Understanding NAICS Codes and Their Application for General Contractors
The North American Industry Classification System (NAICS) is a standard used by the United States, Canada, and Mexico to classify business establishments for the collection, analysis, and publication of statistical data related to the economy. For general contractors working across multiple fields like asphalt, residential and commercial building, painting, and roofing, understanding and applying the correct NAICS codes is crucial. Here’s an expanded look at how many NAICS codes a company can have and how it pertains to such diverse operations:
Overview of NAICS Codes for General Contractors
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General Contracting for Residential Building:
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236115 – New Single-Family Housing Construction (except For-Sale Builders)
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236116 – New Multifamily Housing Construction (except For-Sale Builders)
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236118 – Residential Remodelers
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General Contracting for Commercial and Institutional Building:
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236220 – Commercial and Institutional Building Construction
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Specialty Trades:
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238160 – Roofing Contractors
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238320 – Painting and Wall Covering Contractors
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237310 – Highway, Street, and Bridge Construction (for asphalt work; this is more suited if the contractor does significant roadwork)
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238990 – All Other Specialty Trade Contractors (could apply to various specialized tasks like asphalt maintenance or sealing)
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Limitations on the Number of NAICS Codes
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Primary vs. Secondary Codes: Every business has one primary NAICS code that corresponds to its principal activity or the activity generating the most revenue. However, there is no strict limitation on the number of secondary NAICS codes a company can have. Secondary codes represent other revenue-producing activities that the company engages in.
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Government Systems and Registries:
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In systems like the System for Award Management (SAM) used by federal contractors, businesses can select multiple NAICS codes (up to 5 or 10, according to some sources). This allows a company to accurately reflect its diverse operations and increases visibility for contracting opportunities.
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Data Collection and Reporting: For statistical purposes by agencies like the U.S. Census Bureau, only one NAICS code per establishment is used, but for comprehensive reporting or when registering with various government programs, multiple codes can be beneficial.
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Practical Considerations:
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Business Registration: While some agencies allow multiple codes, in practice, a business might choose to limit the number of codes to avoid confusion or to focus on core competencies for marketing or regulatory purposes.
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Market and Contract Opportunities: Having multiple codes can open up more bidding opportunities in government contracts, where specific codes might be required for certain types of work.
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Application for General Contractors
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Diverse Operations: If a contractor operates in various fields like asphalt laying, residential building, commercial projects, painting, and roofing, they could have several codes:
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A primary code for their main focus (e.g., 236220 for Commercial Building if that’s their largest revenue source).
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Secondary codes for each specialized trade they perform or subcontract (e.g., 238160 for Roofing, 238320 for Painting).
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Best Practices:
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Self-Assignment: Businesses self-assign these codes; thus, they should choose codes that closely match their business activities without overstating their capabilities.
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Review and Update: As business activities evolve, companies should review and update their NAICS codes to ensure they remain accurate.
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In conclusion, while there’s no formal cap on the number of NAICS codes a company can claim, practical considerations suggest focusing on those codes that truly represent the company’s operations. For general contractors, this can mean anywhere from a few to several codes, depending on the diversity and focus of their services. Consulting official NAICS guidelines or industry-specific resources can help in making these decisions accurately.