What Is An SIC Code?

sic codes

What Is An SIC Code?

What Is An SIC Code?

Often times you will hear merchant processing companies ask for a business’ SIC code. SIC stands for Standard Industrial Classification. So, each business is given a four digit SIC code based on what industry type they fall under. SIC codes are imperative in the business world, especially when incorporating, applying for funding or applying for credit card processing. It makes life much easier on the banks and underwriting teams if they are fully aware of what SIC code(s) a business is classified under.

Primary And Sub/Additional SIC Codes

Every business has a primary SIC code. This number shows what the company’s dominant business type is and the primary code is usually determined by how the company makes the most money. Companies can have sub or additional SIC codes, but are usually identified by their primary. In the merchant processing world, additional SIC codes are often looked at and given separate MIDs to avoid being miscoded and later terminated. So, in this case it is extremely important to have your business “coded” correctly.

What Are SIC Codes Used For?

  • The SEC (Security and Exchange Commission) uses these codes to sort company filings
  • SIC codes are used for taxation purposes
  • Those in the professional space use SIC codes to segment different market types
  • Companies that operate in certain industries use specific SIC codes when filing to make sure that their business type is properly identified.
  • Identifying governmental contracts by SIC description
  • To help in the collection, presentation and analysis of business data.

Why Are SIC Codes Important?

  • Many different companies use SIC codes to identify business types by industry code
  • SIC codes are often asked for on applications and forms
  • SIC codes make gathering and analysis of large data groups quick and efficient
  • To identify different target markets, whether they be potential clients or competitors