What is a SIC Code, Who Needs a SIC Code, and How to Find Yours?

What is an SIC code?

A Standard Industrial Classification (SIC) code is a numerical system used to classify businesses and industries. Developed by the US government in the 1930s, SIC codes categorise businesses into distinct sectors based on their primary activities. Each SIC code is a four-digit number that provides a way to identify the industry sector of a business. For instance, SIC codes help in statistical analysis, regulatory compliance, and economic research by grouping similar business activities together. Though the system has been largely replaced by the North American Industry Classification System (NAICS) in many countries, SIC codes are still in use and relevant for certain administrative purposes.

How SIC codes are used?

• Industry classification: SIC codes categorise businesses into specific sectors, aiding in understanding industry trends.
• Data collection: Governments and organisations use SIC codes to collect and analyse economic data.
• Regulatory compliance: Businesses use SIC codes to comply with industry-specific regulations.
• Market research: Companies use SIC codes to identify and target industry-specific markets.
• Business listings: SIC codes are often used in business directories and databases to organise listings by industry.

Structure of the SIC Code

The SIC code is a four-digit system that starts with a business's general characteristics and becomes more specific. The first two digits show the main industry group, while the third and fourth digits give more detailed industry information.

The system divides the economy into 11 broad divisions, which are split into 83 two-digit groups, then into 416 three-digit industry groups, and finally 1005 four-digit industry sectors. The four-digit level is the most specific and identifies a business's exact category.

Though some agencies and organisations add extra levels to the SIC code, these are not part of the official classification.

Changing from SIC code to NAICS

The transition from SIC to the North American Industry Classification System (NAICS) reflects an evolution in industry classification. NAICS, introduced in 1997, offers a more detailed and updated framework than SIC codes. This change aims to accommodate the modern economic landscape, incorporating new industries and technological advancements. Businesses and researchers shifting to NAICS will find that it provides a more precise classification, enhancing data accuracy and industry analysis. The shift requires updating databases and systems to align with NAICS, ensuring consistency and relevancy in industry classification.

How to find your SIC code?

• Check business documents: Look at your company’s registration documents or annual reports.
• Consult industry associations: Industry groups often provide SIC code directories.
• Online databases: Use online SIC code lookup tools available through government or industry websites.
• Company directory services: Business directories often list SIC codes alongside company information.
• Contact industry regulators: Regulatory bodies can assist in identifying the correct SIC code for your company.

How to read SIC codes?

• First digit: Represents the broad industry sector (e.g., manufacturing, retail).
• Second digit: Narrows down to a major industry group within the sector.
• Third digit: Specifies an industry sub-group.
• Fourth digit: Details the specific industry or business activity.
• Example: SIC code 4512 refers to 'Air Transportation, Scheduled', with each digit refining the category.

How to find my company's SIC code?

• Company records: Review your company's official documents for SIC codes.
• Industry associations: Contact industry associations for SIC code information.
• Online lookup tools: Use SIC code search tools on government or industry websites.
• Business directories: Check directories that list SIC codes for companies.
• Regulatory bodies: Reach out to regulatory agencies for assistance in finding the SIC code.

Why is a SIC code important?

A SIC code is crucial for several reasons. It standardises the classification of businesses, allowing for consistent economic analysis and comparison. SIC codes help businesses comply with regulatory requirements, streamline market research, and facilitate economic data collection. They also assist in identifying industry trends and benchmarking performance against industry peers. Despite the rise of NAICS, SIC codes remain important for historical data and specific regulatory contexts.

SIC code format

SIC codes follow a four-digit numerical format. Each digit provides specific information about the industry classification:

• First Digit: Major industry group (e.g., 2 for manufacturing).
• Second Digit: Industry sub-group within the major group.
• Third Digit: Specific industry segment.
• Fourth Digit: Detailed industry activity.

SIC codes range and division

Conclusion

Understanding SIC codes is essential for businesses to navigate industry classifications, regulatory compliance, and market research. While SIC codes offer a historical perspective and remain in use for specific purposes, transitioning to NAICS codes can provide a more contemporary classification system. Companies should ensure their systems reflect the appropriate codes to maintain accurate industry data. For businesses seeking financial support or expansion, considering Bajaj Finserv Business Loan might be a viable option to facilitate growth and adapt to industry changes.