IRS Business Codes for Transportation Services

When filing a business tax return, you will encounter a request for a six-digit number that identifies your company’s primary work. This is a business activity code, derived from the North American Industry Classification System (NAICS). The Internal Revenue Service (IRS) uses these codes to categorize businesses by industry for the purpose of collecting and analyzing statistical data. Every business, from a sole proprietorship to a large corporation, must report one of these codes on its annual tax forms.

Identifying Your Principal Business Activity

Before selecting a code, a business must first determine its principal business activity. The IRS defines this as the activity that accounts for the largest percentage of the company’s total gross receipts. Gross receipts are the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses.

To determine this, you must analyze your revenue streams. For instance, consider a business that earns $100,000 in a year. If $60,000 of that revenue comes from local freight trucking and the remaining $40,000 comes from short-term warehousing services, the principal business activity is local freight trucking. This is because trucking generated 60% of the total gross receipts, which is a larger share than the 40% from warehousing.

Common Transportation and Warehousing Business Codes

The IRS provides a list of business codes grouped into categories. For transportation and warehousing, select the most specific six-digit code available that matches your principal activity.

Truck Transportation

This category covers a wide range of freight trucking services. For companies that transport a variety of goods, the code is 484110 for General Freight Trucking, Local, or 484120 for General Freight Trucking, Long-Distance. Businesses that handle specific types of cargo should use a code for specialized freight, such as 484220 for Specialized Freight (except used goods) Trucking, Local, or 484230 for Specialized Freight (except used goods) Trucking, Long-Distance.

Transit and Ground Passenger Transportation

Businesses that transport people have their own set of distinct codes. The code for taxi and limousine services is 485300. Companies operating charter buses fall under code 485510, while scenic and sightseeing transportation is designated as 487000. Other ground passenger transportation services, which might include shuttle services, use code 485000.

Warehousing and Storage

For businesses whose primary revenue source is storing goods, the appropriate code is 493100 for Warehousing and Storage. This single code encompasses a variety of storage services, including general warehousing, refrigerated warehousing, and other specialized storage facilities.

Support Activities for Transportation

Some businesses do not perform the transportation themselves but provide services that support transportation activities. For example, freight transportation arrangement, which includes freight forwarders and brokers, uses code 488510. Businesses that provide packing and crating services for transportation should use code 488991.

How to Report Your Business Code

Once you have determined your principal business activity and selected the corresponding six-digit code, the final step is to report it on your federal tax return. The specific location for entering this code varies depending on the type of business entity and the form you are filing.

• Sole proprietors and single-member LLCs enter the code on Schedule C (Form 1040), in Box B.
• Partnerships and multi-member LLCs enter the code on Form 1065, in Box C on the first page.
• Corporations filing Form 1120 must enter their code on Schedule K, Line 2a.
• S corporations use Form 1120-S and enter the code in Schedule B, Line 2a.