The What, Why, & Where of NAICS Codes

NAICS Codes 101

As a small business owner, you’ve probably heard of NAICS codes before but may not know what they are, what they’re for, or how to find out which one is right for your business.  Here’s a quick overview of what you need to know!

 


 

// What is a NAICS code? //

A NAICS (North American Industry Classification System) code is a 6-digit code system that is used by business and government agencies (like the U.S. Census Bureau) for statistical purposes, and to classify business establishments into 20 industries depending on their economic activity in the United States. Essentially, it helps them to collect, record, and report economic data.

This system isn’t only used in the U.S., but in Canada and Mexico as well. In 1977 the NAICS replaced the Standard Industrial Classification (SIC) system, and is updated every 5 years in order to accommodate changes in business and industry classifications.

 


 

// Why do I need one for my business? // 

Some agencies at the state and federal level will require businesses to have a NAICS code for contracting and tax purposes, however there is no centralized database available to check which organizations or agencies actually do.  Another reason to know your NAICS code, is that some state governments will offer tax incentives to businesses from certain NAICS industries.

Let’s say you need to register for a sales tax permit in your state. Most likely, you’ll be required to supply it on the paperwork.  The gist of it is, it’s better to know it and not need it instead of being stuck without it!

 


 

// What do the numbers mean that make up the code? //

Each number in the code represents an indicator for different levels of classification.  For all of you soapmakers out there, we’re going to use the NAICS code for soap manufacturers, 325611, as our example to show you how the numbers break down!

>     32 –  The first 2 numbers are what indicate the “economic sector”. In this case, 32 (or any code starting with 31-33) indicates a “Manufacturing” sector.

>     325 – The third number of the code is what indicates what’s called the “industry subsector”. In this specific code, the 5 narrows it down to a “Chemical Manufacturing” subsector. (And yes, this is the subsector even though the soap that you make is a natural product due to the fact that lye, a chemical, is used in the saponification process.)

>     3256 – The fourth number is what refers to the “Industry Group”, again specifying even further. In this example, the 6 refers to “Soap, Cleaning Compound, & Toilet Preparation Manufacturing”.

>     32561 – The fifth number indicates the “Industry” itself. Here the 1 shows that it’s the “Soap & Cleaning Compound Manufacturing” industry.

>     325611 –  The sixth and final number will specify an industry that is specific to the U.S., Canada, or Mexico. For this specific code, the 1 is specific to the “Soap & Other Detergent Manufacturing” in the U.S.

 


 

// What if I qualify for more than one code? //

It’s actually a pretty likely chance that your business could qualify for more than one NAICS code, especially being a craft business!

Sticking to our soapmaker example, there are obviously a ton of different ways one could run their business. Some only sell online while others have a brick-and-mortar location. Some only sell at craft fairs or farmers markets. Some do everything! And yes, that means that some people will need to use different codes than others.

Being a handcrafter and depending on what type of form it is that you’re filling out and who it’s for, you may also need to know your “Retail Trade” NAICS code instead of a “Manufacturing” one like we used in the example above. These codes would start with a “44” or “45” to indicate the “Retail Trade” sector, instead of a “32” like before.

Codes in this sector aren’t product-specific like the “Manufacturing” NAICS code was.  Normally, the agencies (outside of the Census Bureau) don’t necessarily care what the product is that you’re making. (Unless it’s food meant for immediate consumption.) They only care about when/where you actively do your selling, and that’s what will usually determine which NAICS code you should use.

Let’s say you have a Private Label business (Private Label = When you purchase product wholesale from a handcrafter and then sell it retail under your own company’s label). Obviously, you wouldn’t fall under the “Manufacturing” sector type because you’re not making your own product. You would be included under the “Retail Trade” sector.

Some other specific examples would be if you ONLY sell online, ONLY at a craft fair, or some other direct-selling establishment. You would also need a “Retail Trade” NAICS code because you’re not conducting your business in the same space as you’re manufacturing product.

If you are someone who has their own storefront or studio where you both make AND sell your products, then 9 times out of 10 you’ll only have to worry about the NAICS code for the “Manufacturing” sector.

