Government organizations utilize the North American Industry Classification System (NAICS) to categorize firms according to their economic activity. An organization’s industry can be determined by a six-digit code. The government collects and analyzes business data using the NAICS code among other things. Based on a company’s main business, NAICS codes are issued. Companies may, however, alter their NAICS code to reflect adjustments to their business.
The U.S. Census Bureau, in coordination with other federal agencies, assigns the NAICS code. The code is based on the main source of income for the company. If a company engages in various activities, the NAICS code should be determined using the main activity. The government uses the NAICS code to collect and analyze company data for a variety of purposes.
Because it is a young business, cybersecurity is not yet represented in the NAICS system. But there are initiatives underway to include cybersecurity into the NAICS system. The initiative to create an NAICS code specifically for cybersecurity is being led by the National Institute of Standards and Technology (NIST). The new code will enhance data gathering and analysis while also helping to standardize the cybersecurity sector.
If a company has many business lines, it can compete under more than one NAICS code. The principal NAICS code should, however, reflect the company’s main economic activity. Secondary NAICS numbers can be used by a company to identify its other business divisions. Can a Company’s NAICS Code Change?
Yes, a business can alter its NAICS code if its main industry does. The U.S. Census Bureau will grant the company’s request for a new NAICS number. A thorough justification for why the organization needs to modify its NAICS number should be included in the request. If the request is appropriate, the U.S. Census Bureau will examine it and assign a new NAICS code.
In conclusion, the NAICS code is a crucial method for categorizing companies according to their economic activities. If a company’s main business changes, it can alter its NAICS code. The NAICS number is given by the U.S. Census Bureau depending on the major economic activity of the company. The NAICS system is being expanded to incorporate growing areas like cybersecurity. If a company has various business lines, it may compete under different NAICS codes.