SIC codes are assigned by the UK government to all business establishments. These are four-digit numerical codes that are assigned based on the primary line of business. The basic aim behind designing this classification structure is to simplify the collection, storage, and analysis of data. These codes allow the government to maintain uniformity in the display of statistical data. These classification codes aggregate information about major economic activities.
What does SIC stand for?
SIC stands for “Standard Industrial Classification,” a system developed for categorizing industries to which a particular company, establishment, or business entity belongs. The SIC codes help classify and analyse economic activity across government agencies and industries. In short, it is a four-digit numerical code that describes the industry to which an entity belongs on the basis of its business activities. Additionally, the NAICS code is the equivalent of the SIC code for businesses in the United States.
How do businesses use SIC codes?
Every business has a primary Standard Industrial Classification code that expresses its first line of business. The first two digits in the coding system identify the primary industry group, the third digit defines the industry, and the fourth digit indicates the niche industry in which the business operates. Businesses use SIC codes in numerous ways, including:
- Businesses can use SIC codes for tax purposes.
- SIC codes also help businesses to identify government contracts.
- Companies refer to the SIC codes to determine their customers and potential prospects by industry.
- Banking institutions and credit firms use them to identify the industry to which a company belongs when they need to extend credit.
- Companies can use them to identify competitors in the industry.
- Social media professionals and business organisations use SIC codes to create targeted market campaigns.
Why do I need a SIC code?
You need to choose an appropriate code that best defines your industry at the point of incorporation. As a business owner in the UK, you will require a SIC code for various purposes, including:
- Classification: You need a code to identify your customers or potential buyers based on industry.
- Industry Research: They will allow you to explore your competitors more precisely and thoroughly.
- Targeted Marketing: If you are a marketer, it can help you design more targeted marketing campaigns.
- Banking Purposes: If you need to apply for business credit from a banking institution, you will need to provide your code, so that the creditors can better assess your industry.
- Administrative Requirements: A range of administrative tasks and departments will ask you for your code. You need them when registering your business with state and federal governments.
Apart from the above-mentioned purposes, you will need a SIC code for taxation, filing your DUNS number, registration, and seeking government contracts. Not only do these codes help classify a business more accurately, but they also build business credibility.
How do I get a SIC code for my company?
Now you know about SIC codes, you must be wondering what code applies to your company. Several SIC code lookup tools are available online that help you to identify an appropriate code for your industry and business. If you find it complex, it is recommended to hire professional services to simplify the process.
How many SIC codes can a company have?
A company can have more than one SIC code based on the business activities they offer. If your company has multiple lines of business, you can select separate codes for each service. You will, however, have a primary code based on the product that brings you more sales and higher revenue. Apart from a primary code, you can have a secondary and tertiary SIC code that you can use for extended business activities. So, basically, you can have different codes for different products that produce revenue.
How do I change my company’s SIC code?
Sometimes, businesses are not able to pick the right SIC code at the time of setup and registration. The possibilities are that the main business activities change after forming the company. In that case, it is feasible to update the code as soon as you realise it. The code that you select during the application filing process will remain your primary code for that particular organisation or agency. You can update the code at the time of filing the next confirmation statement. It is good to keep your business information up-to-date to appear credible all the time. It will help other businesses and stakeholders to assess your company based on information. When updating SIC codes, use online application methods for faster processing.
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