Standard Industrial Classification (SIC) Code - Explained
What is an SIC Code?
Written by J. Mance Gordon
Updated at April 20th, 2024
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What is a Standard Industrial Classification Code?
The Standard Industrial Classifications (SIC) refer to a set of symbols or codes that are used in the United States to classify industry areas and business activities companies engage in. SIC codes are tools that help the U.S government identify the nature of business a company does and areas of specialization of an industry.
The U.S government created the SIC codes in 1937 to have an effective analysis and evaluation of businesses, government agencies and industries. By 1997, the SIC codes were replaced by the North American Industry Classification System (NAICS) which serves as a new system of six-digit codes. That were adopted by Canada, United States and Mexico.
How is the SIC Code Used?
The major purpose of the SIC codes was the identification of business activities that a company engage in. These codes were also helpful in the analysis of economic activity of a company or business. SIC codes also improved economic communication between companies and industries and the states that adopted the codes.
SIC codes enable the government to access a listing of company activities which are accessed through the Electronic data gathering, analysis and retrieval system (EDGAR). The Securities and Exchange Commission (SEC) an agency owned by the United States still uses SIC codes. The codes aid the easy identification of the industry to which a company belongs and its business activities.