What Is An Naics Code For LLC? Free Guide 2024
Reviewed by Randolph Vialva, MBA
The article is checked by our editorial team, Which includes entrepreneurs who are painfully aware of how overwhelming and challenging it is to start a business for the first time.
An LLC (Limited Liability Company) is a type of legal structure for a company and is not specifically associated with any NAICS (North American Industry Classification System) code. The NAICS codes are used for business classification based on the type of activity they are primarily engaged in.
LLCs can be engaged in a wide variety of business activities and can fall under different NAICS codes depending on their industry and the type of products or services they offer. Therefore, you would need to determine the primary business activity of the LLC to identify the appropriate NAICS code.
Read More: Best LLC Service 2024
What Is A Naics Code?
NAICS code cannot be assigned to an LLC as it’s a legal structure, not an industry. A company can have multiple NAICS codes. This is common for companies that operate in more than one industry or offer a range of products or services. However, one primary NAICS code should be chosen that best represents the main business activity of the companies. An additional or secondary NAICS code can be used to describe other activities or products/services offered by the company.
The wrong NAICS code can be assigned to a company. This can happen if the company is misclassified due to errors in reporting or if the business’s primary activity changes over time. Using the wrong NAICS code can have consequences, such as inaccurate market research or difficulty in obtaining government contracts that are specific to a particular industry sector. Therefore, it’s important for companies to ensure that they have correctly identified their primary activity and selected the appropriate NAICS code(s) to avoid any potential negative impacts.
To correct the mistake, the company should identify the correct NAICS code that accurately reflects its primary activity. This can be done by using the NAICS search tool or consulting with a company advisor. Once the correct code(s) have been identified, the company should update its records with the appropriate government agencies and update any marketing materials or other documents that include the NAICS code.
If a company is unsure of the right NAICS code to use, they can use the NAICS search tool or consult with a company advisor to help them identify the correct code.
Why Do You Need A Naics Code For LLC?
Codes are used for business classification based on the type of activity they are primarily engaged in. There are several reasons why you might need a NAICS code:
- To identify potential customers or suppliers: Using an NAICS code, you can search for companies within a specific industry or sector, which can help you identify potential customers or suppliers.
- To analyze industry trends: a NAICS code can be used to analyze industry trends, such as revenue growth, employment rates, and other key metrics.
- To obtain government contracts: NAICS codes are often used by the government to classify companies for the purpose of awarding contracts. Having the appropriate NAICS code(s) for your company can increase your eligibility for government contracts.
- To benchmark your company: a NAICS code can be used to benchmark your company against others in the same industry, which can help you identify areas for improvement and make informed company decisions.
How Are Naics Codes Used?
An LLC’s NAICS code helps the company understand their industry and market, and make informed decisions based on that understanding. A NAICS code provides a standardized way to classify and analyze companies across industries and is a valuable tool for companies, researchers, and government agencies. They can be used to collect, analyze, and report statistical information and statistical data for an economic sector, conduct market research and industry comparisons for revenue-producing lines, understand the business economy and annual sales, organize or determine multiple business activities, and determine eligibility for certain government programs or an industry group. You can have multiple codes from the industry classification system NAICS. The primary and secondary code is from a six-digit coding system. They are not self-assigned; the appropriate code is determined by federal and state governments depending on the type of private or government work being conducted. The particular code will determine a business’ eligibility to apply for government grants and programs.
By LLC Owners
For LLC owners, the coding system defines the primary activity of their business. You can get a NAICS code quickly. This can be helpful in a number of ways, including:
- Applying for business licenses and permits: Many states and municipalities use a NAICS code to determine which licenses and permits are required for a particular business activity.
- Obtaining business loans: Banks and other lenders may use a NAICS code to evaluate the risk and creditworthiness of a business obtaining loans.
- Benchmarking performance: Most businesses can use a NAICS code to benchmark their performance against other companies in the same industry, which can help identify areas for improvement and inform business decisions.
