What Is the NAICS Code for an LLC? Complete Guide for Business Owners

As you’re beginning to construct a business or manage one that has already been established, you might have come across the phrase NAICS code. But what is the NAICS code for LLC, and what is its significance? To put it simply, it is a classification system that identifies what your LLC primarily does. It matters greatly when it comes to taxation, licensing, government contracting, and statistical analysis. Whether you are forming an LLC or simply want to update your business information, the compliance NAICS code is vital.

We will discuss the basic information you will need to understand a NAICS code, how to choose one, and update it for your LLC.

What is an NAICS Code?

The North American Industry Classification System (NAICS) is a system that assigns a six-digit code to a business for its specific area of economic activities, for the US, Canada, and Mexico. Every business, including an LLC, is assigned an NAICS code that best describes its primary operations.

As an instance, a digital marketing agency might use NAICS code 541613 (Marketing Consulting Services), and a clothing retail business might use NAICS code 448120 (Women’s Clothing Stores).

History of the NAICS System

Before NAICS, the U.S. used the Standard Industrial Classification (SIC) system. However, the growing complexity and diversification of businesses necessitated a more accurate and updated system. Thus, NAICS was introduced in 1997, replacing the outdated SIC system.

The NAICS system is revised every five years to incorporate modifications in the economy and the emergence of new industries, thus maintaining its relevance to contemporary business practices.

Understanding the NAICS Code Format and Structure

Every NAICS code is a number with six digits, organized in a hierarchy:

• First two digits: Economic sector (example: 54 for Professional Services)
• Third digit: Subsector
• Fourth digit: Industry group
• Fifth digit: NAICS industry
• Sixth digit: National industry

This format allows for wide-to-narrow classification, which enables precise categorization of a business’s operations.

How Does the NAICS Code System Work?

The NAICS code system is applied by multiple federal, state, and local government agencies. Here’s how it works:

• For the IRS: Assists in establishing tax classifications
• For the Census Bureau: Facilitates the analysis of economic data
• For state licensing agencies: Helps ensure businesses are properly categorized
• For banks and lenders: Assesses risk based on industry

This system enables effective monitoring of economic activities and comparison of data across different sectors.

NAICS Codes vs. SIC Codes: What’s the Difference?

The NAICS system is more precise than the older SIC system. Consider the following differences:

While some forms still request SIC codes, it’s been quite some time since NAICS codes became the standard for LLCs.

Why LLCs Need a NAICS Code

NAICS codes are used for legal classification reasons, with every Limited Liability Company (LLC) needing one. Here’s why:

• IRS Reporting: Identifies the industry claimed during taxation
• Business Licenses: Needed in some states for application
• Loans and Grants: Determines eligibility for receiving funds
• Government Contracts: Required to be listed for bidding
• Market Analysis: Useful in benchmarking and planning for the business in the long run

Inaccurate or a lack of assigned NAICS codes could lead to your misclassifying business operations and cause delays.

When Do You Use a NAICS Code for Your LLC?

You will need to use your LLC NAICS code in the following scenarios:

• During the application process for getting an Employer Identification Number (EIN)
• Filing business registration or renewals
• Applying for business licenses and permits
• Government contract bids
• Filing taxes
• Applying for funding or business insurance

All of these activities require a clear understanding of the NAICS code for LLC that pertains to your operations.

How to Choose the Right NAICS Code for Your LLC

To select the NAICS code for your LLC, do the following:

• Identify your primary business activity. What service or product do you offer?
• Use the NAICS search tool at www.census.gov/naics
• Read multiple codes to ensure accuracy across the industry
• Seek expert help: A CPA or your business consultant will help

Always ensure you use the code that corresponds with the revenue number for your LLC.

How to Look Up the NAICS Code for Your LLC

If your LLC is registered, you can find your NAICS code by:

• Checking your EIN application form (Form SS-4)
• Reviewing your state business registration
• Searching in the U.S. Company Lookup Tool with your business name
• Logging into your IRS account or state tax agency portal

If you’re planning an update or expansion to your business, confirming your current NAICS code is vital.

Example NAICS Codes for Common LLC Business Types

While using these examples can steer you in the right direction, ensure they reflect your business activities.

What If No NAICS Code Matches Your LLC’s Activities?

If you still can’t find an exact match, don’t panic. Use the closest code to your primary business. The system is far from perfect, and niche or hybrid businesses often slip through the cracks.

You can also use a broader category and describe your exact activities in your business plan, tax filings, or licensing documents.

How to Get a NAICS Code for Your LLC

You do not apply for a NAICS code through a formal agency. Rather, you self-assign during the:

• EIN application with the IRS
• State business registration
• Business license application

You can find a full searchable database and downloadable lists of codes on the U.S. Census Bureau’s NAICS website.

Updating or Changing Your NAICS Code

Your LLC’s NAICS code is not permanent. You can change it if your business:

• Expands into new industries
• Changes its primary product or service
• Rebrands or pivots its model

To update your code:

• Notify the IRS when filing your tax return
• Update state filings or business licenses
• Amend your EIN records, if needed

Accurately keeping this code helps avoid compliance and tax issues.

What to Do If You’re Assigned the Wrong NAICS Code

Mistakes happen, and sometimes, businesses get classified under the wrong NAICS code either due to an error or by self-assignment.

If you find out the NAICS code is wrong:

• Change it in your next tax return submission
• Update any business licenses or state registrations
• Reach out to the agency that gave you the wrong classification with proof for the change

Having the wrong code could lead to loss of eligibility for some loans, grants, or certification opportunities, so making the change as soon as possible is ideal.

Common Questions (FAQs)

1. What is a NAICS Code for an LLC?
A NAICS code for an LLC is basically a six-digit number that identifies what type of business the LLC is primarily engaged in. It assists government agencies, financial institutions, and other relevant entities in understanding the nature of your LLC’s operations and helps them in taxation, licensing, and regulation.

2. Do I need a NAICS Code to form an LLC?
In most cases, you do not need a NAICS code to form your LLC. However, you will likely need to provide one when applying for an EIN, filing taxes, or applying for business licenses and permits.

3. How do I find the correct NAICS Code for my LLC?
You can search on the official NAICS website (census.gov/naics) or use NAICS lookup tools available online. Determine your LLC’s primary source of income and choose the best matching code for that activity.

4. Can I have more than one NAICS Code for my LLC?
In theory, your LLC should only have one primary NAICS code, especially when submitting tax documents. You may reference secondary codes if your business operates in multiple industries.

5. Is the NAICS code permanent for my LLC?
No, your NAICS code can change. It is advised to make changes to your tax filings and business records NAICS code if your LLC restructures its business focus or diversifies into new industries.

6. What happens if I choose the wrong NAICS code for my LLC?
Inaccurate NAICS codes may lead to wrong tax classifications, problems with licenses, and issues when trying to get loans or grants. Whenever possible, you should make the necessary changes right away to avoid complications.

EasyFiling: Helping You Select the Right NAICS Code for Your LLC

We at EasyFiling strive to assist entrepreneurs and business owners in getting the most applicable NAICS code for their LLC. We work with clients starting new companies or those who don’t know if their classification is accurate. Our goal is to provide unmatched customer support so every business can start fast, hassle-free, and right.

With EasyFiling, you’ll get started right away and set your LLC up for long-term success.

Conclusion

You are now familiar with the NAICS code for LLC, so you can classify your business better. The NAICS code should be correct when forming your LLC, applying for EIN, or updating tax records so operations run smoothly, funding is easier, and compliance is correctly met.