Do I Need a SIC Code?
First implemented in 1937, SIC codes are used to classify businesses according to the primary industry they belong to. Although theyve since been replaced, SIC codes are still widely used in the United States and abroad. Get the inside track on business SIC codes with our informative article. SIC stands for Standard Industrial Classification. Essentially, SIC codes are four-digit codes assigned by the U.S. government to identify a companys primary business. Although the term SIC code has since been replaced (in the United States) by the North American Industry Classification System (NAICS code), theyre still used by firms and government agencies to classify the industry that different businesses belong to. The SIC system breaks the economy down into 11 divisions, which are then divided into 83 two-digit major industry groups. These groups are divided once again into 416 three-digit industry groups. Finally, these industry groups are separated into 1,005 four-digit industries. Each company has a primary business SIC code, which indicates the main business activity of a company. Usually, the main business activity is whatever is the highest revenue driver for your company. Once you understand how to read SIC codes, its much easier to understand the system. The first two digits identify the major industry group, the third digit identifies the industry group, and the fourth digit identifies the industry itself. Lets see an example:  3715  Here, 32 represents the major industry group, which is Transportation Equipment. 371 represents the industry group, which is Motor Vehicles and Motor Vehicle Equipment. Finally, 3715 refers to the industry, which is Truck Trailers. In other words, the SIC code for businesses that manufacture truck trailers is 3715. Companies use business SIC codes for a broad range of activities. Heres a rundown of some of the main uses associated with company SIC codes:  Classification  Companies use SIC codes to classify their customers/potential customers according to industry. Furthermore, firms can use business SIC codes to identify their regional/industrial competitors by searching for companies in similar sectors via SIC codes. Targeted marketing  Marketing departments may use SIC codes to create targeted marketing campaigns, as they can be a very effective way to segment markets. Also, SIC codes may be used in customer research. Administrative  There is a range of different administrative tasks that require SIC codes, including state/federal registrations, and acquiring a DUNS number. Banking  Banks and creditors may use company SIC codes to identify which industry your firm belongs to before making a decision about whether or not to offer credit. Now that you know a little more about SIC codes, youre probably wondering how to identify your own businesss company SIC code. Fortunately, there are many different SIC code lookup tools available online, which should help you find the correct code. You can use the United States Department of Labors Standard Industrial Classification (SIC) System Search tool to search for company SIC codes by keyword, for example. If you know your NAICS code, you can use the NAICS & SIC crosswalks tool to find the corresponding SIC code for your NAICS code. We can help  GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.