 


 

// Where can I get my NAICS code? //

If the codes listed at the end of this post don’t apply to your business, then you can find your NAICS code by visiting the US Census Bureau’s website, and entering in a keyword for what your business does. **Always use the search box with the most recent year. If nothing comes up for any of your keywords under that one, THEN try going to the next one down.**

If you find that that doesn’t work well for you, you could also use the NAICS Code Drill Down Table where it allows you to start by selecting the industry out of the list that is most relevant to your business, and then going from there.

If you’re short on time and don’t feel like looking anything up online, you can also give the Census Bureau’s call center a quick ring at (800)923-8282 and someone there could help you figure out which one would be best for you! (I spoke to a gentleman there earlier today – he was super nice and very helpful!)

 


 

// NAICS codes that may be relevant to you //

>     325611 – Bar Soap Manufacturing

>     325620 – Bath & Body Product Manufacturing (lotions, bath salts, scrubs, etc…)

>     339999 – Candle Manufacturing

>     454111 – “Electronic Shopping”; For those who only sell product electronically/online.

>     454390 – “Other Direct Selling Establishments”; For those who only sell at a temporary set-up. (Craft show tables, farmer’s market booths, street vendor trucks/wagons).

>     Click Here if you know what your business’s old SIC code was and need to convert it into the NAICS version.

>     Click Here if you need a list of industry options to choose which would fit your business best.

 


 

I know, it’s a lot of information! So please Please PLEASE drop a comment below if you have any questions & I’ll help you as best that I can! If there’s anything that I missed that you think should be included, leave a comment about that too!

Happy coding 😉                  

 

 

 

 

 

 

Protect Your Ass(ets): Why your website needs Terms & Conditions

Protect Your Ass(ets)

Nowadays, more and more business owners are primarily conducting their business online.  In this digital age, why wouldn’t you?  It costs less than a brick and mortar storefront, it allows access to a larger customer base, and gives you the convenience of working from anywhere.

What a lot of biz owners don’t realize though, is that there are actually certain legal requirements that are needed in order to maintain their presence online.  We’ve all purchased or downloaded something online and had something pop up asking you to check a box and sign your soul away, right? Just like i’m also pretty sure we’ve all seen the terms “Privacy Policy” and “Terms & Conditions”. But what do they mean really? Why are they necessary?

Allow me to shed some light…


Privacy Policy

If you offer an online service like a webstore, a monthly eNews, or anything else that requires you to gather someone’s personal information (like credit card info, mailing address, name, email, etc…) then you NEED to have a Privacy Policy.

Basically, a Privacy Policy should insure the reader that all information shared will remain private and protected, and will not be shared with anyone but “trusted 3rd parties”.  Adding that last part in is important because it leaves you room to selectively share information with necessary 3rd parties, such as your distributor for example.

The Internet reaches all over the world, but the majority of your website visits will probably be from various states within the U.S. Because there are a bunch of specific federal and state-level regulations on Privacy Policies, you will be opened up to the liability of whichever state your potential customer is in.  Some are stricter than others, but most insist that you have your Privacy Policy  in an obvious, highly-visible location on your website.


Terms & Conditions

You may have also heard this referred to as “Terms of Service”.  A Terms & Conditions policy basically acts as a metaphorical contract between your business and the other person.

 It’s where you will include things like your return/delivery policy, liability limitations, warranty information, etc…  It should also include a notice of intellectual property (stating that some/all of the content on your site belongs exclusively to your business).  This will let them know the “rules” or “laws” that your business follows, and essentially protect you from potential legal action from a visitor of your website.

Depending on what your business type is, the terms that should be included can vary a bit, but it’s usually fairly easy to look up template samples online!  Which brings me to my next point…

While it sounds pretty straightforward, you cannot simply copy/paste the T&C policy of another website and tweak it to reflect your business.  That would actually be copy write infringement, which is no bueno mi amigo.


I hope that this helped clear things up a bit about the importance of having these 2 policies present on your website! Especially for those of you who solely operate your biz online!  

If you have questions or something to add that I may have missed, drop a comment below!

5 Business Lessons to Learn From Taylor Swift

5 Business Lessons to Learn From Taylor Swift

 

Whether you’re totally fed up with seeing her face and hearing her music everywhere, or are a diehard fan, you can’t deny that T.Swift is a marketing genius.

