NAICS Codes: What They Are and How Small Businesses Benefit
A NAICS code is a 6-digit industry classification code used by the U.S. government. Learn what NAICS codes are, how to find yours, and how they help small businesses access contracts, financing, and more.
Bizee Editorial Staff
Editorial Team
Introduction
A NAICS code is a 6-digit number that identifies your business's industry. The federal government uses it to classify businesses across the U.S., Canada, and Mexico. For small business owners, having the right NAICS code opens doors to government contracts, SBA lending programs, and industry benchmarking data you can use to run your business.
What is a NAICS code?
A NAICS code is a 6-digit numeric code that identifies a business's primary industry based on its main economic activity. NAICS stands for the North American Industry Classification System — a standardized framework developed jointly by the U.S., Canada, and Mexico and maintained by the U.S. Office of Management and Budget.
The code is hierarchical. The first 2 digits identify the broad economic sector — things like retail trade, construction, or professional services. Each additional digit narrows the classification: the 3rd digit identifies the subsector, the 4th the industry group, the 5th the NAICS industry, and the 6th the specific national industry.
Federal statistical agencies use NAICS codes to collect and publish data about the U.S. economy. That same data is what lenders, researchers, and government buyers use when they look at your industry — which is why picking the right code matters more than most people expect.
Why NAICS codes matter for small businesses
NAICS codes aren't legally required for most businesses, but they unlock real advantages — especially if you want to pursue government contracts, SBA loans, or grants. The code you choose determines whether you qualify as a small business under the SBA's size standards, which are set by NAICS industry.
Government contracting
To bid on federal contracts, you need to register in SAM.gov — the federal System for Award Management. Your NAICS codes go into that registration, and contracting officers use them to find businesses that match what they're buying. Each contract opportunity is assigned a NAICS code, and your business needs to list that code to be considered.
SBA size standards and lending
The SBA uses NAICS codes to define what counts as a small business in each industry. Size limits vary — some industries measure by annual revenue, others by employee count. If your NAICS code doesn't match your actual business activity, you could be measured against the wrong standard and miss programs you'd otherwise qualify for.
Financing and lending
Banks and credit unions use your NAICS code to categorize the type of industry risk your business presents. That classification can influence which loan products are available to you and how lenders assess your application. Having a code that accurately reflects your business gives lenders a clearer picture of what you do.
How to find and use your NAICS code
You self-assign your NAICS code — no government approval is required. The process is to identify the business activity that generates the largest share of your revenue, then find the 6-digit code that best describes it. The U.S. Census Bureau's NAICS search tool at census.gov lets you search by keyword and review full industry definitions before you commit to a code.
Read the full industry description for any code you're considering — not just the title. The Census Bureau includes illustrative examples and cross-references that help you confirm the scope matches what you actually do. A business can have more than 1 NAICS code, but you'll designate 1 primary code in SAM.gov that reflects your main line of work.
The Office of Management and Budget reviews NAICS codes every 5 years to reflect changes in the economy. If your industry evolves or your business shifts its primary activity, check whether a different code is a better fit at the next revision cycle — or update your SAM.gov registration to reflect a more accurate code sooner.
Frequently asked questions
A NAICS code is a 6-digit number that identifies a business's primary industry. NAICS stands for the North American Industry Classification System. Federal agencies in the U.S., Canada, and Mexico use NAICS codes to collect economic data, and U.S. government buyers use them to find businesses for federal contracts.
It depends. A NAICS code isn't legally required for most businesses. But if you want to bid on federal contracts, register in SAM.gov, apply for SBA loans, or qualify for certain grant programs, you'll need one. Even if none of those apply today, having a code costs nothing and can be useful later.
Use the U.S. Census Bureau's free NAICS search tool at census.gov. Search by keyword describing your primary business activity, then read the full industry descriptions for candidate codes to find the one that best matches what you do. You self-assign the code — no government approval is needed.
No, not to form an LLC. A NAICS code isn't part of the LLC formation process. You'll need one if you register in SAM.gov for federal contracting, apply for SBA programs, or open certain business bank accounts where the lender asks for your industry classification.
No. NAICS codes are self-assigned. You choose the code that best describes your primary business activity — no agency reviews or approves your selection. If you list a code in SAM.gov and a contracting officer believes it doesn't match the work, they may flag it, but there's no formal approval process.
No. There's no fee to get a NAICS code and no annual renewal cost. The code is free to self-assign and free to update. The Census Bureau's search tool is also free to use.
It depends on where the code is listed. If it's in your SAM.gov registration, log in and update your entity profile directly. If a government agency is using an incorrect code in their data collection, contact that agency to request a correction. The Office of Management and Budget reviews the NAICS structure every 5 years, but you don't need to wait for a revision cycle to update your own registration.
Both are industry classification systems used by the U.S. government, but NAICS replaced SIC as the federal standard in 1997. NAICS uses a 6-digit code and covers more industries — including newer sectors like technology and professional services. SIC codes are still used by some agencies and private databases, but NAICS is the current standard for federal programs and contracting.
