Sic Codes Vs. Naics Codes

SIC and NAICS codes assist the IRS in processing tax returns.

The Standard Industrial Classification system (SIC) and the North American Industry Classification System (NAICS) were designed to assist in the collection, analysis, reporting and dissemination of industry data. These systems are used by government agencies (such as the IRS) and trade associations, among others, to classify businesses according to specific types of businesses.

History of SIC Codes

The SIC code system was established in the 1930s to promote uniformity and comparability of business and industry data. SIC codes have been periodically revised in response to changes in the United States economic structure. The most recent revision occurred in 1987.

History of NAICS Codes

In the 1990s, the SIC code system had become less useful and complaints about the SIC system led to development of the NAICS system. The NAICS has replaced the SIC system.

Differences Between the Codes

The change from SIC to NAICS codes has led to a more uniform classification of industries and businesses that use the same or similar processes to produce goods and services. This feature was lacking with usage of SIC codes.

References

• NAICS: Business Activity Code FAQ