NAICS Codes: What They Are and How Small Businesses Benefit from Them
A NAICS code is a 6-digit industry classification number used by federal agencies, lenders, and government contractors. Learn what it is, how to find yours, and why it matters for your business.
Bizee Editorial Staff
Editorial Team
Introduction
A NAICS code is a 6-digit number that identifies your business's industry. Federal agencies, lenders, and government contracting offices all use it. Most businesses aren't required to have one — but having the right code opens doors to government contracts, SBA programs, and financing that would otherwise be harder to access.
What is a NAICS code?
A NAICS code — short for North American Industry Classification System — is a 6-digit number that identifies a business by its primary economic activity. The United States, Canada, and Mexico developed the system together to create a shared framework for classifying industries across North America.
The 6 digits aren't arbitrary. Each level of the code narrows the classification: the first 2 digits identify the broad economic sector, the 3rd identifies the subsector, the 4th the industry group, the 5th the NAICS industry, and the 6th the specific national industry. A business in sector 54 (Professional, Scientific, and Technical Services) that does web design would land at a much more specific 6-digit code than one that does accounting.
Federal statistical agencies use NAICS codes to collect, analyze, and publish data about the U.S. economy. That data feeds into everything from SBA size standards to lender risk assessments — which is why the code you choose matters more than most new business owners realize.
Why NAICS codes matter for small businesses
Most businesses aren't legally required to have a NAICS code — but the code unlocks access to programs and opportunities that require one. Government contracting, SBA lending, and certain grant programs all depend on it. Skipping it doesn't hurt you today, but it can close doors later.
Government contracting
To bid on federal contracts, your business needs to register in SAM.gov — the federal System for Award Management. That registration requires at least one NAICS code. Contracting officers use those codes to search for qualified small businesses, so the codes you list determine which opportunities you're visible for.
You can list multiple NAICS codes in SAM.gov, but you'll designate one as your primary code. That primary code also determines your size standard — the SBA uses NAICS-based thresholds (measured by annual revenue or employee count, depending on the industry) to decide whether your business qualifies as small for federal programs.
Financing and SBA programs
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 you're eligible for and how lenders assess your application. The SBA also uses NAICS codes to define size standards for its lending programs — so the right code can determine whether you qualify.
Market research and competitive intelligence
Because federal agencies publish economic data organized by NAICS code, you can use your code to find industry benchmarks, study competitors, and track trends in your sector. The Bureau of Labor Statistics and Census Bureau both publish data at the NAICS level — which means your code gives you a direct line to publicly available research about your industry.
How to find and assign your NAICS code
You self-assign your NAICS code — no government approval is needed. The process is to identify your primary business activity (the product or service that generates the largest share of your revenue), search for it using the Census Bureau's NAICS lookup tool, and pick the 6-digit code whose description most closely matches what you do.
Start at the Census Bureau's NAICS search tool at census.gov. Enter a keyword that describes your main activity — not your business name. Read the full industry description for any candidate code, including the examples and cross-references listed. The description that matches what you primarily do is your code. If your business spans multiple industries, pick the one that accounts for the most revenue.
The Office of Management and Budget reviews and updates NAICS codes every 5 years. If your industry isn't well represented, you can request a new code through that process — but for most small businesses, the right code already exists. There's no fee to look up or assign a code, and no annual renewal.
Frequently asked questions
A NAICS code is a 6-digit number that identifies a business by its primary industry. The North American Industry Classification System is used by U.S. federal agencies, lenders, and government contracting offices to categorize businesses for data collection, program eligibility, and procurement. You self-assign the code that best matches your main business activity.
It depends. Most businesses aren't legally required to have one. But if you want to bid on federal contracts, register in SAM.gov, apply for certain SBA programs, or access industry-specific financing, you'll need a NAICS code. Even if none of those apply today, assigning one costs nothing and keeps your options open.
No. You self-assign your NAICS code based on your primary business activity. No government agency reviews or approves your selection. The responsibility is yours to pick the code whose description most accurately matches what your business primarily does — and to update it if your main activity changes.
No, not as part of forming an LLC. NAICS codes aren't part of the state formation process. You'll need one if you register in SAM.gov for federal contracting, apply for certain SBA loans, or open accounts with lenders who use it for underwriting. Assigning one early is worth doing — it's free and takes a few minutes.
Use the Census Bureau's free NAICS search tool at census.gov. Enter a keyword describing your primary business activity, review the candidate codes, and read the full industry description — including examples and cross-references — to confirm the match. Pick the 6-digit code that most closely describes what your business primarily does.
No. There's no fee to look up, assign, or use a NAICS code, and no annual renewal requirement. The Office of Management and Budget reviews and updates the NAICS system every 5 years, but that process doesn't require any action or payment from individual businesses.
NAICS replaced the older Standard Industrial Classification (SIC) system in 1997 as the federal standard for classifying industries. NAICS uses a 6-digit code and covers more industries — including many in the service and technology sectors that SIC didn't account for well. Some agencies and private databases still use SIC codes, so you may encounter both.
Yes. NAICS covers business establishments based in the United States, Canada, and Mexico regardless of the owner's citizenship. If your business operates in the U.S., you can assign a NAICS code and use it for federal programs, contracting registration, and financing applications.
