NAICS Codes Explained: Finding the Right Codes for Your Business

If you're pursuing government contracts, you'll encounter NAICS codes everywhere — on SAM.gov listings, in solicitation documents, on your SAM registration, and in size standard determinations. Understanding NAICS codes is foundational to government contracting, yet many small businesses get them wrong or don't use them effectively.

What Are NAICS Codes?

NAICS stands for North American Industry Classification System. It's a standardized system used by the United States, Canada, and Mexico to classify businesses by their primary type of economic activity. Each code is a six-digit number that identifies a specific industry.

The structure works hierarchically:

• 2 digits — Sector (e.g., 54 = Professional, Scientific, and Technical Services)
• 3 digits — Subsector (e.g., 541 = Professional, Scientific, and Technical Services)
• 4 digits — Industry Group (e.g., 5415 = Computer Systems Design and Related Services)
• 5 digits — Industry (e.g., 54151 = Computer Systems Design and Related Services)
• 6 digits — National Industry (e.g., 541512 = Computer Systems Design Services)

When a contracting officer posts an opportunity on SAM.gov, they assign a NAICS code to classify the type of work. This code determines which SBA size standard applies — and therefore which businesses qualify as "small" for that specific contract.

Why NAICS Codes Matter for Government Contracting

NAICS codes affect your government contracting business in three important ways:

1. Size Standard Determination

Each NAICS code has an associated SBA size standard. For services, this is typically expressed as average annual revenue over the past five years. For manufacturing, it's usually employee count. If your company exceeds the size standard for a given NAICS code, you don't qualify as a small business for contracts under that code.

A company could be "small" under one NAICS code and "large" under another, depending on the size standard thresholds.

2. Opportunity Discovery

Filtering opportunities by NAICS code is one of the most reliable ways to find relevant contracts. Keywords can be inconsistent — contracting officers use different terminology across agencies — but NAICS codes are standardized. If you know your codes, you can find matching opportunities even when the title or description doesn't use your preferred keywords.

3. SAM Registration

When you register your business in SAM.gov, you list your NAICS codes as part of your profile. Contracting officers may search the SAM entity database by NAICS code when looking for potential contractors, so having the right codes on your profile matters for visibility.

How to Identify Your NAICS Codes

Most businesses have a primary NAICS code and two to five secondary codes. Here's how to determine yours:

1. Start with what you do. Describe your primary business activity in plain language. What service do you provide or what product do you make?
2. Search the NAICS database. The Census Bureau maintains the official NAICS search tool. Look up keywords related to your business and review the descriptions for each matching code.
3. Look at what the government buys. Search SAM.gov or GovTrove for contracts similar to what you'd bid on. Note which NAICS codes those opportunities use. This tells you which codes contracting officers associate with your type of work.
4. Check your competitors. Look up companies in your space on SAM.gov's entity search. See which NAICS codes they list in their registration.
5. Consider adjacent codes. Your work might span multiple NAICS codes. An IT consulting firm might qualify under 541512 (Computer Systems Design), 541519 (Other Computer Related Services), and 541611 (Administrative Management Consulting).

Common Mistakes with NAICS Codes

The most frequent mistakes small businesses make with NAICS codes:

• Listing too many codes. Having 20 NAICS codes on your SAM registration doesn't make you look versatile — it makes you look unfocused. Stick to the codes where you have genuine capability and past performance.
• Using outdated codes. NAICS codes are updated every five years. Make sure you're using the current revision, especially if you registered years ago.
• Ignoring size standards. Each NAICS code has a different size standard. Make sure you qualify as small under each code you list, or you risk a size protest that could cost you a contract award.
• Not filtering by NAICS in searches. Many contractors rely solely on keyword search and miss opportunities that are classified under their NAICS code but use different terminology in the title.

Using NAICS Codes to Find Opportunities

Once you know your NAICS codes, use them as a primary filter when searching for opportunities. On GovTrove, you can filter by one or more NAICS codes and combine that with keyword search, set-aside type, agency, and deadline filters to create a targeted search that surfaces the opportunities most relevant to your business.

The most effective approach is to combine NAICS filtering with keyword search. NAICS codes catch opportunities that use unexpected terminology, while keywords catch opportunities that might be classified under adjacent NAICS codes. You can also browse active federal contracts by NAICS code to see which codes have the most opportunities right now.

Not sure which NAICS codes fit your business? Try our NAICS Code Finder — describe what you do in plain English and get matched codes instantly.