What Is a Standard Industry Classification (SIC) Code?
Standard Industry Classification (SIC) codes are four-digit numerical codes assigned in the course of the U.S. government that categorize the industries to which firms belong, while moreover organizing industries via their business movements. The SIC codes were created in the course of the U.S. government in 1937 to classify and analyze monetary process all the way through slightly numerous industries and government corporations, and to put it on the market uniformity inside the presentation of statistical wisdom accumulated via slightly numerous government corporations SIC codes have moreover been adopted in places outdoor the U.S., in conjunction with inside the U.Adequate.
Key Takeaways
- Standard Industry Classification (SIC) codes are four-digit numerical codes that categorize the industries that companies belong to based on their business movements.
- Standard Industry Classification codes were maximum recurrently modified in the course of the six-digit North American Industry Classification Instrument (NAICS).
- Despite having been modified, government corporations, in conjunction with the SEC, and a couple of firms however use SIC codes these days.
- The main two digits represent the easiest degree business classification, while the next two digits are used to further refine the id.
- The government uses SIC codes to property assign the evaluate of economic filings to the right kind divisions to ensure all prerequisites are met.
On the other hand, Standard Industry Classification codes were maximum recurrently modified in 1997 via a gadget of six-digit codes referred to as the North American Industry Classification Instrument (NAICS). The NAICS codes were adopted partially to standardize business wisdom collection and analysis between Canada, the United States, and Mexico, which had entered into the North American Free Business Agreement.
Despite having been modified, government corporations and firms however use the SIC standardized codes these days for classifying the business that companies belong to via matching their business process with like firms.
Understanding Standard Industry Classification (SIC) Codes
The SIC gadget classifies the monetary machine into 11 primary divisions:
- Agriculture, forestry, and fishing
- Mining
- Building
- Manufacturing
- Transportation and public utilities
- Wholesale business
- Retail business
- Finance, insurance plans, precise belongings
- Services and products and merchandise
- Public control
- Nonclassifiable establishments
The ones are then divided into 83 two-digit primary groups, and extra subdivided into 416 three-digit business groups and then into more than 1,000 four-digit industries.
Every company has a primary SIC code that indicates its number one line of industrial. The main two digits of the SIC code decide an important business workforce, the third digit identifies the business workforce, and the fourth digit identifies the right business.
The Securities and Exchange Charge (SEC) is a vital government corporate that regulates the markets. The SEC however uses SIC codes. The SIC codes are listed in a company’s virtual wisdom amassing, analysis, and retrieval gadget filings (referred to as EDGAR) to signify the company’s business.
SIC Codes vs. NAICS codes
The SIC code gadget continues to stick the preferred business classification gadget. The NAICS code gadget has been now not in a position to completely alternate it as a result of the SIC gadget’s long history, and the reluctance of businesses and other organizations that have been long-term shoppers of SIC codes to switch over to a brand spanking new classification gadget.
Even if the U.S. government stopped updating SIC codes as far back as 1987, personal wisdom organizations stepped in and persisted to switch the SIC gadget, in conjunction with together with very explicit additional classifications. On account of this, at the most defined levels, there are this present day over 10,000 six-digit SIC codes (compared to 1,066 NAICS codes).
With the upper degree of integration all the way through the North American monetary machine following the status quo of NAFTA, U.S. firms now have each and every a SIC code and a NAICS code.
How SIC Codes are Used
Corporations and the government use SIC codes in a large number of ways, as discussed underneath.
Corporations
- Corporations use SIC codes to identify their present customers and conceivable customers via business.
- SIC codes can be used to classify firms for tax purposes.
- Banks and creditors use SIC codes to identify the business a company belongs to when thought to be extending credit score rating.
- SIC codes are used by pros and corporations to create targeted promoting and advertising and marketing campaigns.
- Corporations can decide the competition in their business or house via looking for like firms by way of SIC codes.
- Corporations moreover use SIC codes to identify government contracts.
Government
- The government uses SIC codes to arrange and standardize key monetary wisdom for slightly numerous Federal and state corporations along with personal firms.
- SIC codes show you how to read about wisdom all the way through disparate government corporations.
- SIC codes are also used for tax classification.
- The SEC uses SIC codes when sorting company filings.
Discover ways to To search out Your SIC Code
There are many other ways to hunt out one of the crucial appropriate SIC code for a company. Examples of slightly numerous usable resources include:
- The US Department or Arduous paintings maintains an online gadget search tool to search around SIC codes via keywords.
- If you realize your NAICS code, there are online resources to identify corresponding SIC codes.
- The Protection and Exchange Charge publishes the file by way of PDF.
Discover ways to Be informed SIC Codes
Each and every digit inside of a SIC code has a that suggests; to be informed a SIC code, each and every set of digits should be independently evaluated to make a decision the entire that suggests of the code.
The First Two Digits
The main two numbers of a SIC code identifies the business’s primary sector workforce. Even if the number of primary groups fluctuates, there are generally less than 100 primary groups. The ones primary groups all fit into one of the crucial essential 11 primary divisions, and the ones first two digits define what business the company is in.
The third Digit
The third digit is the second unbiased function that describes a company. This third digit further refines the business classification and is perpetually referred to as the business business workforce. For example, if code 23xx refers to apparel firms:
- 232x identifies men’s and boy’s furnishings.
- 233x identifies ladies’s and misses’ furnishings.
The Fourth Digit
Without equal digit of a SIC code is one of the crucial explicit identifier of a company. Factoring in this final digit, there are in reality over 1,000 mixtures. For example, SIC code 2050 (emphasis on the final digit) represents bakery products, while SIC code 2052 represents cookie & cracker manufacturers. This fourth digit further refines the business classification into a very explicit business magnificence.
Precise-World Examples of SIC Codes
Apple Inc.’s SEC filings show its SIC code as 3571 (virtual laptop programs). The main two digits—35—decide its primary business workforce as “Industry and Industry Apparatus and Pc Equipment,” while the third digit—7—narrows its business workforce all of the means right down to “Pc and Administrative center Equipment” and the overall digit—1—classifies it as “virtual laptop programs.” Bear in mind that if the main two digits are between 20 and 39, the ones firms are labeled inside the manufacturing division or segment of the monetary machine.
Despite the SIC codes having been modified via NAICS, you are able to however search for them. Below is an image of the Standard Industry Codes, along with their that suggests, for the banking business (taken from the SEC’s web page).
- Monetary establishment of The us Corporate (BAC), for example, would have the SIC code of 6021 on account of this is a national industry monetary establishment.
- State banks would have the SIC code of 6022.
- Existence insurance plans firms may well be labeled as 6311.
Examples of Standard Industry Classification (SIC) codes from the Securities and Exchange Charge.
Investopedia
How Do I To search out My Company’s SIC Code?
Who Needs a SIC Code?
All firms naturally have a SIC code, as there are over 1,000 basic SIC codes possible. Corporations that document public reports are perpetually required to use SIC codes when reporting, since the SEC uses it as a basis for assigning evaluate duty for company filing prerequisites.
What Is an Example of a SIC Code?
What Does SIC Code Stand for?
The Bottom Line
To help decide the right kind reviewer of company filings based on the business a company operates inside of, the Securities and Exchange Charge publishes a listing of standard business classification (SIC) codes. When issuing reports, firms should file the SIC code that the majority closely identifies with their operations.
