As part of South Carolina’s business license standardization, all organizations levying business license tax must make those calculations based on the business’ NAICS code. If you’re still evaluating based on SIC code, let’s look at what steps you can take to get your conversion completed.
Why Moving Makes Sense
SIC was originally established in 1938 in the United States as a means to help agencies measure non-government activity uniformly. While it was updated several times, it hasn’t been updated since 1987. Since that’s before widespread adoption of the Internet, many of today’s industries don’t fit well into SIC categories. NAICS continues to be updated every five years to take into account new industries as well as remove ones that no longer exist.
In addition to being more up-to-date, NAICS is also more granular. For example, SIC only had ‘5812 – Eating Places‘ as an option. NAICS now provided codes, to differentiate between full service, and limited service restaurants as well as caterers, improving your reporting and measurement:
- 711110 Theater Companies and Dinner Theaters
- 722310 Food Service Contractors
- 722320 Caterers
- 722511 Full-Service Restaurants
- 722513 Limited-Service Restaurants
- 722514 Cafeterias, Grill Buffets, and Buffets
- 722515 Snack and Nonalcoholic Beverage Bars
Okay, so what are our options then.
Option 1: Ask Your Businesses
You already have a mailing address or (even better) email address so you can contact them. They know their business better than you. As mentioned by MASC staffmember Caitlin Cothran in their December 16, 2020 podcast: Why not have them tell you what their NAICS code should be?
If you have renewals due this spring, go ahead and ask for it either on this year’s renewal form or as an insert into the envelope. If you don’t or already sent it out, it may make sense to send out a second mailer or an email requesting the information. Even if you only get 50% participation, that’s half that you don’t need to think about.
Option 2: ‘Correct’ Conversion
This is the most ‘obvious’ choice: convert each business specifically to their correct code.
To do this simply build a spreadsheet or export a report from the business license system that let’s you get the business name and SIC code:
|Dr. Pressley Warrick||8099|
|Harvin’s Choice Meats||2013|
|Jade School Of Performing Art||7911|
|Devine Mothers Beauty Salon Ll||7231|
Then go line by line. You can just google ‘SIC code xxxx to NAICS’. You can also use a site like naics.con to lookup the conversion:
You can also print out and use their conversion PDF. Fair warning, the NAICS.com site listed here seems like an okay reference to me and I regularly use them for a quick lookup, they are not the official site of NAICS codes (the federal government is) and there is no guarantee their data is up-date.
Once you’ve looked up the NAICS code for that business, add that code to your spreadsheet (along with the description so you can audit it later:
|Dr. Pressley Warrick||8099||621111||Offices of Physicians (except Mental Health Specialists)|
|Harvin’s Choice Meats||2013||311612||Meat Processed from Carcasses|
|Phil Griffith||1521||236118||Residential Remodelers|
|Jade School Of Performing Art||7911||611610||Fine Arts Schools|
|Devine Mothers Beauty Salon Ll||7231||611511||Cosmetology and Barber Schools|
|Mark Hamlin||1711||238210||Electrical Contractors and Other Wiring Installation Contractors|
Once you’re done and you’ve reviewed all the codes are correct, you can then import them into your system (assuming it allows you to).
Option 3: ‘Rough’ Conversion
Tying each business to their best matching NAICS code gives you a lot of advantages as far as reporting, but what if you’re short on time and just need to get this done so you can move on to figuring out what classes you need?
Well let’s take a look at the MASC class schedule:
So, in the class schedule, anything starting with ’23’ is construction and goes to class 8.1. If you don’t care about reporting by industry then, why not just set anything that’s construction as a ’23’? You can then do the same for each of your businesses. If we do this, our table looks like
|Dr. Pressley Warrick||8099||62||Health care and social assistance|
|Harvin’s Choice Meats||2013||31-33||Manufacturing|
|Jade School Of Performing Art||7911||61||Educational services|
|Devine Mothers Beauty Salon Ll||7231||61||Educational services|
One downside to note is you may have extra work in future years. If the updated 2022 schedule from MASC, for example, splits the 610000 series of codes into two different classes, you’ll need to go back through all your businesses labelled ’61’ to figure out to which license class they’ll go. However it gets the job done!
Why Not All Three?
The nice part about these options is it’s not exclusive. Go ahead and get a mailer out to your businesses, map specific NAICs codes for industries that are important to your municipality to track, and then perform the minimalist conversion for the rest.
If you’re still confused, reach out to us at GovPossible. We have over a decade of experience working with South Carolina municipalities on their Business Licensing issues.