SIC Code

The Standard Industrial Classification (SIC) code is a four-digit system for categorizing industries. Established by the U.S. government in 1937, SIC codes were used, and are sometimes still used, to classify businesses for statistical purposes, regulatory requirements, and to promote uniformity in data reporting. Each SIC code represents a specific industry, intending to enable more straightforward economic activity analysis and comparison.

The SIC code system has been a foundational tool for categorizing industries, facilitating data analysis, regulatory compliance, and market research. Although largely replaced by the North American Industry Classification System (NAICS) system now, SIC codes remain relevant for historical data and specific regulatory applications. Understanding SIC codes and their applications continues to be important for businesses, researchers, and government agencies involved in economic analysis and reporting.

• Identification System: SIC stands for Standard Industrial Classification, used to classify industries. Each industry is assigned a unique four-digit code. The first digit represents the division, the second the major group, the third the industry group, and the final digit is the specific industry.
• SIC → NAICS: The U.S. government created SIC to standardize data reporting and analysis. SIC was essential for statistical purposes, regulatory compliance, and economic analysis. In 1997, the SIC system was largely replaced by the NAICS Code, which encompasses the U.S., Mexico, and Canada.
• Still in Use: Despite being replaced, SIC codes are still used in some sectors, such as B2B (business-to-business) and historical data. Verify if you meet those parameters; otherwise, NAICS codes are probably more relevant for your current business.
• Wide Application: Utilized by government agencies like the U.S. Securities and Exchange Commission (SEC), businesses, and researchers for industry classification.

The SIC code system was established in 1937 by the U.S. government to provide a standardized method of identifying and classifying industries. This system assigns a unique four-digit code to each industry, which facilitates uniformity in data reporting and economic analysis. SIC codes are still used by various government agencies, researchers, and businesses to categorize industry sectors for statistical purposes, regulatory requirements, and market analysis. If your business must utilize a SIC code, you will self-assign this code based on their directory and provide it when outside organizations ask.

SIC codes serve multiple essential functions:

• Standardization: By providing a uniform classification system, SIC codes ensure consistency in how industries are categorized and reported.
• Data Analysis: Researchers and government agencies use SIC codes to collect, analyze, and compare economic data across different industries.
• Regulatory Compliance: Businesses often use SIC codes to comply with regulation requirements, such as reporting to the Securities and Exchange Commission (SEC).
• Market Research: Companies use SIC codes to identify industry trends, conduct market research, and perform competitive analysis.

Structure of SIC Codes

The SIC code system categorizes industries into four levels of detail:

1. Division: The broadest level, represented by a single digit.
2. Major Group: A more specific category within a division, represented by two digits.
3. Industry Group: A subset of the major group, represented by three digits.
4. Industry: The most specific level, represented by a four-digit code.

For example, the SIC code for "General Medical and Surgical Hospitals" is 8062:

• Division: 8 (Services)
• Major Group: 80 (Health Services)
• Industry Group: 806 (Hospitals)
• Industry: 8062 (General Medical and Surgical Hospitals)

General Applications of SIC Codes

• Economic Reporting: Government agencies use SIC codes to collect and report financial data, such as employment statistics and industry output.
• Business Registration: Companies use SIC codes to indicate their primary industry when registering their business.
• Regulatory Filings: Businesses report SIC codes in regulatory filings to comply with requirements from agencies like the SEC and the Occupational Safety and Health Administration (OSHA).
• Market Research and Analysis: Market researchers use SIC codes to segment markets, analyze industry trends, and assess competitive landscapes.

Applications of SIC Code 8062

From the above example for "General Medical and Surgical Hospitals," direct applications might include:

• Economic Reporting: Government agencies use SIC code 8062 to collect and report data on hospitals, such as employment statistics, revenue figures, and industry growth.
• Business Registration: When opening a new hospital, an equity firm uses SIC code 8062 to indicate its primary industry classification.
• Regulatory Filings: Hospitals report SIC code 8062 in regulatory filings to comply with OSHA.
• Market Research and Analysis: Market researchers use SIC code 8062 to segment the healthcare market and assess potential competitors in the metropolis.

Transition to NAICS

In 1997, the U.S. adopted the NAICS to replace the SIC system. NAICS provides a more detailed and updated framework for classifying industries, reflecting the evolving structure of the economy. Despite this transition, SIC codes are still used in certain sectors and for historical data analysis.