What Is a SIC Code, Who Needs a SIC Code, and How to Find Yours

What Is a SIC Code?

Standard Industrial Classification (SIC) codes are four-digit numerical codes used to categorize U.S. companies by the industries in which they operate. Companies are required to use them in certain government filings.

SIC codes were created by the U.S. government in 1937 to help classify and analyze economic activity across various industries and government agencies.

The United States Department of Labor maintains an online database that can be used to identify the right SIC code for a business.

SIC Codes vs. NAICS Codes

The Standard Industrial Classification codes were supposed to be replaced in 1997 by a system of six-digit codes called the North American Industry Classification System (NAICS). 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.

Nevertheless, many government agencies, including the Securities & Exchange Commission, continue to use SIC codes. That forces most companies, particularly public companies, to use both systems.

The SIC code system remains the most widely used industry classification system. The NAICS code system has been unable to fully replace it due to the SIC system's long history, and the reluctance of businesses and other organizations that have been long-term users of SIC codes to switch over to a new classification system.

The U.S. government stopped updating SIC codes as far back as 1987, but private data organizations stepped in and continued to update the SIC system, including adding very specific additional classifications.

As a result, at the most defined levels, there are now more than 10,000 six-digit SIC codes, compared with 1,066 NAICS codes.

U.S. companies now have both a SIC code and a NAICS code.

Understanding SIC Codes

The SIC system classifies the economy into 11 major divisions:

• Agriculture, forestry, and fishing
• Mining
• Construction
• Manufacturing
• Transportation and public utilities
• Wholesale trade
• Retail trade
• Finance, insurance, real estate
• Services
• Public administration
• Nonclassifiable establishments

These are then divided into 83 two-digit major groups and further subdivided into 416 three-digit industry groups and then into more than 1,000 four-digit industries.

Every company has a primary SIC code that indicates its main line of business. 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.

The Securities and Exchange Commission (SEC) uses SIC codes. 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.

How SIC Codes Are Used

Businesses and the government use SIC codes in a number of ways.

Businesses

• Companies use SIC codes to identify their existing customers and potential customers by industry.
• SIC codes can be used to classify companies for tax purposes.
• Banks and creditors use SIC codes to identify the industry a company belongs to when they consider credit applications. 
• SIC codes are used by professionals and businesses to create targeted marketing campaigns.
• Companies identify competitors in their industry or region by searching for like companies via SIC codes.
• Businesses use SIC codes to identify government contracts.

Government

• The government uses SIC codes to organize and standardize key economic data for various federal and state agencies as well as private companies.
• SIC codes make it easier to compare data across disparate government agencies.
• SIC codes are used for tax classification.
• The SEC uses SIC codes when sorting company filings.

How to Find Your SIC Code

There are many different ways to find the most appropriate SIC code for your company.

• The United States Department of Labor maintains an online system search tool to search SIC codes by keywords.
• If you know your NAICS code, there are online resources to identify corresponding SIC codes.
• The Security and Exchange Commission publishes the full list in a PDF.

How to Read SIC Codes

Each digit in a SIC code has a meaning. To read a SIC code, each set of digits should be independently evaluated to determine the overall meaning of the code.

The First Two Digits

The first two numbers of a SIC code identify the business's major sector. 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.

The Third Digit

The third digit further refines the business classification and is often referred to as the business industry group. For example, if code 23xx refers to apparel companies:

• 232x identifies men's and boy's furnishings.
• 233x identifies women's and misses' furnishings.

The Fourth Digit

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.

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 specific business category.

Real-World Examples of SIC Codes

Apple Inc.'s SEC filings show its SIC code as 3571 (electronic computers). The first two digits—35—identify its major industry group as "Industrial and Commercial Machinery and Computer Equipment," while the third digit—7—narrows its industry group down to "Computer and Office Equipment" and the final digit—1—classifies it as "electronic computers."

Note that if the first two digits are between 20 and 39, these companies are classified in the manufacturing division or segment of the economy.

Banking Industry Examples of SIC Codes

Below is an image of the Standard Industrial Codes, along with their meaning, for the banking industry (taken from the SEC's website).

• Bank of America Corporation (BAC), for example, would have the SIC code of 6021 because it's a national commercial bank.
• State banks would have the SIC code of 6022.
• Life insurance companies would be classified as 6311.

The Bottom Line

Standard Industrial Classification (SIC) codes for U.S. businesses were supposed to have been phased out some 27 years ago. This shorthand, four-digit descriptor of the industry in which a company operates was to have been replaced by another classification system, the North American Industry Classification System (NAICS).

That didn't quite happen. Many U.S. government agencies, notably the Securities & Exchange Commission, still use SIC codes and require businesses to identify themselves by their SIC codes.