Using the right principal business code is crucial for your company's taxes—and the health of your industry as a whole.
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by Connor Beaulieu
Connor is a content strategist, journalist, and legal writer living and working in Chicago. Over the past decade, he'...
Updated on: April 4, 2024 · 12 min read
If you've ever filed taxes for your business, you've likely encountered a section asking for your IRS principal business code. This is part of the North American Industry Classification System, or NAICS, which is a system used by the American federal government to label and organize different businesses based on their respective industries and the goods or services they provide.
Using six digits, the NAICS applies a specific code to each business type. Then, business owners use those business activity codes when filing taxes. This allows the federal government to correctly tax each business according to its industry and collect valuable economic data.
Before you can find the right principal business code for your business, you'll need to fully understand your business' main revenue-generating activity. Even if your company engages in several smaller types of activities beyond its main purpose, that core purpose is what matters most for identifying your code.
Here are some ways you can go about finding the correct code for your business.
Whenever you receive tax forms that require a principal business code, such as Schedule C (Form 1040) for sole proprietors, Form 1065 for partnerships, and Forms 1120 and 1120-S for corporations, you'll also be provided a list of instructions for finding the appropriate code for your company. These instructions often include a list of codes or a reference to where you can find them.
Sometimes, finding the right principal business code is as simple as visiting the official NAICS website. There, you can browse industries and specific codes by keyword, such as "construction" or "consulting." Then, the NAICS website will provide detailed descriptions of each code that you can use to make sure it's right for your business.
As we mentioned above, it's important to focus on your company's core revenue-generating activity when choosing the business code to use on your taxes. Remember that the right code is the one that best describes the primary source of your income, even if it doesn't necessarily explain the entirety of everything your company does.
Sometimes, seeing examples of other businesses and their codes can help to more clearly identify which code is right for you. While such examples aren't always published by the IRS, business forums, industry publications, and materials provided by a qualified tax professional will often include clear examples for you to reference when making a choice.
If you're still unsure which code to choose, talking to a qualified tax professional or accountant may be your best bet. These experts are specially trained to help you understand the ins and outs of different codes, industries, and any implications they may have for your tax situation.
For business owners with a relatively clear understanding of their business's main purpose, the IRS publishes a regularly updated list of principal business activity codes, which you can reference when filing taxes. This list is typically included in the instructions you would receive alongside business tax forms. Additionally, we've included the full list of business codes below for you to browse.
To simplify your search, we've included all major codes from the IRS business activity codes form, categorized by industry.
110000 Agriculture, forestry, hunting and fishing
111000 Crop production
211110 Oil and gas extraction
211120 Crude petroleum extraction
211130 Natural gas extraction
212000 Mining (except oil and gas)
221000 Utilities
230000 Construction
236000 Construction of buildings
310000 Manufacturing
323100 Printing and related support activities
339110 Medical equipment and supplies manufacturing
423000 Merchant wholesalers, durable goods
424000 Merchant wholesalers, nondurable goods
441100 Automobile dealers
442000 Furniture and home furnishings stores
444100 Building materials and supplies dealers
445100 Grocery stores
445200 Specialty food stores
446110 Pharmacies and drug stores
446199 All other health and personal care stores
448000 Clothing and clothing accessories stores
451110 Sporting goods stores
451211 Bookstores
452000 General merchandise stores
453000 Miscellaneous store retailers
453220 Gift, novelty, and souvenir stores
453310 Used merchandise stores
454110 Electronic shopping and mail-order houses
480000 Transportation
485000 Transit and ground passenger transportation
493000 Warehousing and storage
511110 Newspaper publishers (except internet)
511120 Periodical publishers (except internet)
511130 Book publishers (except internet)
511140 Directory and mailing list publishers (except internet)
511190 Other publishers (except internet)
512000 Motion picture and sound recording industries
515100 Radio and television broadcasting (except internet)
517000 Telecommunications (including paging, cellular, satellite, cable, other telecommunications, and internet service providers)
519100 Other information services (including news syndicates and libraries)
519130 Internet publishing and broadcast
518210 Data processing, hosting, and related services
522100 Depository credit intermediation (including commercial banking, savings institutions, and credit unions)
522200 Nondepository credit intermediation (including credit card issuing and sales financing)
522110 Credit card issuing
522220 Sales financing
522291 Consumer lending
522292 Real estate credit
522298 Other nondepository credit intermediation
523000 Securities, commodity contracts, and other financial investments and related activities
523920 Portfolio management
523930 Investment advice
524113 Direct life insurance carriers
524114 Direct health and medical insurance carriers
524126 Direct property and casualty insurance carriers
524130 Reinsurance carriers
524292 Third-party administration of insurance and pension funds
524298 All other insurance-related activities
525100 Insurance and employee benefit funds
525920 Trusts, estates, and agency accounts
525990 Other financial vehicles (including mortgage REITs)
531110 Lessors of residential buildings and dwellings (including equity REITs)
531120 Lessors of nonresidential buildings (except mini-warehouses) (including equity REITs)
531190 Lessors of other real estate property (including equity REITs)
531310 Real estate property managers
531390 Other activities related to real estate
532000 Rental and leasing services
532420 Office machinery and equipment rental and leasing
541100 Legal services
541990 Consumer credit counseling services
541200 Accounting, tax preparation, bookkeeping, and payroll services
541300 Architectural, engineering, and related services
541380 Testing laboratories
541511 Custom computer programming services
541519 Other computer-related services
541610 Management consulting services
541700 Scientific research and development services
541800 Advertising and related services
541860 Direct mail advertising
541900 Other professional, scientific, and technical services
551111 Offices of bank holding companies
551112 Offices of other holding companies
561000 Administrative and support services
561300 Employment services
561439 Other business service centers
561499 All other business support services
561500 Travel arrangement and reservation services
