SIC (Standard Industrial Classification) Number

When launching a new campaign, businesses segment their target audience to optimize their outreach efforts. The audience might be categorized into groups numbers like 100 for age, and 200 for interests. This will further sub-divide into 110 for millennials and 210 for fitness enthusiasts. Similarly, government agencies have given a Standard Industrial Classification number to businesses. This helps streamline data collection and facilitate analysis across different sectors.

In this blog, we will discuss what is a SIC number is, its uses, and some examples from the real world. We will also learn how address verification can help you bring together your mailing address databases, helping you enhance overall data management.

Key Takeaways

• The SIC number is a four-digit identifier issued by the U.S. government to businesses based on their primary economic activities.
• It helps government agencies and businesses with classification, industry trend analysis, policy development, and targeted marketing.
• Adding SIC codes to addresses simplifies the address verification process. It enables data accuracy and compliance with industry standards.

Standard Industrial Classification,  SIC code, as it is commonly referred to, is a four-digit code assigned by the U.S.A. government to determine a company’s principal business. It is used by the U.S. Office of Management and Budget (OMB) and various statistical bodies. These numbers help in the classification and analysis of economic data across different industries and government agencies. It is needed for state registration, federal registration, tax purposes, and when checking the eligibility for government contracts.

You may have the SIC numbers for a list of businesses you have. However, you need an address verification tool to verify their mailing address validity and accuracy to be able to contact them. PostGrid’s address verification API allows you to do just that!

History

Around 1934, there was a discussion at the Interdepartmental Conference on Industrial Classification about the need for a standardized classification the economic activities. Individual government agencies used various classification systems. The inconsistency in the collected data made it challenging to precisely compare statistics from one agency to another.

In 1937, the Interdepartmental Committee on Industrial Statistics, established by the Central Statistical Board of the United States, developed the SIC number. They first released a list of industries for manufacturing in 1938 and another list of industries in non-manufacturing in 1939.  These lists were reviewed and later published. 

The manufacturing industry list was published in 1941, and the non-manufacturing list was published in 1942. The editions were updated in 1967, 1972, and 1987. The last update in 1987 was the final edition of the SIC number.

The SIC number was unable to keep up with the growing list of industries. Hence, the North American Industry Classification System (NAICS) was developed to replace SIC. The U.S. federal government along with the Canadian and Mexican statistical agencies designed NAICS to standardize industry data collection. This number facilitates a direct comparison of the industrial production statistics collected and published in the three North American free trade agreement countries.

NAICS number comprises six digits, unlike the SIC which has four digits. It is available on the US Census Bureau NCAIS page and classifies various economic activities into 20 industry sectors. This includes five goods-producing and 15 service sectors. SIC, on the other hand, groups all types of industries and sectors into 10 broad categories. 

Ever since the development of NCAIS, more than 350 industries have been recognized. NAICS includes over 1170 industries, while SIC has 1004 industries. 

When compared to SIC, NAICS offers detailed insights into the firm’s activity. Moreover, NAICS is developed on a consistent economic concept. The organizations that use the same method to produce goods and services are grouped. However, in SIC, the groups were created based on demand or production.

Once you have your SIC or NAICS codes, you can always cross-verify the mailing addresses of the businesses under the relevant industries. It lets you ensure your records are error-free and recently updated.

Classification

Companies classify their customers and potential customers using SIC codes. It also helps them determine who their regional and industrial competitors are. Banks and creditors, when processing loan applications, use it to understand which industry a business falls in. 

Each industry has its own tax obligations, incentives, and credits. Using a SIC code, the government classifies the companies. Aside from assisting in applying relevant tax regulations and rates, this helps in monitoring compliance and identifying the sector that might need to be reviewed carefully.

Track Economic Activity

Government agencies and organizations use SIC codes to collect and categorize business data according to business activities. This helps with holistic economic reporting. The insights help them understand how different sectors are contributing to the economy. This assists in generating comprehensive reports on GDP, productivity, and employment. It also facilitates analysis of growth rates and industry performance. 

Policy Development

Policymakers gather and analyze economic data by industry using the SIC code. This helps understand the specific needs and the challenges faced by various sectors and creates suitable policies. They also use it to determine how to allocate resources. This ensures that resources are distributed effectively among the industries that are supporting economic growth or those that require assistance. 

Investment Decisions

To assess the risk associated with the investment and make sound decisions, investors use the SIC code. It helps them determine the growth potential and the level of stability of a particular industry. The data also reveals industries with high-growth potential, which can guide investment strategies. Moreover, the SIC code assists in portfolio diversification. Investors can minimize the risk by spreading their investments across different industries. 

Analyze Industry 

By grouping businesses into specific categories, SIC codes help aggregate and analyze data related to economic performance, growth rate, and market dynamics. Through analysis of the contribution of different industries towards the economy, agencies can identify which industry is driving growth and creating job opportunities. Moreover, keeping track over time using SIC code can help analysts identify patterns, upcoming trends, and shifts in customer behavior.

