SIC codes (Standard Industrial Classification Codes) were created by the U.S. government in 1937, as a system to identify the industries or U.S. businesses. It was a four-digit coded number that helped in categorizing businesses/companies by industry. But it was replaced in 1997, by NAICS codes (North American Industry Classification System) which is a six-digit system that also performed the same function of categorizing industries across the U.S., Canada, and Mexico. Despite the introduction of NAICS codes and their use, whereas Standard Industrial Classification Codes were still performing their roles in certain circumstances, like some businesses were still updating Standard Industrial Classification Codes for their business to generate profit and to maintain the clients data for their accounts but it was not registered under the government system and protocol after the introduction of North American Industry Classification System codes.
Our The SIC Codes were created in light to stop the different and meaningless ways for analyzing business and its data. So, the government created these codes to standardize the way of measuring and analyzing business data. The characterization of these codes was basically on the basis of products, services, production, and delivery system of the business.
SIC Code Structure
SIC codes have four digits. The first two digits classify the major group whereas the third digit defines the industry group, and the last digit indicates the industry sector. This code was classified in a hierarchical manner which narrowed down towards the specifics (business or services).
SIC Code - 5713
57- Major Group (Home Furniture, Furnishings, and Equipment Stores)
571- Industry Group (Home Furniture, Furnishings Stores)
5713- Industry Sector (Floor Covering Stores)
Primary SIC Codes
Primary SIC codes are for all existing businesses. It is the main/primary code that is used to help in categorizing the core industry of the business.
Secondary SIC Codes
Secondary SIC codes are used to classify other industries that were involved in the business but are not the primary or main focus of the business. A single business can have up to 5 secondary SIC codes. The secondary industries can be the same as the primary business industry or can be unrelated to it.
Range of SIC Codes according to Industry Sector (Division):
The SIC codes consisted of four digits classifying: Major Group (starting two digits), Industry Group (third digit), Industry Sector (was represented by last-digit with other three-digits included). So, according to this classification, the industry sector was the broader group which was classified according to the range as shown below in the table:
|Range (SIC Codes)||Division|
|0100-0999||Agriculture, Forestry, Fishing and Hunting|
|4000-4999||Transportation, Communication, Electric, Gas and Sanitary service|
|6000-6799||Finance, Insurance and Real Estate|
The divisions were classified narrowly into the industry groups and then specific to the major group for expressing the exact business services or products bought or sold.
Now, if we take the above example of SIC code again,
SIC code- 5713; belongs to the category of floor covering stores in Industry Sector (5713) and home furniture, furnishings stores in the section of Industry group (571), and as home furniture, furnishings, and equipment stores in the Major Group (57).
Where to find SIC code for a company?
The U.S. Department of Labor's OSHA website is the one containing a "SIC Manual" link which takes you to the 1987 edition of the SIC Manual, which you can also find through the search box present on the website taking you to the same link of the SIC Manual.
Uses OF SIC Codes
The U.S. Census Bureau, Bureau of Labor Statistics, Internal Revenue service as well as Social Security Administration utilized the SIC codes in their reports till its eradication and introduction of NAICS. SIC codes were used in academic and business sectors as well.
The Bureau of Labor Statistics updated the SIC codes every three years, reporting the wages and pricing issues as well as the workforce.
The Social Security Administration used the SIC codes for tracing/keeping tracks of primary business activity through the employer ID.
The Standard Industrial Classification Codes when came into action in 1937, it was the best method to eradicate the other individual methods of businesses to analyze data and it was a good step by the government to create a standard by grouping every other business in the United States. The four digit system made the whole process stable and easy for everyone supported by multiple secondary SIC codes (up to five). It went on for 60 years in United States, with 20 time revisions and updating after every 3 years of gap.