NAICS in Canada uses a series of six-digit industry codes to identify a company’s primary business activity. The system covers nearly every type of business. The first two digits identify one of 20 sectors, and the following digits narrow down the specific business activity. Each digit, or pair of digits, provides specific details for classifying a business: The first two digits show the sector. The third digit shows the subsector. The fourth digit shows the industry group. The fifth digit shows the industry. The sixth digit identifies the national industry (if applicable). For example, the NAICS a construction company uses depends on the business’s exact area of operation. The NAICS construction code is “23”, but adding more digits narrows down the definition. “238” is for Specialty Trade Contractors, “2383” is for establishments primarily engaged in Building Finishing. The correct NAICS code for a construction company that does painting would be “238320”, Painting and Wall Covering Contractors. The 20 sectors for NAICS codes in Canada include the following: Agriculture, Forestry, fishing and hunting Mining, quarrying, and oil and gas extraction Utilities Construction Manufacturing Wholesale Trade Transportation and Warehousing Retail Trade Information and Cultural Industries Finance and Insurance Real Estate and Rental and Leasing Professional, Scientific, and Technical Services Management of Companies or Enterprises Administrative and Support, Waste Management and Remediation Services Educational Services Health Care and Social Assistance Arts, Entertainment and Recreation Accommodation and Food Services Other Services (except Public Administration) Public Administration Before 1987, the Canadian and American governments used Standard Industrial Classification (SIC) codes. Since then, both countries have adopted NAICS. Canada, Mexico, and the United States created NAICS codes as part of the North American Free Trade Agreement (NAFTA). These government agencies designed North American Industry Classification System (NAICS) codes for statistical purposes.

What Is A NAICS Code & How Is It Used For Business?

Tags: #Business Planning

Originally Published: Nov 15, 2021

NAICS, or “The North American Industry Classification System” is a standard used to classify businesses based on their industry. Whether you’re running a small startup or a large corporation, understanding your NAICS code is important.

Multi-industry employees showing healthcare, construction, and service sector workers representing industry classifications

This article will break down what the NAICS code is, why it matters, and how it can impact your business.

What is NAICS?

NAICS in Canada uses a series of six-digit industry codes to identify a company’s primary business activity. The system covers nearly every type of business. The first two digits identify one of 20 sectors, and the following digits narrow down the specific business activity.

Each digit, or pair of digits, provides specific details for classifying a business:

The first two digits show the sector.
The third digit shows the subsector.
The fourth digit shows the industry group.
The fifth digit shows the industry.
The sixth digit identifies the national industry (if applicable).

For example, the NAICS a construction company uses depends on the business’s exact area of operation. The NAICS construction code is “23”, but adding more digits narrows down the definition. “238” is for Specialty Trade Contractors, “2383” is for establishments primarily engaged in Building Finishing. The correct NAICS code for a construction company that does painting would be “238320”, Painting and Wall Covering Contractors.

The 20 sectors for NAICS codes in Canada include the following:

Agriculture, Forestry, fishing and hunting
Mining, quarrying, and oil and gas extraction
Utilities
Construction
Manufacturing
Wholesale Trade
Transportation and Warehousing
Retail Trade
Information and Cultural Industries
Finance and Insurance
Real Estate and Rental and Leasing
Professional, Scientific, and Technical Services
Management of Companies or Enterprises
Administrative and Support, Waste Management and Remediation Services
Educational Services
Health Care and Social Assistance
Arts, Entertainment and Recreation
Accommodation and Food Services
Other Services (except Public Administration)
Public Administration

Before 1987, the Canadian and American governments used Standard Industrial Classification (SIC) codes. Since then, both countries have adopted NAICS. Canada, Mexico, and the United States created NAICS codes as part of the North American Free Trade Agreement (NAFTA). These government agencies designed North American Industry Classification System (NAICS) codes for statistical purposes.

Why Do I Need a NAICS Code?

Primary activity codes are essential for businesses in both the US and Canada. In the United States, the Census Bureau assigns NAICS codes to organize economic data. This helps businesses qualify for tax incentives. In Canada industry codes help the CRA compare similar businesses within the same industry, identifying potential anomalies or discrepancies in financial reporting.

Depending on where you register your business, you might need to choose an industry code in your application.

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New Business Registration or Incorporation

The new Ontario Business Registry system introduced in October 2021 brought NAICS codes to Ontario. Businesses must provide a primary activity code in Ontario as part of the registration or incorporation process.

When you order with Ontario Business Central, we ask for a description of your business activity. Our agents will then perform a NAICS code lookup for Canada and find a match for your economic activity.

When starting a new business, you will need an industry code for Canada that accurately reflects your business activity. Below is a list of the most commonly used forms in Ontario that now require a NAICS code:

Ontario Incorporation
Ontario Professional Incorporation
Ontario Not For Profit Incorporation
Ontario Articles of Amalgamation
Ontario Articles of Continuance
Ontario Business Name Registration (formerly Master Business Licence)
Ontario Sole Proprietorship
Ontario Firm Name For A General Partnership (formerly General Partnership)
Ontario Business Name For A Corporation (formerly trade name)
Ontario Register an EP Limited Liability Company Name
Ontario Articles of Revival
Ontario Registration of an LLP, EP LLC, or LP

Existing Registration or Incorporation

When updating an existing registration or incorporation, you must add an activity code from the Canadian NAICS code system. The update can include any of the following filings with the Province of Ontario:

Ontario Corporation Articles of Amendment
Ontario Corporation Notice of Change
Ontario Corporation Annual Return
Ontario Amendment or Renewal of Sole Proprietorship
Ontario Amendment or Renewal of a Firm Name For A General Partnership
Ontario Amendment or Renewal of a Business Name For A Corporation
Ontario Amendment or Renewal of LLP, EP LLC or LP

You don’t need to add a NAICS code unless you update your registration or incorporation. If you dissolve or cancel your business, you don’t need to provide a NAICS code.

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How Do I Get a NAICS Code?

When you start or update your business with Ontario Business Central, we’ll help you find a NAICS code. Just provide a brief description of your business activity, and our team will match it with the correct code.

You can also perform a North American Industry Code lookup using the Statscan NAICS code finder.

Can the NAICS Code Change?

Yes, it can change if and when your business activity changes. You can update your 6 digit code to a new code when applicable. If your business continues to provide the same products or service, this code may never require a change.

Ontario Business Central has been assisting entrepreneurs for 30 years to start, change, cancel and search businesses. The NAICS Code is the newest element for your business to acclimate to. We are here to help you feel confident in choosing the correct NAICS Code when starting or updating your business.

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Ontario Business Central Inc. is not a law firm and cannot provide a legal opinion or advice. This information is to assist you in understanding the requirements of registration within the chosen jurisdiction. It is always recommended, when you have legal or accounting questions that you speak to a qualified professional.