What are NAICS Codes, the North American Industry Classification System codes?
Welcome to our podcast FedBiz 5, where you get informed, get connected and get results. In our last episode we discussed, “What is SAM?” – The System for Award Management. Now we will learn more about NAICS Codes and their importance in your SAM registration.
NAICS Codes are the six-digit identification standard used by federal statistical agencies in classifying businesses for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. For federal contracting, these are the codes the government researches to find goods and services for award opportunities.
An important part of the SAM registration process is ensuring a business has properly categorized its industry codes in their SAM registration.
The six-digit NAICS Code can be broken down into specific levels by each digit of the code. The NAICS code has 20 primary two-digit Sectors. The NAICS hierarchy includes 99 three-digit Subcategories, 311 four-digit Industry Groups, and 709 five-digit NAICS Industry Designations. There are 1,057 six-digit NAICS Codes.
NAICS Code Structure by Sector:
SECTOR DESCRIPTION
| 11 | Agriculture, Forestry, Fishing and Hunting
| 21 | Mining, Quarrying, and Oil and Gas Extraction
| 22 | Utilities
| 23 | Construction
| 31-33 | Manufacturing
| 42 | Wholesale Trade
| 44-45 | Retail Trade
| 48-49 | Transportation and Warehousing
| 51 | Information
| 52 | Finance and Insurance
| 53 | Real Estate and Rental and Leasing
| 54 | Professional, Scientific, and Technical Services
| 55 | Management of Companies and Enterprises
| 56 | Administrative and Support and Waste Management and Remediation Services
| 61 | Educational Services
| 62 | Health Care and Social Assistance
| 71 | Arts, Entertainment, and Recreation
| 72 | Accommodation and Food Services
| 81 | Other Services (except Public Administration)
| 92 | Public Administration
NAICS Codes describe in general “HOW” purchased products and/or services are produced. For example, NAICS Code 541611 is defined as ‘Administrative Management and General Management Consulting Services.’ NAICS Codes do not describe who a business sells to. NAICS Codes are based on a production-oriented concept, meaning that it groups businesses into industries according to similarity in the processes used to produce goods and/or services.
In SAM, NAICS Codes should be focused on core business. Too much disparity or too many NAICS Codes can give the impression the business is not focused. What do you want to sell to the government? Less is more in this instance, and that focus is very important.
FedBiz Access’ fulfillment team takes the time to understand their client’s business and asks questions to pull information from the client to ensure their registration is complete, optimized and verified.
This podcast is sponsored by FedBiz Access - https://fedbizaccess.com. For government contracting made simple, call (888) 299-4498.
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What are NAICS Codes? – FedBiz5_Episode 3
Myles Mnich 0:05
You are listening to FedBiz'5. I'm Myles Mnich and I do marketing for small businesses.
Anthony D'Attore 0:48
My name is Anthony D'Attore and I am a federal contracting consultant.
Myles Mnich 0:05
In today's discussion we will be talking about NAICS codes.
Hello and welcome back to FedBiz'5 where you get informed, get connected, and get results. So we are going to jump straight into our subject today. Last week we touched on the subject regarding SAM registration, and NAICS and PSC codes in the midst of that. So today, Anthony, can you touch deeper on NAICS and PSC codes for us?
Anthony D'Attore 0:48
Sure, happy to, NAICS is the North American Industry Classification System code. It is a six-digit code that identifies your industry. The first two numbers are significant, because they will identify your sector. For instance, if you are 23 – if it starts with 2-3, it is construction; if it starts with 31 – 33, it is manufacturing; 40’s are wholesale / retail; 49 is transportation. But that is the way it works down. Services typically start with, you know, 51 or 52, and that sort of thing.
So you can identify what your NAICS codes are by going to census, C-E-N-S-U-S.gov / N-A-I-C-S, NAIC, and you can do a keyword search there. Make sure when you do that though, make sure you use the most current level. They change every six years or something like that, five years. They will also make changes along the way too, but you can go in there to find the year closest to the year you are looking for and put in the search keyword. That will be a good step and then you will have to read to make sure and click on them because it will give you a pretty good description. When you get to the description page, it will also tell you what things are covered under there. Like there will be our chart of what things are covered.
One thing to remember while you are trying to identify your NAICS is this, many people make the mistake of putting in a NAICS code because that is who they sell to. It is not listing your clients’ here, or what your clients NAICS would be, or your buyers NAICS would be. It would be, what is your NAICS code? What do you do? If you give the impression, particularly in the early going, if you have NAICS codes that are all over the place, you know it, just all over the place, it will give the impression that you’re not focused. So think about when you are identifying your NAICS codes. Think about what do I want to, what do I - my business, want to sell to the government. Whether it is goods or services and stay focused on that. Less is more in this instance, and that focus is very, very important.
Myles Mnich 3:56
Amazing information! And with that being said, that is today’s episode. Thank you for listening to today’s podcast and in our next episode we will be further discussing PSC codes.
This podcast is sponsored by FedBiz Access. Government contracting made simple.
For more information visit www.fedbizaccess.com. That's F-E-D-B-I-Z-access.com. Our phone number is 877-376-4249. The extension code is 407.
Thank you guys for listening, and we will see you in the next episode.