Where Is the NAICS Code on a Tax Return?

The North American Industry Classification System (NAICS) codes are an important element businesses often encounter when preparing their tax returns. These codes categorize businesses by their primary activities, and understanding their purpose and proper application is important for accurate tax reporting. This article clarifies what NAICS codes are, how to determine the correct one for a business, and where to locate them on common tax forms.

Understanding the NAICS Code for Tax Purposes

The North American Industry Classification System (NAICS) is a standard system developed by federal statistical agencies in the United States, Canada, and Mexico to classify business establishments. These codes, typically six digits long, help organize and analyze economic data across North America. For tax purposes, the Internal Revenue Service (IRS) utilizes NAICS codes to gather statistical information, analyze economic trends, and compare businesses within the same industry.

This classification aids in ensuring that tax rules and regulations are applied consistently across industries. Businesses are responsible for self-reporting the NAICS code that best describes their principal source of revenue or activity.

Determining Your Business’s NAICS Code

The code chosen should accurately reflect the main source of income or the predominant service/product offered by the business. Selecting an appropriate code is a self-assignment process.

The official U.S. Census Bureau NAICS website is the authoritative resource for looking up these codes. Users can search by keyword describing their business activity or browse through the various industry sectors and subcategories. It is important to select the most specific six-digit code that precisely matches the business’s primary operation. If a business engages in multiple activities, the code representing the activity generating the largest percentage of total receipts should be chosen.

Finding the NAICS Code on Your Tax Forms

Once the correct NAICS code is determined, businesses need to know where to report it on their federal income tax forms. The location varies depending on the type of entity and the specific tax form being filed. These codes are typically found on the first page of the relevant tax return.

For sole proprietors and single-member LLCs filing Schedule C (Form 1040), Profit or Loss From Business, the NAICS code is entered on Line B. Partnerships and multi-member LLCs filing Form 1065, U.S. Return of Partnership Income, report it in Item B on page 1. Corporations filing Form 1120, U.S. Corporation Income Tax Return, include it in Item B on page 1. S corporations filing Form 1120-S, U.S. Income Tax Return for an S Corporation, enter the code in Item B on page 1. Non-profit organizations filing Form 990, Return of Organization Exempt From Income Tax, typically find the space for their NAICS code in Part I, Line 2.