Understanding NAICS Codes: Pick the Right Ones for Your Business

What Are NAICS Codes and Why They Matter

The North American Industry Classification System (NAICS) is a 6-digit code system that classifies businesses by the type of economic activity they perform. In government contracting, NAICS codes serve three critical functions:

• Size determination: Every NAICS code has a size standard: you're either "small" or "other than small" based on revenue or employee count
• Set-aside eligibility: Small business set-asides require you to be small under the solicitation's NAICS code
• Contract matching: Agencies use NAICS codes to find vendors: wrong codes mean missed opportunities

NAICS Code Structure

NAICS codes are organized hierarchically:

• 2-digit sector: Broad industry (54 = Professional, Scientific, Technical Services)
• 3-digit subsector: (541 = Professional, Scientific, Technical Services)
• 4-digit industry group: (5415 = Computer Systems Design)
• 5-digit industry: (54151 = Computer Systems Design and Related Services)
• 6-digit national industry: (541511 = Custom Computer Programming Services)

Always use the full 6-digit code. Agencies filter at the 6-digit level.

Most Common IT NAICS Codes

• 541511: Custom Computer Programming Services ($30M revenue size standard)
• 541512: Computer Systems Design Services ($30M)
• 541513: Computer Facilities Management Services ($30M)
• 541519: Other Computer Related Services ($30M)
• 541611: Administrative Management and General Management Consulting ($19M)
• 541690: Other Scientific and Technical Consulting Services ($19M)
• 518210: Data Processing, Hosting, and Related Services ($35M)
• 334111: Electronic Computer Manufacturing (1,250 employees)
• 517311: Wired Telecommunications Carriers ($40M)

How to Choose Your Primary NAICS Code

Your primary NAICS code (listed first on your SAM.gov registration) should represent the majority of your anticipated federal revenue. This is the code SBA uses to determine your small business status for most purposes.

Selection Process

1. List your top 5 service/product offerings
2. For each, find the best-matching NAICS code
3. Check the size standard for each code against your current revenue
4. Rank by where you expect the most federal revenue
5. The highest-revenue code = primary NAICS

Warning: Don't pick a primary NAICS where you're "other than small." You lose set-aside eligibility for every contract under that code.

How Many NAICS Codes Should You Register?

SAM.gov doesn't limit the number of NAICS codes you can register, but more is not always better:

• Register: Codes where you genuinely have capabilities and past performance
• Don't register: Aspirational codes where you have no experience: evaluators can ask for proof
• Sweet spot: Most small businesses do well with 5–12 codes that represent their actual work

Registering codes you can't support creates liability. If you win a contract under a NAICS code and can't perform, the consequences range from cure notices to contract termination to debarment.

NAICS Codes and Set-Aside Eligibility

When a solicitation is set aside for small businesses, your eligibility is determined by your size under that specific solicitation's NAICS code: not your primary code. This means:

• You could be "small" under 541511 ($30M limit) and "other than small" under a different code with a lower threshold
• Always check the size standard for the NAICS code listed in each solicitation
• If you're on the edge, calculate carefully: the certification you sign on your proposal is legally binding

Updating Your NAICS Codes

Review your NAICS code registrations annually during your SAM.gov renewal:

• Add codes where you've built new capabilities
• Remove codes where you've lost capacity or expertise
• Check for NAICS code updates: the code list is revised every 5 years

The next NAICS update is scheduled for 2027. Monitor for changes to IT-related codes.