How are SIC Codes and NAICS Codes assigned to small businesses?

Thank you so much for this clear explanation! So if I understand correctly, I just need to find the codes that best match what my business does? I'm planning to open a specialty bakery focusing on gluten-free products. Would I just look up bakery-related codes and pick the most appropriate one? And do I need to register these codes somewhere official, or do I just start using them on my paperwork?

Yes, you've got it right! For a specialty bakery focusing on gluten-free products, you'd look for something in the food manufacturing or retail bakery category. For NAICS, you might start with code 311 (Food Manufacturing) and then drill down to something like 311812 (Commercial Bakeries) or 311811 (Retail Bakeries) depending on your business model. You don't need to officially register these codes with any central authority. You'll simply use them when filling out various forms like tax documents, loan applications, or business registrations. Different agencies might ask for this information on their specific forms. Just be consistent with how you classify your business across different applications and filings.

Does it work for complex businesses with multiple revenue streams? My company does web design, but we also sell digital products and offer consulting services. I've been using different codes on different forms which I'm worried might cause problems.

I'm skeptical about automated systems for this. Wouldn't a real accountant or business advisor be better at picking the optimal code? Sometimes these classifications are nuanced and you want to position yourself for the best lending rates.

For businesses with multiple revenue streams, the tool actually helps identify which should be your primary classification based on your largest revenue source. It also lets you note secondary activities. This helps maintain consistency across all your paperwork which is important for avoiding red flags. The system is actually pretty sophisticated and was developed with input from tax professionals. While a personal accountant is always valuable, this tool applies consistent rules based on actual classification guidelines. It's designed to help you find the most accurate codes, not just the ones that might seem preferential for lending - because misclassification can cause bigger problems down the road.

Wait, there's actually a way to talk to real IRS people without waiting for 3 hours? How exactly does this work? Do they just call the regular IRS number for you or what?

This seems too good to be true. I've literally spent entire days on hold with the IRS before giving up. Why would they answer a call from this service when they ignore everyone else? Sounds like a scam to me.

They actually use a system that navigates the IRS phone system and holds your place in line, then calls you when an agent picks up. It's completely legitimate - they don't call a special number or anything like that. They're just using technology to deal with the frustrating hold system so you don't have to stay on the phone yourself. It's not that the IRS is answering their calls preferentially - they're just solving the hold time problem. I was done with my entire call in less than 30 minutes including the time spent talking to the agent. Don't take my word for it though, check out their reviews online. Total game changer for tax season.

Wow, I had no idea insurance rates could be affected too. Do you know if it's possible to change your code later if you realize you picked the wrong one? Or are you kind of stuck with whatever you initially choose?

You can absolutely change your classification codes later if needed. Businesses evolve over time, and sometimes your primary activities shift. Just be aware that if you're changing them on existing accounts (like with your insurance company or bank), they might ask questions about why you're changing classification. The important thing is to be accurate and consistent. If you realize you've been using the wrong code, it's better to correct it than to continue with an inaccurate classification. Just make sure you update it everywhere - tax filings, loans, insurance, etc. - to avoid discrepancies that might raise red flags.

But doesn't picking certain codes make you more likely to get audited? I heard restaurants and cash-based businesses get flagged more often.