IRS principal business codes: What they are and how they're used (2024)

What are IRS principal business codes?

If you've ever filed taxes for your business, you've likely encountered a section asking for your IRS principal business code. This is part of the North American Industry Classification System, or NAICS, which is a system used by the American federal government to label and organize different businesses based on their respective industries and the goods or services they provide.

Using six digits, the NAICS applies a specific code to each business type. Then, business owners use those business activity codes when filing taxes. This allows the federal government to correctly tax each business according to its industry and collect valuable economic data.

How to find the correct IRS principal business code

Before you can find the right principal business code for your business, you'll need to fully understand your business' main revenue-generating activity. Even if your company engages in several smaller types of activities beyond its main purpose, that core purpose is what matters most for identifying your code.
Here are some ways you can go about finding the correct code for your business.

Review the IRS instructions for your tax forms

Whenever you receive tax forms that require a principal business code, such as Schedule C (Form 1040) for sole proprietors, Form 1065 for partnerships, and Forms 1120 and 1120-S for corporations, you'll also be provided a list of instructions for finding the appropriate code for your company. These instructions often include a list of codes or a reference to where you can find them.

Use the NAICS website

Sometimes, finding the right principal business code is as simple as visiting the official NAICS website. There, you can browse industries and specific codes by keyword, such as "construction" or "consulting." Then, the NAICS website will provide detailed descriptions of each code that you can use to make sure it's right for your business.

Focus on your primary source of revenue

As we mentioned above, it's important to focus on your company's core revenue-generating activity when choosing the business code to use on your taxes. Remember that the right code is the one that best describes the primary source of your income, even if it doesn't necessarily explain the entirety of everything your company does.

Look at examples

Sometimes, seeing examples of other businesses and their codes can help to more clearly identify which code is right for you. While such examples aren't always published by the IRS, business forums, industry publications, and materials provided by a qualified tax professional will often include clear examples for you to reference when making a choice.

Talk to a qualified tax professional

If you're still unsure which code to choose, talking to a qualified tax professional or accountant may be your best bet. These experts are specially trained to help you understand the ins and outs of different codes, industries, and any implications they may have for your tax situation.

Consult the official IRS list of codes

For business owners with a relatively clear understanding of their business's main purpose, the IRS publishes a regularly updated list of principal business activity codes, which you can reference when filing taxes. This list is typically included in the instructions you would receive alongside business tax forms. Additionally, we've included the full list of business codes below for you to browse.

The IRS list of business codes

To simplify your search, we've included all major codes from the IRS business activity codes form, categorized by industry.

Agriculture, forestry, hunting, and fishing

110000 Agriculture, forestry, hunting and fishing
111000 Crop production

Mining

211110 Oil and gas extraction

211120 Crude petroleum extraction

211130 Natural gas extraction

212000 Mining (except oil and gas)

Utilities

221000 Utilities

Construction

230000 Construction

236000 Construction of buildings

Manufacturing

310000 Manufacturing

323100 Printing and related support activities

339110 Medical equipment and supplies manufacturing

Wholesale trade

423000 Merchant wholesalers, durable goods

424000 Merchant wholesalers, nondurable goods

Retail trade

441100 Automobile dealers

442000 Furniture and home furnishings stores

444100 Building materials and supplies dealers

445100 Grocery stores

445200 Specialty food stores

446110 Pharmacies and drug stores

446199 All other health and personal care stores

448000 Clothing and clothing accessories stores

451110 Sporting goods stores

451211 Bookstores

452000 General merchandise stores

453000 Miscellaneous store retailers

453220 Gift, novelty, and souvenir stores

453310 Used merchandise stores

454110 Electronic shopping and mail-order houses

Transportation and warehousing

480000 Transportation

485000 Transit and ground passenger transportation

493000 Warehousing and storage

Information

511110 Newspaper publishers (except internet)

511120 Periodical publishers (except internet)

511130 Book publishers (except internet)

511140 Directory and mailing list publishers (except internet)

511190 Other publishers (except internet)

512000 Motion picture and sound recording industries

515100 Radio and television broadcasting (except internet)

517000 Telecommunications (including paging, cellular, satellite, cable, other telecommunications, and internet service providers)

