A Brief Introduction To The SIC Code

A Brief Introduction To The SIC Code

The SIC code (standards industrial classification code) is used for classifying the business into specific industries so they can be grouped together for a particular purpose. This statistical tool has great importance since it helps us to measure economic activity, employment and other relevant statistics. Knowing about the mission statement is essential since it can provide you with an insight of how the business is positioned in terms of the wider market. This article consists of the standard industrial classification code, mentions its applications, describes the various categories, and gives similar models.

What is the SIC Code?

The business or organization standard industrial classification (SIC) code is a six-digit numerical code the government gives to companies in their various industrial groups. The codes are a tool that assists the Census and Statistical Division (C&SD) of the government in collecting and organizing companies that belong to specific industries. This classification makes it possible for local authorities to evaluate economic activities and standardization of collection, analysis, and reporting data by agencies. By these codes, the officials will be able to discover the patterns of different economic sectors which helps the government, companies, and other stakeholders collect and study data from numerous service areas.

Regulators can monitor declining sectors and their effects on jobs and public finances with the use of data supplied by codes. Each code in the new SIC version, known as HSIC V.2.0, has a varied amount of digits based on its level. For instance, level 2 businesses are assigned two-digit SIC codes, Level 3 businesses are assigned three-digit codes, and Level 4 and 5 businesses are assigned four and six-digit codes respectively. Businesses need to know their employer’s SIC code for tax, loan application, and other regulatory compliance purposes, so it is critical to know it.

HSIC code structure

First of all, to read the influential code of HK, which is the Hong Kong equivalent of the SIC, you must be aware of the structure of the classification system. There are five hierarchies in the HSIC V2.0, the most recent version of the code that the Census and Statistics Department has been using since 2009. 

1. Industry sections

This is the highest level of a coding system developed for all levels of HSIC. It consists of 21 topics and single-digit alphabets which range from letter A to letter U, and each alphabet signifies a different industry. Take an example, A represents agriculture, forestry, and fishing. Hence, if you want to read the code for the business in IPA, check area A of the directory.

2. Industry division

Under the second level, there are 88 groups, each being a sub-category of the industry section. For this level of HSIC code, the method is 2-digit numbers with the range 01-99. For instance, the industry division code for retail trade is 47.

3. Industry Group

According to the HSIC classification, this is the third level. It is composed of 221 sections, only three digits depict the codes whereas those numbers range from 011 to 990. As another example, HSIC code 472 is assigned to retail businesses that sell food, beverages, and cigarettes in specialty stores. 

4. Industry class

There are 483 industry classifications or industries to choose from. Businesses at this stage are allocated as the fourth level digits ranging from 0110 to 9900. For instance, specialized food items in retail businesses such as wholesale stores will lead to an HSIC code of the 4721 type.

5. Industry sub-class

This is the lowest level in the HSIC coding system. It comprises 1001 categories and businesses obtain a 6-digit code number which ranges from 011000 to 99000. For example, code 649901 represents foreign exchange brokers or dealers and money changers.

The HSIC classification codes can be read with the help of several tools for industries and businesses. The main page of the C&SE online website has a search tool that you can use to find out which industries’ or businesses’ codes. You can type the “Industry” or “Business Title” into the tab to ensure that the search is appropriate. Then, the system will display a list that shows active organizations in the specified economic sector. In addition to that, a booklet that leaves full the list of HSIC V2.0 industry codes and names is provided as well. There, you can also find the code glossary webpage for the code or industry you want.

How do companies make use of the HSIC codes?

The following are some uses of the HSIC code by businesses:

  • Identify industry: According to the HSIC code, businesses can identify their industry based on a particular economic activity which is very useful and significant for regulatory reasons. 
  • Register company: Before a company registers the business, you need to identify an HSIC code that matches your industry of operation. This becomes necessary to maintain compliance and accuracy from the regulatory, statistical, and recording perspectives.
  • Industry trends: The HSIC code system is used by the statistics department for collecting, analyzing, and providing processed statistics on the different fields of the economy. By having this code, companies may stay up to date with the patterns and trends in the sector which can help them spot opportunities and solve problems.
  • Identify target audiences or customer segments: The use of HSIC codes is beneficial to business organizations in the sense that they can access vital information about their industry. The study of companies in the various GICS sectors and categories can help businesses understand their customers` needs, wants, and preferred markets and broaden their offers accordingly. 
  • Optimize approaches for marketing and sales: An employer can able to determine its target customers and their needs for goods and services. It can, consequently, come up with marketing and sales strategies that will be able to create better brand recognition and increase the desired level of revenue. Reviewing the industry and sector reports which are specifically based on the HSIC code is an effective way through which organizations can craft more successful marketing campaigns.
  • Tax filing: Companies need their HSIC code when tax filing. There are specific tax laws for different industries, so it makes sense for companies to choose the code that best fits the sector of their business. 
  • Competitor analysis: For market analysis and competitor research, the HSIC code directory is an invaluable resource. Studying companies within a sector can assist corporations in locating other companies that manufacture similar goods and services to their own. This will provide them with a list of information on how they can improve the product and attract more customers.
  • Apply for loans and government grants: Application for loans by companies often includes indicating their HSIC codes to determine their industry and more accurately assess the company’s capacity to repay the loan. Moreover, the organization may also need to provide the code as a qualification if it wants to get grants and other subsidies from the government.

What role does the HSIC code play in the government?

The following are some uses of HSIC codes by the government:

  • Economic data collection: The statistics department utilizes the HSIC codes to gather vital data on the economic activities of several industries. The code will have a deliberate systematic for the combination of the data from various sectors of the economy such as employment, revenue, active businesses and other factors.
  • Tax policy Implementation: The HSIC code plays an accordingly important role in the implementation of tax policies. The government defines this term via the kind of business, income brackets, and other variables for stated purposes of fair and effective taxation.
  • Economic policies planning: The government can determine which industries need support and which are growing naturally by analyzing the HSIC code.

HSIC code guidelines for businesses

Business is required to fill out the General Enquiry Form of HSIC V2.0 and send the form to the Census and Statistics Department by email. The inquiry form in HSIC contains sections to fill in your contact details and the information of your business.  

In the beginning, the candidate must fill in their name, organization’s name, phone number as well as fax number or email address. In the second part, you should do a thorough analysis of the main business activity you are pursuing. The major economic activity category, principal consumers, and principal business activity are listed by the candidates. The candidate selects their principal industry under the category area. Their options include manufacturing, export and import, wholesale, retail, transportation, education, finance, and personal services.

Do companies have similar codes?

The only system with a similar classification to the HSIC V2.0 is the Hang Seng Industry Classification System (HSICS). HSICS is a wide track that the authorities in Hong Kong use to categorize businesses in the stock market. Based on market patterns and trends, the system offers a thorough categorization of companies listed on the stock exchange, enabling stakeholders to evaluate the performance of every economic sector and industry. The framework includes coverage of the economy’s 12 industries, 31 sectors, and 96 subsectors. 

The framework was intended to accommodate the specific features of the national economy and at the same time, it fully adapts to the international industry classification practices. Factors included in the classification of businesses in the HSICS system are sales records, profits, and also assets.

How FastLane Group Can Help?

Looking to streamline your company registration and ensure regulatory compliance? Understanding your SIC code when registering your company is crucial whether it’s for tax purposes, loan applications, or industry analysis, having the right code can make a significant difference. FastLane can assist you in navigating the complexities of the HSIC code system. 

Contact us today to ensure your business is categorized accurately and efficiently. Let’s unlock your business’s potential together.

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