Forex TradingEvery public company has a SIC code and uses it when filing certain reports to government agencies including the Securities & Exchange Commission. The SEC uses the company’s SIC code to assign review responsibility for required company filings. The SIC codes are listed in a company’s electronic data gathering, analysis, and retrieval system filings (called EDGAR) to indicate the company’s industry. Among the prominent changes in SIC 1957 was the creation of separate Major Groups in Division A (Agriculture, forestry and fisheries) for commercial and noncommercial farms. Changes also involved the relocation of a number of activities from trade to manufacturing and the expansion of detail in the classification of government.
The discussion around creating the standardized classification of economic activities began in 1934 at an Interdepartmental Conference on Industrial Classification. At that time, there were a number of different, inconsistent classification systems used by individual government agencies. As a result, it was impossible to accurately compare statistics from one agency to another. For example, if one agency reported on production output, and other on employment, there was no way to link that data. Every company has a primary SIC code that indicates its main line of business.
Real estate firms can make better investment selections by identifying which sectors are active in a specific place. Government agencies use NAICS and SIC codes to inform budgeting, resource distribution, and zoning. Using standardized codes across geographies, whether domestic or international, simplifies the approach and improves accuracy. Understanding Standard Industrial Classification (SIC) codes is essential for businesses to navigate industry classifications, regulatory compliance, and market research.
Practical Applications of SIC Codes for Businesses and Government
- Each number in a SIC code has significance; to read a SIC code, each pair of digits must be evaluated independently to discover the overall meaning of the code.
- The result was the North American Industry Classification System, or NAICS, a collaborative effort between Canada, the U.S. and Mexico.
- Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any.
- The U.S. Census Bureau, Bureau of Labor Statistics, Internal Revenue Service and Social Security Administration utilize SIC codes in their reporting, although SIC codes are also used in academic and business sectors.
For example, the industry 5051 (Farm products – raw materials) of SIC 1957 was disaggregated in SIC 1967 into the industries 5052 (Cotton), 5053 (Grain), and 5054 (Livestock). Moreover, some less relevant manufacturing industries in SIC 1957 such were relegated to the “Manufacturing Industries, Not Elsewhere Classified (nec)” code in SIC 1967. This four-digit number is a shorthand descriptor of the type of business a company is engaged in. This fourth digit further refines the business classification into a very specific business category. The NAICS codes were adopted in part to standardize industry data collection and analysis between Canada, the United States, and Mexico, which had entered into the North American Free Trade Agreement.
Standard Industrial Classification (SIC) 1967 (Legacy)
Consequently, the Government Division from SIC 1967 was dropped and government establishments were classified based on their main economic activity and not by ownership form. 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 Interpret SIC Codes?
The SIC code is a four-digit system used for the standard industrial classification of businesses. It begins with general business characteristics and becomes more specific with each digit. The first two digits represent the main industry group, while the third and fourth digits provide more detailed industry information. The system divides the economy into 11 broad divisions, which break down into 83 two-digit groups, 416 three-digit industry groups, and finally 1005 four-digit industry sectors. While some organisations add extra levels to the SIC code, these are not part of the official classification. Understanding this system can help businesses, including those seeking start-up business loans, to classify themselves correctly for regulatory and financial purposes.
The United States Department of Labor maintains an online database that can be used to identify the right SIC code for a business. The overall aim of SIC 1945 was to account for the transformation of the American industrial landscape in the aftermath of World War II. Key changes in SIC 1945 included a substantial revision of manufacturing industries related to textiles and chemicals while basic adjustments were made in few other Industries. SIC code 6512 further refines the classification to nonresidential buildings, while 6513 further refines the classification to operators of apartment buildings.
Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same. The following table is from the SEC’s website, which allows searching for companies by SIC code in its database of filings.11 The acronym NEC stands for “not elsewhere classified”. The SIC system was last revised in 1987 and was last used by the Census Bureau for the 1992 Economic Census. Only use codes on the condensed SIC code list below when filing to Companies House or your filing may be rejected. SIC code 6513 is even more specific, pointing to those who manage apartment buildings.
- The SEC uses the company’s SIC code to assign review responsibility for required company filings.
- The SIC system was last revised in 1987 and was last used by the Census Bureau for the 1992 Economic Census.
- Similarly, real estate companies use NAICS and SIC codes to evaluate possible investment locations better.
- All establishments involved in the same kind of economic activity are grouped without regard to their ownership, be they government agencies, corporations, sole proprietors, joint ventures etc.
Understanding SIC Codes: Who Needs Them & Finding Yours
The first two digits of the SIC code identify the major industry group, the third digit identifies the industry group, and the fourth digit identifies the specific industry. A Standard Industrial Classification (SIC) code is crucial for several reasons. It standardises the classification of businesses, allowing for consistent economic analysis and comparison.
That is, their business can be categorized by one of the more than 1,000 SIC codes that are in existence. The last digit of a SIC code is the most specific identifier of a company. Factoring in this last digit, there are now more than 1,000 possible combinations. To read a SIC code, each set of digits should be independently evaluated to determine the overall meaning of the code. Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.
Though the number of major groups fluctuates, there are typically fewer than 100 in all. These major groups all fit into one of the 11 major divisions, and these first two digits define what industry the company is in. With this last digit added, there are now over 1,000 possible possibilities. SIC code 2050, for example, covers bakery products, while SIC code 2052 represents cookie and cracker makers. This fourth number narrows the business classification further into a highly precise business category. The initial two numbers of a SIC code identify the principal sector group of a business.
Even if your company is dormant (99999) or non-trading (74990) you’ll still need to provide the appropriate SIC code. Companies House uses a condensed version of the full list of codes available from the Office of National Statistics. Ultimately, the first version of the manual for Manufacturing Industries was published in 1941, and for Nonmanufacturing Industries in 1942.
SIC codes are used by businesses and the government in various ways, as detailed below. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information.
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Businesses, executives, and government bodies can benefit from these labels. The primary sic code of your company may be useful to you whether you’re a leader or an entry-level worker there. The SIC code meaning, an explanation of how to read one, an explanation of how organizations use them, and an explanation of the distinctions between SIC and NAICS classifications are all covered in this article. The sic code india Standard Industrial Classification (SIC) is a system for classifying industries into distinctive groups.