- Conducting market research: LLCs can use a NAICS code to conduct market research and understand the competitive landscape and consumer behavior within their industry.
- Eligibility for government programs and contracts: LLCs may need to use NAICS codes to determine eligibility for government programs and contracts, as well as to complete required government reporting.
By Government
For the federal government, the codes classify companies and activities, including:
- Collecting economic data: The government collects data on companies and industries to help inform economic policy decisions. NAICS codes are used to categorize companies and industries for data collection purposes.
- Administering government programs: Many government programs are designed to support small businesses and industries in specific sectors. NAICS codes are used to determine which businesses are eligible for these programs.
- Contracting and procurement: The government uses NAICS codes to classify businesses and industries for contracting and procurement purposes. This helps the government identify potential contractors and vendors for government projects and purchases.
- Regulatory compliance: Businesses are required to comply with a variety of government regulations, including environmental regulations, labor laws, and safety standards. NAICS codes are used to help determine which regulations apply to which businesses.
- Research and analysis: The government uses NAICS codes to conduct research and analysis on different industries and sectors, which can help inform policy decisions, economic forecasts, and other government activities.
How To Lookup For LLC Naics Codes?
To look up a NAICS code, you will typically need to provide information about your business’s industry, products or services offered, or other key characteristics. Once you have identified the appropriate NAICS code(s), you can use them for various purposes, such as benchmarking performance, conducting market research, and applying for government programs and contracts.
- NAICS Association: The NAICS Association provides a free search tool on their website that allows you to search for NAICS codes by keyword, industry, or code.
- US Census Bureau: The US Census Bureau maintains a searchable database of NAICS codes and descriptions on its website.
- Business databases: Many business databases, such as Hoovers and Dun & Bradstreet, provide NAICS code information for companies listed in their databases.
- Business advisors: Business advisors, such as SCORE and SMB Development Centers, can help business owners identify the appropriate NAICS codes for their businesses.
How To Get A Naics Code For Your LLC?
There is no NAICS codes application portal, and the codes are not self-assigned. instead, you use the lookup tool. You can look up codes using several resources, including:
- NAICS Association: The NAICS Association provides a free search tool on their website that allows you to search for NAICS codes by keyword, industry, or code.
- US Census Bureau: The US Census Bureau maintains a searchable database of NAICS codes and descriptions on its website.
- Business databases: Many business databases, such as Hoovers and Dun & Bradstreet, provide NAICS code information for companies listed in their databases.
- Business advisors: Business advisors, such as SCORE and Small Business Development Centers, can help business owners identify the appropriate NAICS codes for their businesses.
What If You Can’t Find A Naics Code Matching Your LLC’s Activities?
The Small Business Administration uses the codes as part of its program eligibility requirements and government contracting processes. They help the SBA to determine a business’s eligibility for various federal programs, including small business loans, certifications, and contracting opportunities.
For example, the SBA uses NAICS to determine whether a business qualifies as a small business for the purpose of bidding on government contracts. The SBA sets size standards for different industries based on NAICS codes to ensure that small businesses have a fair opportunity to compete for government contracts.
If you are unable to find a NAICS (North American Industry Classification System) code that matches your activities, you may need to choose a code that closely aligns with your activities, even if it is not a perfect match. It’s important to note that NAICS codes are designed to be broad and cover a wide range of activities within an industry, so it is common for businesses to find that no exact code matches their specific activities. In this case, you should choose the code that best describes your primary activities.
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ZenBusiness
ZenBusiness was founded in 2017 and bills itself as a one-stop shop for small company preparation. The platform helps small companies launch, operate, and grow the company, and includes access to many services that simplify the set-up and launch process, and it is automated, which means the owner can quickly and efficiently file needed paperwork.
