NAICS & SIC Explained 📖

16Apr 2023 by Moonthemes 55 Comments

Do you know what the Business Code for IT Consulting is and how it’s classified under NAICS and SIC codes? If not, don’t worry; you’re not alone. It can be challenging to navigate through all the industry codes and figure out which one applies to your business.

In this article, we’ll explore what the Business Code for IT Consulting is and its corresponding NAICS and SIC codes. We’ll also discuss why having the right code is crucial for your business and how it impacts things like taxes and government reporting requirements.

According to a recent report by IBISWorld, the IT consulting industry has an annual revenue of over $465 billion in the United States alone. As such, it’s vital that IT consulting firms have the correct classification code for their business. In the following sections, we’ll dive deeper into what these codes are and how they apply to IT consulting.

What is a Business Code?

A Business Code is a numeric code assigned to different industries for classification and analysis purposes. It helps in identifying the primary business activities of a company and is used by various government agencies, such as the IRS, SBA, and Census Bureau, for statistical reporting and taxation purposes.

The most commonly used codes for IT Consulting are NAICS (North American Industry Classification System) and SIC (Standard Industrial Classification).

What is a NAICS Code

What is a NAICS Code?

A NAICS code is a series of numbers assigned to businesses to classify and categorize them based on the type of industry they belong to. It stands for North American Industry Classification System and is used by government agencies, researchers, and analysts to gather data and statistics on different industries.

NAICS Code Meaning

The numbering system for NAICS codes works in the following manner:

  • Numbers 1 and 2:  Indicate the economic sector in which the company is located
  • Number 3: You will find the company’s sub-sector
  • Number 4: Indicates the industry group that the company is a member of
  • Number 5: The company’s particular industry is identified
  • Number 6: The national industry of the company is identified

As a result, every NAICS code relates to an individual business and describes what it does

NAICS Code Meaning

NAICS Code for IT Consulting

When it comes to identifying the correct NAICS code for IT consulting, things can get a little tricky. NAICS codes are used by businesses and government agencies to classify different industries based on their primary activity. The NAICS code for IT consulting falls under the larger category of professional, scientific, and technical services, which includes a wide range of sub-industries.

To determine the appropriate NAICS code for your IT consulting business, you’ll need to consider the types of services you offer and the industries you serve. For example, if your company primarily provides software development and programming services to clients in the healthcare industry, your NAICS code would likely fall under 541511 – Custom Computer Programming Services.

Here is a list of all NAICS codes for IT consulting:

Custom Computer Programming Services 541511
Computer Systems Design Services 541512
Computer Facilities Management Services 541513
Other Computer Related Services 541519

It’s important to note that while these codes are the most relevant for IT consulting, there may be other codes that could apply depending on the specific services offered by your business. It’s always a good idea to consult with a business advisor or industry expert to ensure you’re using the correct code for your business.

What is a SIC Code?

A Standard Industrial Classification (SIC) code is a four-digit code that identifies a particular industry. It was replaced by the North American Industry Classification System (NAICS) in 1997, but some organizations still use the SIC code system for specific purposes.

SIC Code Meaning

SIC Code Meaning

The SIC codes have four digits and there are more than 1,000 unique codes nationally recognized.

  • The first two digits are used to identify the major group, which is then further divided into 12 groups at higher levels
  • The third digit reveals a little more detail – more specific industry groupings
  • The fourth digit shows the industry sector

The official US Standard Industrial Classification code is always four digits; however, some private companies use six, seven, or eight-digit versions of these codes for more specific marketing or research.

SIC Code for IT Consulting

The Standard Industrial Classification (SIC) system was developed by the US government to categorize and track businesses based on their primary activity. IT consulting falls under SIC code 7371, which includes computer programming services, systems analysis services, and data processing services.

Other SIC codes that may be relevant to IT consulting include 7379 (computer related services, not elsewhere classified), 8711 (engineering services), and 8742 (management consulting services).

While the North American Industry Classification System (NAICS) has replaced the SIC system for many purposes, some organizations still use SIC codes. It’s important for IT consulting businesses to understand both systems and ensure they are properly classified.

Here is a list of all SIC codes for IT Consulting:

Computer Programming Services 7371
Prepackaged Software 7372
Computer Integrated Systems Design 7373
Computer Processing and Data Preparation and Processing Services 7374
Health and Allied Services, Not Elsewhere Classified 7375
Information Retrieval Services 7376
Computer Facilities Management Services 7377
Computer Rental and Leasing 7378
Computer Related Services, Not Elsewhere Classified 7379

Knowing the right SIC code for your business can help with market research, competitive analysis, and government reporting requirements. It’s important to regularly review and update your classification as your business evolves.

What is the Difference Between NAICS and SIC Codes?

NAICS and SIC codes are both used to classify businesses based on their activities. NAICS is newer and more comprehensive, while SIC is older and less flexible. NAICS codes have been adopted by many countries, including the US, Canada, and Mexico. Businesses can use these codes to identify potential customers or partners, research competitors, and track industry trends.

Conclusion

To recap, in this article, we discussed the two primary business codes for IT consulting: NAICS and SIC. We covered the differences between the two coding systems and how businesses can use them to classify their services accurately.

If you found this information helpful, be sure to check out BetterStudio’s blog for more tutorials on related topics. Our team of experts is always sharing valuable insights to help you grow your business and improve your skills.

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Thank you for reading this article, and we hope you found it informative. If you have any questions or comments, please feel free to leave them in the comment section below. Our team will be happy to address any concerns you may have.

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