519100 Other information services (including news syndicates and libraries)

519130 Internet publishing and broadcast

Data processing

518210 Data processing, hosting, and related services

Finance and insurance

522100 Depository credit intermediation (including commercial banking, savings institutions, and credit unions)

522200 Nondepository credit intermediation (including credit card issuing and sales financing)

522110 Credit card issuing

522220 Sales financing

522291 Consumer lending

522292 Real estate credit

522298 Other nondepository credit intermediation

523000 Securities, commodity contracts, and other financial investments and related activities

523920 Portfolio management

523930 Investment advice

524113 Direct life insurance carriers

524114 Direct health and medical insurance carriers

524126 Direct property and casualty insurance carriers

524130 Reinsurance carriers

524292 Third-party administration of insurance and pension funds

524298 All other insurance-related activities

525100 Insurance and employee benefit funds

525920 Trusts, estates, and agency accounts

525990 Other financial vehicles (including mortgage REITs)

Real estate and rental leasing

531110 Lessors of residential buildings and dwellings (including equity REITs)

531120 Lessors of nonresidential buildings (except mini-warehouses) (including equity REITs)

531190 Lessors of other real estate property (including equity REITs)

531310 Real estate property managers

531390 Other activities related to real estate

532000 Rental and leasing services

532420 Office machinery and equipment rental and leasing

Professional, scientific, and technical services

541100 Legal services

541990 Consumer credit counseling services

541200 Accounting, tax preparation, bookkeeping, and payroll services

541300 Architectural, engineering, and related services

541380 Testing laboratories

Management of companies and enterprises

551111 Offices of bank holding companies

551112 Offices of other holding companies

Administrative and support services

561000 Administrative and support services

561300 Employment services

561439 Other business service centers

561499 All other business support services

561500 Travel arrangement and reservation services

561520 Tour operators

561700 Services to buildings and dwellings

Waste management and remediation services

562000 Waste management and remediation services (sanitary services)

Educational services

611420 Computer training

611430 Professional and management development training

611600 Other schools and instruction (other than elementary and secondary schools or colleges and universities, which should select a code to describe their unrelated activities)

611710 Educational support services

Healthcare and social assistance

621110 Offices of physicians

621300 Offices of other health practitioners

621400 Outpatient care centers

621500 Medical and diagnostic laboratories

621610 Home health care services

621910 Ambulance services

621990 All other ambulatory health care services

623000 Nursing and residential care facilities

623990 Other residential care facilities

624100 Individual and family services

624110 Community centers (except recreational only), youth adoption agencies

624200 Community food and housing, and emergency and other relief services

624210 Meal delivery programs, soup kitchens, or food banks

624310 Vocational rehabilitation services

624410 Child day care services

Arts, entertainment, and recreation

711110 Theater companies and dinner theaters

711120 Dance companies

711130 Musical groups and artists

711190 Other performing art companies

711210 Spectator sports (including sports clubs and racetracks)

711300 Promoters of performing arts, sports, and similar events

713110 Amusem*nt and theme parks

713200 Gambling industries

713910 Golf courses and country clubs

713940 Fitness and recreational sports centers

713990 All other amusem*nt and recreation industries (including skiing facilities, marinas, and bowling centers)

Accommodation and food services

721000 Accommodation

721110 Hotels and motels (except casino hotels)

721210 RV (recreational vehicle) parks and recreational camps

721310 Rooming and boarding houses, dormitories, and workers’ camps

722320 Caterers

722440 Drinking places (alcoholic beverages)

722511 Full-service restaurants

722513 Limited-service restaurants

722514 Cafeterias and buffets

722515 Snack and non-alcoholic beverage bars

Other services

811000 Repair and maintenance

812300 Dry cleaning and laundry services

812900 Other personal services

812930 Parking lots and garages

Other

900001 Investment activities of section 501(c)(7), (9), or (17) organizations

900002 Rental of personal property

900003 Passive income activities with controlled organizations

The 999999 code

While the NAICS outlines a wide range of codes, including those falling under "other" categories, some businesses may still fall into the grey area between industries. In the event that a business doesn't cleanly fit into any one principal business activity, using the 999999 code may be appropriate.

Even more than the "other" category, the 999999 code serves as a catch-all for hard-to-define or unusual businesses, such as those in emerging industries.

Keep in mind, however, that assigning your business a 999999 code when filing taxes should only be done after extensive research and preferably with the help of a tax professional. In cases where the 999999 code is mistakenly used, businesses may open themselves up to audits or other regulatory actions.

Changing your principal business code

Sometimes, your business will undergo a significant change in structure and, because of that change, require a new principal business code. This structural change could be anything from the business model and industry focus to the products or services it provides. Regardless, updating your NAICS code to reflect the new nature of your business is important for staying above board with the IRS and other federal agencies.