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Conclusion
NAICS (North American Industry Classification System) is a standardized system used to classify activities into industries. It is needed for market research, government contracting, and economic analysis. To get a NAICS code, identify the primary activities of your business and use the search tool or consult with a licensed professional. There are 20 types of NAICS title codes, each describing the primary activity:
- Agriculture, Forestry, Fishing, and Hunting
- Mining, Quarrying, and Oil and Gas Extraction
- Utilities
- Construction
- Manufacturing
- Wholesale Trade
- Retail Trade
- Transportation and Warehousing
- Information
- Finance and Insurance
- Real Estate and Rental and Leasing
- Professional, Scientific, and Technical Services
- Management of Companies and Enterprises
- Administrative and Support and Waste Management and Remediation Services
- Educational Services
- Health Care and Social Assistance
- Arts, Entertainment, and Recreation
- Accommodation and Food Services
- Other Services (except Public Administration)
- Public Administration
Each industry sector is assigned a two-digit code, and each subsector, group, and industry is assigned a unique four-, five-, or six-digit code within its respective sector. The system is regularly updated to reflect changes in the economy and new industries
Frequently Asked Questions (FAQs)
The NAICS is a standardized classification system used to categorize business establishments into industry sectors based on their primary economic activity. It is jointly developed and maintained by the statistical agencies of Canada, Mexico, and the United States. The NAICS system is a hierarchical structure that organizes companies into 20 industry sectors, which are further divided into subsectors, groups, and industries. Each industry sector is assigned a two-digit code, and each subsector, group, and industry is assigned a unique four-, five-, or six-digit code within its respective sector.
NAICS codes are used by government agencies, commercial lenders, small business loan companies, researchers, and companies for a variety of purposes, including market research, economic analysis, and government contracting. By classifying companies into industries, the NAICS system provides a standardized way to compare and analyze economic activity across different regions and time periods.
NAICS codes are not required for every company structure, but they are required for LLCs. When a company registers for an LLC, it may be required to provide a NAICS code to the relevant government agency or licensing authority. If a company is unsure which NAICS code to use, it can use the search tool or consult with a company advisor. If your company applies or plans to apply for federal funding or contracts, it will require a NAICS code.
A NAICS code is not applied for but rather identified based on the primary activities of a company. Use the NAICS search tool or consult with a company advisor. There is no renewal cost for your specific code or specific industries, and you don’t have to solicit public comments if you need a NAICS code for various industries. You can get new codes if your company expands or begins operating within a different classification. For example, a coffee shop and a nail salon are different business types and would have different codes.
Other businesses can have more than a standard industrial classification code if they have multiple primary activities that fall into different industries. Having multiple codes can help companies more accurately benchmark their performance and conduct market research.
A SIC code or Standard Industrial Classification is an older system that was used to categorize company establishments into industry sectors based on their primary activity. The SIC code was developed in the 1930s and was used by the U.S. government until they were replaced by the codes in 1997. While SIC codes are no longer actively maintained or updated, some companies may still use them for historical or comparative purposes.
First, visit the NAICS website and then click the search function. For most companies, first enter a keyword that describes your company, general industry, activities, or desired industry, and then browse the results to determine the best fit.
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- Get federal and state tax ID numbers. (2023). Get federal and state tax ID numbers. [online] Available at: https://www.sba.gov/business-guide/launch-your-business/get-federal-state-tax-id-numbers.
- Bls.gov. (2016). North American Industry Classification System (NAICS) at BLS : U.S. Bureau of Labor Statistics. [online] Available at: https://www.bls.gov/bls/naics.htm.
- Register your business. (2023). Register your business. [online] Available at: https://www.sba.gov/business-guide/launch-your-business/register-your-business.
- Federal Register. (2021). North American Industry Classification System (NAICS) Updates for 2022; Update of Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments; and Elimination of Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises. [online] Available at: https://www.federalregister.gov/documents/2021/07/02/2021-14249/north-american-industry-classification-system-naics-updates-for-2022-update-of-statistical-policy.