Overview
A NAICS code is a unique six-digit identifier used to classify businesses by industry. The North American Industry Classification System (NAICS) code is used by government agencies and businesses to collect economic data, categorize business entities for analysis, and facilitate the adoption of industry standards.
Key Functions and Uses
- NAICS size standards determine if a business is "small" or "other than small," affecting contracts set aside for small businesses.
- Insurance and financing terms use NAICS codes to assess risk.
- You select the NAICS code that defines your primary activities, and multiple codes may apply if you have several lines of business.
The NAICS code for equipment rental is 532412, which includes heavy equipment rentals.
Detailed Structure
The NAICS code’s structure is as follows:
- The first two digits identify the major business sector.
- The third digit identifies the subsector.
- The fourth digit identifies the industry group.
- The fifth digit enables industry comparison.
- The sixth digit specifies country-specific details.
For example, soybean cultivating has the NAICS code 111110.
How to Find Your NAICS Code
Government agencies like the GSA adopt NAICS codes for contractors based on their products and services.
The IRS Business Code Lookup Tool and the NAICS Association website provide tools to search and find NAICS codes.
Marketing and Risk Assessment
NAICS codes allow for targeted marketing efforts on companies in similar or identical industries. Financial institutions often use a company’s NAICS code to assess loan risk.