Matters (The “National Industry” Level)
National refinements: Digits 1–5 are generally harmonized across the United States, Canada, and Mexico. The 6th digit provides national industry refinement—so a 5-digit category may be shared across countries while the 6-digit definition can differ by country.
When precision matters, verify the 6-digit definition and scope notes on the code detail page.
Process-Based vs Product-Based (Baker vs Retailer)
Two establishments can “sell the same product” but belong to different NAICS industries because their primary process differs. NAICS focuses on whether the establishment primarily produces goods/services or primarily resells them.
Makes bread (production) and sells it
Dominant activity is producing the product
Buys bread and sells it (no production)
Dominant activity is resale
Same product, different process: classification follows whether the establishment primarily produces or resells.
How to Read a NAICS Code (Worked Example)
NAICS codes read left-to-right from general to specific. Each digit level adds specificity to the industry definition.
Sector (2)
11 Agriculture, Forestry, Fishing & Hunting
Subsector (3)
111 Crop Production
Industry Group (4)
1113 Fruit & Tree Nut Farming
Industry (5)
11133 Noncitrus Fruit & Tree Nut Farming
National Industry (6)
111331 Apple Orchards
Extended (8)
111331-02 Marketing-level refinement (example)
The “extended” example is not an official government NAICS level; it is a commercial segmentation layer used in some datasets.
Primary NAICS Code and the Establishment Rule
Each establishment is assigned one primary NAICS code representing the location’s dominant economic activity. Dominance is typically determined using measurable proxies such as revenue or value of shipments, with payroll, hours, or headcount used when revenue-based measures are unavailable.
Critical rule: NAICS is assigned by establishment (business location), not enterprise-wide brand. A company can have multiple primary NAICS codes across locations if dominant activities differ by site.
See: How Many NAICS Codes Can a Company Have? • What Is an Establishment in NAICS? • What Is an Enterprise in NAICS?
Example: Different locations can have different NAICS codes
Corporate HQ
551114 Corporate, Subsidiary, and Regional Managing Offices
Manufacturing plant
336111 Automobile Manufacturing
Retail dealership
441110 New Car Dealers
Same company, different NAICS codes—because each location has a different primary activity.
Dominant Activity (Plurality Rule)
Clarification: “Primary” does not require an activity to exceed 50%. It means the largest share (plurality) at that establishment.
“Primary” means the activity with the largest share of measurable output at the establishment. In practice, people say “51% rule,” but many establishments are split where no activity exceeds 50%. In those cases, the primary NAICS code is still the largest share (plurality).
Need a defensible classification workflow?
This page defines NAICS. For boundary interpretation (included/excluded) and step-by-step classification methodology, use: NAICS Classification & Reference Center.
Helpful NAICS Tools
NAICS lookup & directory (browse/search)
Search by activity keywords or browse the hierarchy, then open the code detail page to confirm the definition.
Step-by-step guide: How Do I Find My NAICS Code?
Governance & accuracy references
Use governance references when you need consistent, audit-ready interpretation across teams and time.
NAICS Classification & Reference Center
NAICS Data Governance & Versioning
NAICS Codes for Government Programs & Compliance
Code conversion tools (cross-reference)
- NAICS-to-SIC Cross Reference – Convert NAICS codes to SIC
- SIC-to-NAICS Cross Reference – Convert SIC codes to NAICS
For manufacturing and other sector drill-downs, browse the hierarchy in the NAICS Code Lookup Directory.
8-Digit “Extended” NAICS Codes (Marketing Use)
The official NAICS structure ends at 6 digits. Some commercial datasets add an “extended” layer (often described as 8-digit or marketing-level) for finer segmentation in list building and analytics.
Important: Extended codes are not a government NAICS standard. They are a commercial segmentation layer used beyond official 6-digit categories.
Explore extended segmentation: Extended NAICS Code Lookup Directory.
NAICS History and Updates
NAICS replaced the legacy SIC system to modernize industry classification and align industry groupings across North America. It is updated periodically to reflect the evolving economy.
| Year | Milestone | Meaning |
|---|---|---|
| 1997 | NAICS formally adopted | Replaced SIC with process-based North American alignment |
| 2002 | NAICS revision | Updated categories to reflect structural economic shifts |
| 2007 | NAICS revision | Refined definitions and boundaries to reduce ambiguity |
| 2012 | NAICS revision | Added/updated categories for new and evolving industries |
| 2017 | NAICS revision | Continued modernization; many systems still reference these codes |
| 2022 | NAICS revision (current published revision) | Verify older code mappings have not been renamed or re-scoped |
| 2027 | Next scheduled revision cycle | Planned update cycle to reflect economic evolution |
Official reference: U.S. Census NAICS page. Governance context: NAICS Data Governance & Versioning.
How NAICS Is Used
Programs & reporting
Used in reporting, eligibility checks, and procurement workflows where scope needs to be consistent.
Banking & underwriting
Used to group risk and compare establishments within consistent industry definitions.
Analytics & benchmarking
Used to compare peers and measure trends using consistent industry groupings.
FAQ
- Does NAICS end at 6 digits?
Yes. The official government NAICS structure ends at 6 digits. Some commercial datasets use an additional extended layer for segmentation, but it is not an official NAICS standard. - Why is the 6th digit called “National Industry”?
Digits 1–5 are generally harmonized across the United States, Canada, and Mexico. The 6th digit provides national industry refinement, so the 6-digit detail can vary by country even when the 5-digit category is shared. - Can a company have more than one NAICS code?
Yes. NAICS is assigned at the establishment level, so different locations of the same company can have different primary NAICS codes if dominant activities differ. - How do I pick the correct NAICS code?
Identify likely candidates, then verify the official definition and scope notes on the code detail page. If you need boundary interpretation rules, use the NAICS Classification & Reference Center. - What if my establishment performs multiple activities?
Classify based on the activity generating the largest share of measurable output (commonly revenue/value of shipments). If that proxy is unavailable, use a consistent secondary proxy (payroll, hours, headcount) and document the method. - Why does my NAICS code matter for SBA programs?
In many SBA programs, the NAICS code determines which size standard is applied to evaluate small business eligibility. Accurate classification can affect eligibility and contracting outcomes.
Need help with NAICS classification? Contact Us.