In the case of such a chance, simply use the newer, more appropriate code the next time you file taxes. This process is straightforward and doesn't require anything beyond changing one piece of information on your taxes, but you may want to consult a tax professional to ensure that the new code is correct.
If you believe you've used an incorrect code on an already-filed return, however, the process is significantly more complicated. Filing taxes for your business with the incorrect code can affect your eligibility for specific deductions or credits, open you up to regulation issues, and may even trigger an audit.

To fix such an error, you'll need to amend your return through a form such as Form 1040-X or 1120X. While this can be done on your own, it's almost always better to consult a tax professional to make sure that no details or paperwork are overlooked—especially if the misfiled taxes have already been processed.

What are IRS business codes used for?

Although their primary uses are tax-related, principal business codes actually serve several important purposes in the American economy, meaning they are crucial to properly classify and report your business.

Filing taxes

When filing taxes for your business, using the correct principal business code ensures that you not only maximize any industry-specific deductions or credits but also minimize the risk of unnecessary audits. Generally, your principal business code should be included in the following sections of your taxes (depending on the size and structure of your business):

Schedule C (Form 1040 or 1040-SR): Used by sole proprietors and single-member LLCs, your principal business code should be entered in Part I, line B.
Form 1065: Used by partnerships and multi-member LLCs, your principal business code should be listed on Page 1, in the section labeled “principal business activity.”
Form 1120 (U.S. Corporation Income Tax Return): Used by C corporations, your principal business code should be entered on page 1, in the section for “business activity.”
Form 1120-S (U.S. Income Tax Return for an S Corporation): Used by S corporations, your code should be listed on page 1 in the business activity section.

Regulations

Similar to how different industries allow different deductions or credits, they also impose different regulations specific to the goods or services provided by businesses within that industry. When a business is coded improperly, it may be subjected to unfair regulations and, often, punishments for not adhering to those regulations.

Industry comparisons

By assigning your business an activity code, you're instructing the IRS to group you with other businesses within your industry. This allows the IRS to compare your business' financial information to similar businesses and check for any outliers or discrepancies.

Audits and reviews

In instances where your reported financial information doesn't match up with industry standards, the IRS may flag your business for further inspection or even an audit, meaning it's especially important to label your business with the correct code in order to ensure you're being compared to the right industry standards.

Economic analysis

Beyond their use for tax purposes, principal business codes grant the IRS access to a vast database of economic information broken down by industry and business size. This database, in turn, serves as one of the most powerful resources for the government and economists alike. Using this data, experts can:

Identify industry trends: By comparing and contrasting data across various industries, the IRS and federal government gain invaluable insight into industry health and trends, allowing them to pinpoint industries that may need more help the following year.
Produce statistically accurate reports: Agencies like the IRS, Census Bureau, and Bureau of Economic Analysis (BEA) are all responsible for taking data, such as that provided by principal business codes, and translating it into accurate reports used by countless organizations, both public and private.
Develop new policies: Even the best data and reports are only as good as the action they drive, and information from principal business codes is often used to develop new economic policies to stimulate growth and promote a healthier economy. By taking the time to correctly code your business and file taxes, you're doing your part in driving the creation of these policies.
Analyze imports and exports: Just like business activity codes help the government understand how businesses are performing within the United States, they can also help explain how U.S. companies with international dealings are behaving. This, in turn, allows economists to better understand the U.S. economy as a whole and any trends in our international imports and exports.
Support small businesses: Between limited resources and the heavy workload of starting a new business, it can be difficult for small business owners to effectively communicate their needs and pain points to larger organizations, such as the IRS.

Principal business codes improve those communications by automatically letting the federal government know how businesses in your industry are performing and, consequently, whether extra tax credits or looser regulations may be appropriate.

Frequently asked questions

What happens if I use the wrong code?

Business owners who use the wrong principal business codes when filing taxes may face serious complications such as revoked eligibility for credits and deductions, breach of industry regulations, and even financial audits.

Can I have more than one business code?

Yes. In the event that you are engaged in more than one professional activity, you may need to list multiple business codes when filing taxes. When doing so, list these codes in order of the businesses with the largest gross income to those with the smallest.

Can the IRS change my code for me?

In certain rare cases, the IRS may change your principal business code during the course of an audit if they find that your previous code didn't properly reflect the nature of your business.

Does my code affect how much taxes I pay?

While your principal business code doesn't directly affect the amount of taxes you'll pay, it does determine which credits or deductions you may be eligible for.

Are principal business codes and NAICS codes the same thing?

Yes, both terms may be used interchangeably, though the phrase "principal business code" is more commonly used by business owners and tax professionals.