NAICS Codes – Your Company Identity and Small Business Size Standards

The illustrious North American Industry Classification System (NAICS) code…for some companies this code is rarely used or noticed, for others it packs a serious punch! Especially in the case of federal contractors, a specific NAICS code associated with your business can get you noticed and offer business opportunities.

The NAICS code was originally created for the use of collection and statistical data to show economic status within the US. While still used for this purpose, it has definitely become a company’s key identifier. NAICS was designed to allow businesses to self-code, determining which is the most appropriate for their business type.

The NAICS code uses a six-digit hierarchical system to classify all economic activity into 20 different industry sectors. From there, codes are narrowed to 99 three-digit subsector codes and then further divided into 312 four-digit industry codes, which are subdivided into 713 five-digit industry codes and finally broken into 1,066 six-digit NAICS codes. Whew, that was a lot! Most companies fall into multiple industry code categories as some products and services tend to overlap slightly.

When registering a company in beta.SAM.gov, multiple NAICS codes can be selected, however, only one can be selected as your Primary code. Selecting multiple codes, or all that apply, is beneficial for potential work in the future because it broadens your company’s marketability. One benefit of listing multiple NAICS codes is that contracting agencies or other companies can search by NAICS code and find a list of firms for possible business opportunities.

The Small Business Administration (SBA) established size standards for each NAICS code is based on two separate criteria to determine the largest size a company can be and still qualify as a small business (SB). The first is the average annual receipts of the company for the past five years, this was changed by the SBA in January 2020 from three years. The second criteria is the average employment of the firm, in other words, the average number of employees. Being a SB designation can fuel so many business opportunities or sales efforts, so it is important to understand, what size standards are associated with your NAICS code(s). The federal government and Department of Defense (DoD) often set-aside contracts for certain SB concerns and aim for a certain percentage goal of budget spending. Associating your business with the correct NAICS code and size standard is pertinent for your business opportunities.

For example, the most common NAICS code Meridian West works with is 236220, Commercial and Institutional Building Construction, which has a size standard of $39.5 million. When a construction company with this primary NAICS code exceeds this size annually, they no longer qualify as a SB. You can find the full listing of NAICS codes and their associated business size thresholds at https://www.sba.gov/document/report--table-size-standards-naics-codes.

Meridian West’s NAICS codes are 541613, Marketing Consulting Services and 541611, Administrative Management and General Management Consulting Services, so you better use us for all your proposal and marketing needs! Let us know if you need help establishing your appropriate NAICS codes or size standards.