What Is a SIC Code?

What Is a SIC Code?

Let me explain SIC codes directly to you. Standard Industrial Classification (SIC) codes are four-digit numerical codes that categorize U.S. companies based on the industries they operate in. You need to use them in specific government filings if you're running a company.

These codes were created by the U.S. government back in 1937 to classify and analyze economic activity across industries and agencies. If you're looking for the right SIC code for your business, the United States Department of Labor has an online database you can use to find it.

Key Takeaways

Here's what you need to know about SIC codes. They are four-digit numerical codes that categorize industries based on business activities. Although they've been largely replaced by the six-digit North American Industry Classification System (NAICS), many U.S. government agencies still rely on SIC codes.

The first two digits represent the highest level of classification, and the next two refine it further. The government uses these codes to assign reviews of financial filings to the right divisions, ensuring all requirements are met.

SIC Codes vs. NAICS Codes

You should understand the difference between SIC and NAICS codes. SIC codes were meant to be replaced in 1997 by the six-digit NAICS system, which was adopted to standardize data collection between the U.S., Canada, and Mexico under the North American Free Trade Agreement.

However, agencies like the Securities and Exchange Commission still use SIC codes, so most companies, especially public ones, have to use both. SIC remains the most widely used system because of its long history, and businesses are reluctant to switch.

The U.S. government stopped updating SIC codes in 1987, but private organizations have continued, adding specific classifications. Now, there are over 10,000 six-digit SIC codes at the most detailed levels, compared to 1,066 NAICS codes. As a result, U.S. companies have both a SIC and a NAICS code.

Understanding SIC Codes

Let me break down how SIC codes work for you. The system classifies the economy into 11 major divisions, including agriculture, forestry, and fishing; mining; construction; manufacturing; transportation and public utilities; wholesale trade; retail trade; finance, insurance, real estate; services; public administration; and nonclassifiable establishments.

These divisions are split into 83 two-digit major groups, then 416 three-digit industry groups, and over 1,000 four-digit industries. Every company has a primary SIC code indicating its main business line. The first two digits identify the major industry group, the third the industry group, and the fourth the specific industry.

The SEC uses SIC codes in company filings through the EDGAR system to indicate the industry.

How SIC Codes Are Used

You can see SIC codes in action in business and government. For businesses, they help identify existing and potential customers by industry, classify for tax purposes, and let banks assess credit applications by industry.

Professionals use them for targeted marketing campaigns, to find competitors via searches, and to identify government contracts. On the government side, SIC codes organize economic data for agencies and private companies, make data comparison easier across agencies, handle tax classification, and help the SEC sort filings.

How to Find Your SIC Code

If you need to find your company's SIC code, there are straightforward ways. Use the Department of Labor's online search tool by keywords. If you have your NAICS code, online resources can match it to a SIC code. The SEC also publishes a full list in PDF format.

How to Read SIC Codes

Reading a SIC code is simple if you evaluate each digit separately. The first two digits identify the major sector, fitting into one of the 11 divisions, defining the industry.

The third digit refines it to the industry group—for example, 23xx for apparel, with 232x for men's furnishings and 233x for women's. The fourth digit is the most specific, like 2050 for bakery products versus 2052 for cookies and crackers.

Real-World Examples of SIC Codes

Take Apple Inc. as an example—their SEC filings show SIC code 3571 for electronic computers. The 35 indicates industrial and commercial machinery and computer equipment, 7 narrows to computer and office equipment, and 1 specifies electronic computers. Codes 20-39 mean manufacturing.

In banking, Bank of America has 6021 as a national commercial bank, state banks have 6022, and life insurance is 6311. You can find these on the SEC's website.

How Do I Find My Company's SIC Code?

To find your company's SIC code, check the SEC's standard code list, which is updated by the Division of Corporation Finance.

Who Needs a SIC Code?

Every company has a SIC code, even if you're not aware of it—your business fits one of over 1,000 codes. Public companies use them in filings to the SEC, which assigns review based on the code.

What Is an Example of a SIC Code?

For real estate, 6500 covers the entire industry, 6510 identifies operators, 6512 specifies nonresidential buildings, and 6513 is for apartment building operators.

What Does SIC Code Stand for?

SIC stands for Standard Industrial Classification code, a four-digit descriptor of a company's business type.

The Bottom Line

SIC codes were supposed to be phased out 27 years ago in favor of NAICS, but that hasn't fully happened. Many agencies, like the SEC, still require them, so businesses must identify themselves with SIC codes.