If you’re starting a software company, you’ll need your SIC code to file taxes, fill out loan applications, and fill out other paperwork. In the following article, we are going to find out what is SIC Code, Different SIC Codes for different businesses, the importance of the SIC Code, as well as some money-saving tips from Wise Business.
Standard Industrial Classification ( SIC ) Codes | Complete Guide
Table of Content
What is SIC Code?
A Standard Industrial Classification (SIC) code is a four-digit numerical code used to identify and classify businesses in the United States. It was superseded by the North American Industry Classification System (NAICS), which employs six-digit codes for a variety of purposes, including software development.
The SIC codes have four digits and there are more than 1,000 unique codes nationally recognized.
- The first two digits are used to identify the major group, which is then further divided into 12 groups at higher levels.
- The third digit reveals a little more detail – more specific industry groupings.
- The fourth digit shows the industry sector.
Meaning of SIC Code
SIC Code for Software Development
The SIC code for Software Development is 7371, and it is classified as “Computer Programming, Data Processing, and Other Computer Related Services” This major category includes businesses that primarily provide services like computer programming, software development, data processing, and other computer-related services.
A table of SIC codes related to this industry is provided below to assist you in identifying the specific types of businesses included in the SIC code for Software Development:
Table of SIC Codes for Software Development:
|
Services |
SIC CODE |
|---|---|
| Computer Programming Services | 7371 |
| Pre-packaged Software | 7372 |
| Computer Integrated Systems Design | 7373 |
| Computer Processing and Data Preparation and Processing Services | 7374 |
| Computer Facilities Management Services | 7376 |
| Computer Rental and Leasing | 7377 |
| Computer Maintenance and Repair | 7378 |
Which SIC codes can be used by software developers?
All businesses are assigned Standard Industrial Classification codes, or SIC codes for short. These four-digit codes are then used by government agencies, marketing firms, banks, academics, and entrepreneurs to understand and analyse the type of work that a company does.
- Software businesses are classified as major group 73, and all SIC codes for this industry begin with these numbers. By looking at the final digits, you can learn more about the business type. Computer Programming Services uses SIC code 7371, while Pre-packaged Software uses SIC code 7372.
- Software developers, designers, and analysts are examples of companies that use the SIC code 7371. Packaged software developers or publishers are more likely to use 7372.
What is the SIC code for commercial and residential software development?
If your software development company writes, modifies, tests, and supports software, it can be classified as business and domestic software development 62012. Agencies that design and implement system software, software applications, databases, and web pages for clients are examples of this.
What is the SIC code for consulting in information technology?
Information technology consultancy activities 62020 include agencies that plan and design computer systems that integrate computer hardware, software, and communication technologies and provide user trading.
What is the SIC code for computer facility management?
Computer facilities management activities 62030 include technology agencies that support the on-site management and operation of clients’ computer systems and/or data processing facilities.
What is the SIC classification for other information technology service activities?
Other information technology service activities 62090 include agencies that perform other information technology and computer-related activities that are not otherwise classified, such as computer disaster recovery services, installation services (setting-up) of personal computers, or other software installation services.
What SIC code is assigned to data processing, hosting, and related activities?
Data processing, hosting, and related activities 63110 includes agencies that provide infrastructure for hosting, data processing services, and related activities.
How do I correct my company’s SIC code?
You need to do is file a confirmation statement to correct your company’s SIC Code. This is the annual report that provides Companies House with a general snapshot of your company’s general, non-financial, situation. The confirmation statement will allow you to add and remove SIC codes.
Consequences of Using the Wrong SIC Code:
Having the incorrect SIC code does not result in any government penalties; however, it is factually incorrect and may cause unforeseeable problems in the future; therefore, it is preferable to have your SIC code updated with Companies House.
Why is it important to keep information up to date?
Keeping your information up to date ensures that anyone interested in doing business with your company has the most up-to-date information available. If a stakeholder looks up your company on Companies House and the SIC code is incorrect, it can cause confusion. This can result in lost business or even suspicion from authorities.
Altering your SIC code:
If you provided an incorrect code when registering your business, or if your primary business activities changed after the company was formed, you can clarify your new SIC code when you submit your next confirmation statement to Companies House. If you need to update your SIC code right away, you can submit a confirmation statement.
- Statement of confirmation: Every 12 months, you must file an annual confirmation statement (previously known as an annual return). The statement confirms the accuracy of information such as the office address, company directors, SIC code, share capital, and shareholders.
- Filling out your confirmation statement with company names: If your private company has one shareholder, one to five officers, and fewer than five persons with significant control (PSC), you can file a confirmation statement with Companies House. Otherwise, you must use the Web filing service.
- Fees: A confirmation statement costs £13 to submit.
After you’ve decided on a SIC code for your company and completed the incorporation process, you’ll need to create legal contracts to structure your business activities. It can be costly to create lawyer-approved agreements, and it can be tempting to download free templates online. However, thanks to contract management platforms like Legislate, this process is risky and unnecessary.
Transition to NAICS:
Although the SIC code system has been greatly adopted in the past, the modern and flexible nature of NAICS system has made it popular. Compared to SIC, NAICS offers greater flexibility in defining industry characteristics because it recognizes that industries can change through time.
The associated NAICS code for software development is 5112, which covers software publishers. The transition from SIC to NAICS is more appropriate, since it better characterizes software’s subordinate activities such as its development, publishing, and auxiliary services.
Conclusion:
The Software Development SIC code continues to play an important role in categorizing and deciphering businesses that develop software programs in today’s changing technological environment. Nevertheless, in the midst of such changes sweeping around the industry the move towards the more flexible system like NAICS is driven by necessity to design a classification system that will correspond the pace of progress. The changes in the activities are highly likely since all forms of software’s are shaping and redefining different fields.