What is a SIC code and why does my company need one?

A Standard Industrial Classification code, more often referred to as a ‘SIC’ code, is a five-digit number that classifies a company’s principal business activity. All companies must provide at least one SIC code when they register with Companies House.

But what is the purpose of providing this information? How do you find and choose the right SIC code for your company? And in which situations will you use this code after company formation? We answer all of these questions and more below.

About Standard Industrial Classification (SIC) codes

Standard Industrial Classification codes, or ‘SIC codes’ for short, are used to identify and categorise companies by their ‘economic activities’.

They are presented in a five-digit format, with each unique code representing a particular trade description. For example, ‘43310’, which is the SIC code for ‘Plumbing, heating and air-conditioning installation’.

When you set up a company, you will need to choose at least one code from the condensed SIC code list provided by Companies House. This is a shortened version of the full list of codes maintained by the Office for National Statistics (ONS).

What are SIC codes used for?

The purpose of providing this code is to tell Companies House what your new business actually does. That is the goods you make or sell or the services you provide. By supplying this information, Companies House is able to:

• get a clearer picture of the types of business activities being carried out by companies in the UK at any given time
• organise and standardise key economic data for research and analysis purposes
• identify and keep track of historic and emerging trends
• monitor industries that are in decline and those which are experiencing growth
• gain a better understanding of the UK economy as a whole

SIC codes are also used by other institutions and organisations.

Banks, creditors, and insurers use them to make informed decisions about the level of risk a business presents, depending on the industry in which it operates.

B2B marketers often use SIC codes to collect information on businesses operating in particular industries and to more accurately target potential customers. They can also be useful to academic and economic researchers. However, some codes are too broad or ambiguous, which places limitations on the value of this information in certain areas of research.

There is also no guarantee that companies are choosing the correct or most suitable codes for their activities.

How to find and choose the right one for your company

During the company formation process, you will be asked to provide at least one SIC code. Companies House supplies a condensed list of SIC codes for you to choose from, which contains over 600 individual codes within 21 industry groups.

You will need to search this list to find the trade description that matches or most closely relates to your company’s main economic activity. The corresponding SIC code will be displayed alongside the trade description.

An online search facility is provided within this list, allowing you to enter keywords (e.g. “restaurant”, “plumbing”) that relate to your business activities. However, because SIC trade descriptions are so broad in nature, the search facility does not always produce results.

If you can’t find an exact match, try searching for other keywords that relate to your business activities. Failing that, you will have to scroll through the list manually to find the most appropriate SIC code for your company. This can be time-consuming, but unfortunately, it is necessary.

You may even find that you need to use more than one code to describe what your company does. You can choose up to four SIC codes in total, and you can change them at any time if need be.

Entering your SIC code on the company formation application

If you set up a company online through Rapid Formations, the first page of our application form will ask you to provide your SIC code(s). You will be presented with a drop-down menu and search facility containing all Standard Industrial Classification codes from the condensed list at Companies House.

See also: Forming a company: a simple step-by-step guide Our All Inclusive Package - £89.99 plus VAT See also: Cutting through the company formation jargon

The process is similar if you set up a company via Companies House WebFiling. You will enter your SIC code on the online application when asked “What will the company be doing?” However, you will need to open the condensed SIC list in a new window if the search facility does not produce any results.

If you choose to register a company by post using Companies House form IN01, you will provide your SIC code(s) and a description of each principal business activity in section A5 of the paper form.

Can I choose more than one?

Many companies find that one SIC code is sufficient to describe what they do. However, you have the option of selecting up to four different codes.

This is useful if your company’s activities are complex or varied, or you are unable to find a code that alone covers what your business does.

When do companies need to provide SIC codes?

You will first provide a SIC code when completing your application to register a company. When Companies House approves your application, your code will be displayed on the public register alongside your company details. Anyone can view this information free of charge online.

After company formation, you will need to verify your SIC code on an annual basis when you file a confirmation statement at Companies House. This is to ensure that the information on the public register is still correct and up to date.

If you need to change your SIC code at any point, you can update this information on the confirmation statement. Simply enter the new code(s) and send the statement to Companies House by your next filing date. If you would like your SIC code to be updated on the public register immediately, you can file your confirmation statement early.

See also: What company information is available to the public? See also: Do you need a bank account for a limited company? See also: Do I need business insurance when I set up a company?

You may also need to provide your code on a number of other occasions. For example, when opening a business bank account, applying for a business loan or funding, taking out business insurance, and setting up trade accounts with suppliers.

Do I need to provide a SIC code for a dormant or inactive company?

You will still need to provide a SIC code even if your company is dormant or non-trading.

If you are not planning to trade through your company, you should use SIC code ‘99999’ for a dormant company.

Similarly, if you stop trading after a period of activity but are not planning to close (‘wind up’) your company, you should change your SIC code to ‘99999’ on the confirmation statement to notify Companies House.

If your company is non-trading – that is, the company is inactive but engages in financial transactions – you should use SIC code ‘74990’ for a non-trading company.

Whether your company is dormant or non-trading, you must still file a confirmation statement at Companies House each year.

Do LLPs need to provide SIC codes to Companies House?

There is no need to provide a SIC code when setting up a limited liability partnership (LLP) or when filing a confirmation statement for an LLP.

Wrapping up

All UK companies must provide at least one SIC code when they register with Companies House. If required, you can use up to four at any given time to describe what your company does.

You will also need to confirm your SIC code(s) every year when you file a confirmation statement, or update this information on the statement if you change your code(s) at any time.

If you have any questions about this post – or anything else related to limited companies – please leave a comment below or contact our company formation team.