Targeted Marketing

The precise segmentation with SIC codes allows the marketing team to craft targeted messages that resonate with a particular industry. It helps identify and address specific pain points, preferences, and needs. It can also be used to identify the high-potential market and ensure that the resources are being allocated effectively. Moreover, by searching for competitors using the SIC code, businesses can identify gaps and opportunities in the market.

Loan Eligibility and Borrowing Terms

SIC codes are required when applying for a loan and a government contract. Some loans are only limited to certain industries or certain business sizes within an industry. The SIC code will help determine the eligibility. Moreover, banks might also use it to identify whether or not the business is a high-risk borrower. Assessing industry-specific risks will help lay down the appropriate lending terms.

There are many different ways to find the most appropriate SIC number for your organization.

1. The Securities and Exchange Commission published a complete list of SIC numbers in PDF format.
2. You can search business SIC codes by keywords using the online system search tool provided by the United States Department of Labour.
3. If you know your NAIC code, you can cross-reference it on the online portal to find the right SIC code.

Every digit in an SIC code has a meaning. To fully understand the SIC code, you need to evaluate every digit independently. But before diving into it, let us first understand the SIC code classification. According to the SIC system, the economy is divided into 11 major groups.

• Agriculture, forestry, and fishing
• Mining
• Construction
• Manufacturing
• Transportation, public utilities
• Wholesale trade
• Retail trade
• Finance, insurance, real estate
• Services
• Public administration
• Non-categorized organizations

They are categorized into 83 two-digit major classes and further sub-categorized into 416 three-digit industry classes. It is subsequently classified into 1000 four-digit industries. Let us now break down the SIC code for ease of understanding.

1. First two digits: It defines which industry the company falls in. It could be one of the aforementioned 11 divisions. While the number fluctuates, it is generally less than 100.
2. Third digit: It defines the business classification, referring to the business industry group. Take, for instance, 24XX is for lumber and wood products. The code 2421 is for sawmills and planting mills, while 2430 is for milkwood, veneer, plywood, and structural wood members. 
3. Fourth digit: This is the unique identifier that puts a business into a particular category. For example, SIC code 2520 represents office furniture, while 2522 denotes office furniture that does not include wood.

One thing to keep in mind is that the aforementioned is the primary SIC code. There are also secondary SIC codes that are assigned to businesses that operate in multiple industries but have a core business. Take, for instance, you operate a meat packaging plant but also offer dairy products. Your primary SIC code will be 2011, while the secondary SIC code will be 2020.

 Also Read: Difference Between Proof of Address (PoA), Proof of Residence (PoR), and Proof of Identity (PoI)

Banks and Financial Organizations

Different banks and financial institutions will have different SIC codes. For example, a national commercial bank like Bank of America Corporation will have SIC Code 6021. On the other hand, personal credit institutions like Bread Financial Holdings will have SIC code 6141. In the case of a life insurance company, the SIC code will be 6311. 

Electronics

The SIC code of Apple Inc. is 3571. The first two digits signify the primary industry group, which is Industrial and Commercial Machinery and Computer Equipment Mailing List. The third digit further puts it in the subgroup Computer and Office Equipment. The last digits represent electronic computers.

Real-Estate

6500 is the SIC code for the entire real estate industry. Further classification to 6510 denotes real estate operators. When further subdivided, we get 6512 representing non-residential buildings and 6153 representing apartment building operators. 

 Also Read: What is Deterministic Matching?

Address verification is necessary to necessary to keep the records up-to-date and accurate. It ensures effective communication and smooth delivery of service. Using SIC code in an address can enhance address verification in the following ways.

Enhanced Data Accuracy

Government agencies can cross-reference the SIC code with the address information. This will ensure that the business’s address is real. Correct data streamlines the address verification process. The teams involved in the process can follow the workflow without any interruption caused by data discrepancies.

Compliance

Certain businesses are required to report SIC codes. Alongside other address details, businesses can add the SIC code to ensure they are adhering to industry standards and protocols. This allows for quick identification of the applicable standards during address verification.

PostGrid offers an address verification API designed to ensure that the data is accurate and up-to-date as per the postal standards. Our address validation feature will ensure that the data is correct and deliverable. Furthermore, with the autocomplete API, we will predict and suggest complete addresses, which will speed up the address verification process. 

We are CASS (USPS) certified. We verify addresses against the USPS databases. Hence, you can trust our solution will only return accurate addresses. Moreover, we also cross-verify the addresses with NCOA to reflect any change of address. 

Government agencies and businesses have to verify multiple addresses in one go, and sometimes the addresses are international. Our address verification system allows verifying over 1 million addresses in a single request. Moreover, we have access to global addresses of more than 250 countries to facilitate international address verification in real-time. Our address verification system ensures timely and accurate communication and delivery of service.

SIC code service is a vital tool in standardizing the classification of businesses and analysis of their economic activity. Despite the advent of NAICS, It plays a significant role in targeted marketing, investment decisions, compliance, and more. Adding the SIC code to the address can enhance data integrity, ensure adherence to regulatory standards, and simplify and speed up the address verification process. 

To further streamline the process, you can use the PostGrid address verification API, which verifies records against the USPS and NCOA database to provide correct and latest information for both domestic and international addresses. Curious to see how we work? Request a demo now.