NAICS Code

The North American Industry Classification System (NAICS) Code is a standardized system used to classify business establishments by their economic activities. It helps in the consistent collection and analysis of industry data across the U.S., Canada, and Mexico. NAICS codes are hierarchical, consisting of six digits that provide detailed information about specific industries.

The North American Industry Classification System (NAICS) Code is essential for categorizing businesses based on their economic actions. This classification system helps government agencies, businesses, and researchers to analyze and compare industry data consistently.

• Standardization & Assignment: The unified codes are six digits long, with each digit providing more specific information. Each code represents a specific industry sector and activity. Your businesses will self-assign the code(s) that aligns with your primary business activity, and then provide it to outside organizations when asked.
• Multinational Economic Insight: Used by governments and businesses across the U.S., Canada, and Mexico for cross-border economic comparisons, analysis, and decision-making.
• Regular Updates: NAICS codes are updated to reflect changes in the economy every five years.
• Business Utilization: NAICS codes must be identified for businesses like government contractors, highly regulated industries (like healthcare, finance, or environmental services), economic reporting & analysis organizations (like businesses involved in economic reporting or contributing to industry surveys and data collection), and government grant or loan ****applicants. Some jurisdictions require an NAICS code when registering or licensing your business as well.

The North American Industry Classification System (NAICS) Code is a standard used by federal statistical agencies in the U.S., Canada, and Mexico to classify business establishments consistently according to their economic activities. Formerly known as the Standard Industrial Classification (SIC) system, the NAICS was developed collaboratively by the United States, Canada, and Mexico in in the late 1990’s. This shared classification system enables direct comparison of economic data across the three North American countries. Because its primary purpose is data driven, it is not assigned by an outside party, but is rather self-volunteered by a business.

NAICS Structure

NAICS codes are hierarchical, starting from broad economic sectors and narrowing down to specific industries. The six-digit code structure is as follows:

• The first two digits represent the wider sector (e.g., Manufacturing, Retail Trade).
• The third digit represents the subsector.
• The fourth digit represents the industry group.
• The fifth digit represents the NAICS industry.
• The sixth digit represents the national industry, unique to each country.

Example of NAICS Codes

For instance, the code 511210 stands for Software Publishers:

• 51: Information
• 511: Publishing Industries (except Internet)
• 5112: Software Publishers
• 511210: Software Publishers (specific to the national level).

Applications of NAICS Codes

• Economic Analysis: Government agencies use NAICS codes to track economic activity and trends, aiding in policy-making and economic planning.
• Business Research: Companies use these codes for market research, competitive analysis, and strategic planning.
• Regulatory Compliance: Some regulations and reporting requirements are based on NAICS codes.

Updates and Revisions

NAICS is revised every five years to reflect the evolving economy. The most recent update was in 2017, with prior updates in 2012 (as of June, 2024). These updates ensure that new and emerging industries are accurately represented.

Examples of Businesses Using NAICS Codes

• A construction company applying for a state infrastructure project to work on water and sewer lines could utilize code 237110.
• A healthcare provider meeting federal compliance for patient data protection could utilize code 621111.
• A tech startup seeking a government innovation grant in cloud storage service could utilize code 518210.
• A footwear manufacturing firm registering for business in a new state could utilize code 316210.
• An autoparts retail chain conducting market research for expansion planning could utilize code 441330.

To self-assign your business a NAICS code, visit the North American Industry Classification System (NAICS) U.S. Census Bureau website, and begin by choosing the most relevant year.

How to Pronounce NAICS

There are a few options when pronouncing NAICS - the first and most simple is to pronounce each initial that is a part of the acronym (”N-A-I-C-S”). You can also pronounce it “NAKES”, sounding like snakes.