561520 Tour operators
561700 Services to buildings and dwellings
562000 Waste management and remediation services (sanitary services)
611420 Computer training
611430 Professional and management development training
611600 Other schools and instruction (other than elementary and secondary schools or colleges and universities, which should select a code to describe their unrelated activities)
611710 Educational support services
621110 Offices of physicians
621300 Offices of other health practitioners
621400 Outpatient care centers
621500 Medical and diagnostic laboratories
621610 Home health care services
621910 Ambulance services
621990 All other ambulatory health care services
623000 Nursing and residential care facilities
623990 Other residential care facilities
624100 Individual and family services
624110 Community centers (except recreational only), youth adoption agencies
624200 Community food and housing, and emergency and other relief services
624210 Meal delivery programs, soup kitchens, or food banks
624310 Vocational rehabilitation services
624410 Child day care services
711110 Theater companies and dinner theaters
711120 Dance companies
711130 Musical groups and artists
711190 Other performing art companies
711210 Spectator sports (including sports clubs and racetracks)
711300 Promoters of performing arts, sports, and similar events
713110 Amusement and theme parks
713200 Gambling industries
713910 Golf courses and country clubs
713940 Fitness and recreational sports centers
713990 All other amusement and recreation industries (including skiing facilities, marinas, and bowling centers)
721000 Accommodation
721110 Hotels and motels (except casino hotels)
721210 RV (recreational vehicle) parks and recreational camps
721310 Rooming and boarding houses, dormitories, and workers’ camps
722320 Caterers
722440 Drinking places (alcoholic beverages)
722511 Full-service restaurants
722513 Limited-service restaurants
722514 Cafeterias and buffets
722515 Snack and non-alcoholic beverage bars
811000 Repair and maintenance
812300 Dry cleaning and laundry services
812900 Other personal services
812930 Parking lots and garages
900001 Investment activities of section 501(c)(7), (9), or (17) organizations
900002 Rental of personal property
900003 Passive income activities with controlled organizations
While the NAICS outlines a wide range of codes, including those falling under "other" categories, some businesses may still fall into the grey area between industries. In the event that a business doesn't cleanly fit into any one principal business activity, using the 999999 code may be appropriate.
Even more than the "other" category, the 999999 code serves as a catch-all for hard-to-define or unusual businesses, such as those in emerging industries.
Keep in mind, however, that assigning your business a 999999 code when filing taxes should only be done after extensive research and preferably with the help of a tax professional. In cases where the 999999 code is mistakenly used, businesses may open themselves up to audits or other regulatory actions.
Sometimes, your business will undergo a significant change in structure and, because of that change, require a new principal business code. This structural change could be anything from the business model and industry focus to the products or services it provides. Regardless, updating your NAICS code to reflect the new nature of your business is important for staying above board with the IRS and other federal agencies.
In the case of such a chance, simply use the newer, more appropriate code the next time you file taxes. This process is straightforward and doesn't require anything beyond changing one piece of information on your taxes, but you may want to consult a tax professional to ensure that the new code is correct.
If you believe you've used an incorrect code on an already-filed return, however, the process is significantly more complicated. Filing taxes for your business with the incorrect code can affect your eligibility for specific deductions or credits, open you up to regulation issues, and may even trigger an audit.
To fix such an error, you'll need to amend your return through a form such as Form 1040-X or 1120X. While this can be done on your own, it's almost always better to consult a tax professional to make sure that no details or paperwork are overlooked—especially if the misfiled taxes have already been processed.
Although their primary uses are tax-related, principal business codes actually serve several important purposes in the American economy, meaning they are crucial to properly classify and report your business.
When filing taxes for your business, using the correct principal business code ensures that you not only maximize any industry-specific deductions or credits but also minimize the risk of unnecessary audits. Generally, your principal business code should be included in the following sections of your taxes (depending on the size and structure of your business):
Similar to how different industries allow different deductions or credits, they also impose different regulations specific to the goods or services provided by businesses within that industry. When a business is coded improperly, it may be subjected to unfair regulations and, often, punishments for not adhering to those regulations.
By assigning your business an activity code, you're instructing the IRS to group you with other businesses within your industry. This allows the IRS to compare your business' financial information to similar businesses and check for any outliers or discrepancies.
In instances where your reported financial information doesn't match up with industry standards, the IRS may flag your business for further inspection or even an audit, meaning it's especially important to label your business with the correct code in order to ensure you're being compared to the right industry standards.
Beyond their use for tax purposes, principal business codes grant the IRS access to a vast database of economic information broken down by industry and business size. This database, in turn, serves as one of the most powerful resources for the government and economists alike. Using this data, experts can:
Principal business codes improve those communications by automatically letting the federal government know how businesses in your industry are performing and, consequently, whether extra tax credits or looser regulations may be appropriate.
Business owners who use the wrong principal business codes when filing taxes may face serious complications such as revoked eligibility for credits and deductions, breach of industry regulations, and even financial audits.
Yes. In the event that you are engaged in more than one professional activity, you may need to list multiple business codes when filing taxes. When doing so, list these codes in order of the businesses with the largest gross income to those with the smallest.
In certain rare cases, the IRS may change your principal business code during the course of an audit if they find that your previous code didn't properly reflect the nature of your business.
While your principal business code doesn't directly affect the amount of taxes you'll pay, it does determine which credits or deductions you may be eligible for.
Yes, both terms may be used interchangeably, though the phrase "principal business code" is more commonly used by business owners and tax professionals.
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