Perhaps you are familiar with SIC codes and NAICS numbers. You may also be aware that they assign a risk classification to your company.

Here, we’ll discuss how to quickly and efficiently select the ideal NAICS code and Financial Business Opportunities for your business. We won’t bother with SIC categories anymore. However, the basic idea remains the same.

A question of danger must be considered. In a second, we’ll go into more detail about that.

Earlier Context

Industry codes are used by the North American Industry Classification System to classify businesses according to their primary function. Organizations use these codes to organize their operations so that statistical information about the US economy may be collected, analyzed, and made public.

Your business could have the code 812112, which is used for hair and nail salons. However, if you run a nail salon, you should use the number 812113 instead.

There is a limited set of codes that salons can use, and they all refer to different services. There are three possible categories for a salon that provides hair, nail, and permanent makeup services.

What Statistical Classification Method do Financial Institutions and Commercial Credit Bureaus Use?

The majority of financial institutions, insurers, and credit reporting agencies (CRAs) rely on SIC and NAICS codes to categorize businesses. They are investigating to discover if you operate in a dangerous field. Therefore, your company’s classification could result in a loan or credit card rejection. There are certain codes that can immediately result in denial or increased rates. You risk having your company’s credit limit lowered if you don’t pay attention.

Choose carefully, as the IRS will use this code to evaluate whether or not your company’s tax returns are typical for your sector. There is a higher risk of an audit if your company’s tax deductions are significantly different from those of similarly situated enterprises.

Additionally, not selecting the proper code can lead to a high-risk label for some businesses. Understanding how the system operates is crucial for picking the correct NAICS number for a firm the first time around.

Avoiding High-Risk Codes

The most dangerous industries are the ones that require a lot of quick cash. Businesses that pose a greater risk of harm to customers or employees are also included.

The National Association for Industry Classification (NAICS) maintains a list of high-risk, high-profit sectors. Among the listed businesses are dining establishments, pawn stores, and casinos. Review the options before settling on a code.

However, keep in mind that the aforementioned 2014 list of high-risk, high-cash businesses is likely either incomplete or out-of-date. There are no current plans to revise it, as specified by the NAICS.

Additionally, OSHA mandates that certain high-risk industries record workplace injuries and illnesses.

Three different salon IDs are not included. This, however, is not to say that they are not. Indeed, there can be a wide variety of risks present in these establishments. Slippery when wet, floors can be caused by towels left dripping. Hair dryers and curling irons can be hazardous if placed too close to sinks. Nail polish remover, nail color, and shampoo can all trigger allergic responses. A customer’s back could be hurt by a masseuse if he or she is too rough.

But on the flip side, jobs that rely heavily on cash are also risky. It’s possible that there is very little actual danger in a pawn store. The vast sums of money typically found in one, however, make them an attractive target for burglars.

More Reasons a Business May Be High Risk

In particular, Experian has a history of labeling non-cash-intensive businesses as high-risk. Further, they do not operate any facilities where people could be injured (such as is the case with purely online businesses). What gives, then?

There are a few reasons.

  • Sectors with a history of late payments and/or a high probability of defaulting on payments. For instance, in the late aughts, when the housing bubble burst, single-family home builders posed a high credit risk due to their frequent bankruptcy filings.
  • Low-barrier-to-entry industries. There could be no formal education prerequisite or perhaps no need for a license. It’s possible that the industry isn’t even regulated. Therefore, people who have no idea what they’re doing end themselves working in these industries. As a result, they have the same ease of entering or exiting the market. Consider how many advisors and mentors you’ve encountered recently—possibly even among your social circle. These establishments tend to fail quickly. And even if they do, the oversaturation of the market means they may not see much profit.

Conducting a NAICS Code Search

Get your business’s unique code by following these steps:

  • For the complete list of NAICS codes, please visit
  • You can check up on a company’s activity code by using NAICS’s search engine.
  • Choose the most applicable NAICS code; if none exists, broaden your search. You can get more details by clicking on the code name, which will open a new tab.

Can You Perform a NAICS Code Lookup by Company Name?

That’s right; it’s perfectly possible. It’s important to remember that this is not a complete list of businesses arranged by the NAICS code. This makes perfect sense, considering the NAICS’s preference for the sale of such goods. Nonetheless, you can find a few alternatives in the NAICS Company Lookup Tool.

A business can be located if you know either its ZIP code or its D-U-N-S number or its full name and address.

This allowed me to research Apple’s NAICS codes (their Cupertino, CA headquarters has the ZIP number 95041). So, if you were Tim Cook and you wanted to know, “What is my NAICS code?” you could do so by looking up that particular number. However, you may only perform one free search using their service.

Choosing a Business Code: Back to Our Example for a Moment

When considering our salon scenario, it’s difficult to recommend a single code. All of them probably have the same amount of danger attached to them. Choosing a code with integrity is a given. If more than one code seems applicable, though, picking the one that won’t get you turned down by financial institutions is fine.

It’s possible that 325620 will prove to be a superior code if you regularly create your own conditioner and similar items. In this manner, you may keep your legitimate salon going without drawing undue attention to yourself.

Funding for a company can hinge on the quality of its code or lack thereof.

But Does Risk REALLY Matter That Much?

You shouldn’t give it as much weight as you could. If you’ve been turned down by banks, it may be time to do some online investigating. There are more than seven million results when you search Google for “startup funding for small business.” In order to acquire cash, you don’t have to go via a bank or credit union.

But before you rush off, make sure of a few things.

Can small, local businesses get a loan, or do they just work with chains?

I was wondering what their BBB rating was.

Do business leaders and industry professionals in your area know about them? If that’s the case, what do they say?

After that, do anything you like. To some extent, SIC and NAICS numbers are irrelevant if you’ve located a respectable lender who is unconcerned with such details.

Codes and Fundability

Your company’s findability can be affected by its NAICS code. It’s preferable to use NAICS codes with a low-risk profile. However, if your company demonstrates multiple other strong findability qualities, the code will become less important. A well-established company making $2 million per month in sales should have no trouble getting financing.

The Best NAICS Code For Your Business: Takeaways

A bad choice of code could lead to financial losses and a reputation as a risky enterprise. Your insurance rates may change as a result of this. It might have an effect on your access to Business credit service, down to the credit limit suggestions lenders provide you. If you accidentally choose the wrong code, it could have serious consequences for your company. It’s important to read up on your options before settling on one.

The following are some NAICS codes that are indicative of industries that pose a high risk to the economy.

Restricted Industries (automatic decline):

  • Ammunition or Weapons Manufacturing; wholesale and retail.
  • Finance: Federal Reserve Banks, foreign banks, banks, bank holding companies
  • Gaming or Gambling Activities
  • Pawn shops
  • Political campaigns, candidates, or committees
  • X-rated products or entertainment

High-Risk Industries (subject to stricter underwriting guidelines):

  • Computer and software-related services.
  • Dry cleaners
  • Entertainment (adult entertainment is considered restricted).
  • General contractors
  • Gasoline stations or convenience stores (also known as c-stores)
  • Healthcare: specifically nursing homes, assisted living facilities, and continuing care retirement centers.
  • Hotels or motels

More High-Risk Industries

  • Jewelry, precious stones, and metals; wholesale and retail
  • Limousine services
  • Long-distance or “over-the-road” trucking.
  • Real estate agents/brokers
  • Real estate developers or land sub-dividers
  • Restaurants or drinking establishments.
  • Travel agencies