You may not think that, as a professional entertainer, her tactics bear any relevance in your own life and business, but you’d be wrong. Being a big-time celebrity today doesn’t just mean you have to entertain your audience – that’s only half of the job. You also need to create, build, and maintain a brand for yourself. Which is what you work so hard at everyday, right? So take a look at these 5 business lessons, and take notes from the chart-topping icon.


1. Never be afraid to go in a different direction.

Taylor Swift Business Lessons

For 6 whole years in a row, Taylor maintained her status as a current-day country icon. Then out of nowhere she flipped a huge 360 and produced an entirely pop album! To say that there were strong opinions about her choices and new direction would be an understatement. Disregarding the negative feedback, she worked hard and stayed true to to she IS instead of who she WAS. She proved that it’s okay to change your image/brand to reflect your ever-evolving style and preferences. Considering that she still has yet to leave the top of the charts, i’d say that it worked. Never be afraid to try new things because you’re unsure of how it will be perceived. Your #1 fans will still love you anyway.


2. Be authentic/relatable.

Show your followers and customers the behind-the-scenes of your life and business. In a creative business you ARE the business, so show everyone who YOU are as a person! What does the day-to-day of your business look like? Part of why T.Swizzle dominates the social media world is because she’s not afraid of sharing the quirks and imperfections of her life. She shows her extended family packed in a van for a trip to a family gathering. She showcases her 2 cats Doctor Meredith Grey and Detective Olivia Benson at every opportunity (shoutout to Grey’s Anatomy and Law & Order fans). People love witnessing and connecting with the ordinary. Do like Taylor does and proudly tell and show people what is the most important to you!


 

3. Reward & surprise your loyal fans (um, customers..).

This may just be what makes Taylor stand out the most from other celebs. If there’s one thing she knows, it’s how to leave an impression with a thoughtful surprise. In September of last year, T.Swift invited a group of fans to her home in L.A. , baked them cookies, gave them an exclusive secret session performance of her then-soon-to-be-released album, 1989, and hung out with everyone afterwards telling them the real stories behind the songs. Later that year she also hand wrapped gifts, some from around the world, that she had specifically picked for some of her social media fans (!!!). She included a handwritten card for each of them, and in one case even DROVE to Connecticut and hand-delivered gifts to a fan and her young son.  Now, am I saying that you, as a business, have to be as generous or go to the great lengths that she did? No. But by personalizing a free gift for someone to show that you pay attention to them as an individual and that you value them can go a long way. Check out their purchase history – Is their one specific product that they purchase all the time and might be their favorite? Send it to them with a handwritten note and make their day!


4. Know your target audience.

Taylor Swift wears "No It's Becky" tee

Knowing where to find your target audience and what they find popular is huge.  A great example of T.Swift rocking this is when she made her Tumblr fans explode by wearing a “No It’s Becky” t-shirt (a nod to an inside joke involving her that came about on Tumblr). She had a huge reaction from people who loved sharing a joke with her, and having proof that she stayed current and active with her social media. She’s also been known to use Twitter as a way of communicating with individual followers directly as well as keeping an eye on what sort of content her fans are sharing with each other. She doesn’t just primarily use social media for marketing, but will use it to create relationships with fans through casually responding to comments, liking and reposting their pictures. As a business, you should do this too! Join in on the conversation and use it to make your brand seem more relatable!


5. Deliver the highest quality possible.

One of many things that Taylor could shamelessly brag about is her ability to provide value and leave an impression. She is notorious for giving her complete all in every single performance, which are usually around 2-3 hours long. On her current tour for her 1989 album, she has regularly surprised her audience with guest stars from all other genres of music during each concert. Getting to see multiple famous performers for what you thought was the price of one? I don’t think there is anyone out there that wouldn’t totally dig that.  So take a second and think – What are you doing to surprise your customers? Are you making sure that each product/service you offer is of the highest level of quality and value? If not, it may be time to take a tip from T.Swift and make changes until you’re able to start exceeding expectations regularly. They’ll be sure to spread good things about you and remain a steady follower!

♦  ♦  ♦

I challenge you to arm yourself with these tips, take a good look at your current tactics, and identify which areas could use the T.Swift Touch. Cherry Red lipstick optional ; )