Are you a business owner or an entrepreneur looking to expand your business operations in Canada? If yes, then you need to know about the North American Industry Classification System (NAICS). It is a system used by the government of Canada to classify businesses for statistical purposes.

What is NAICS?

The North American Industry Classification System (NAICS) is a system used by Canada, the United States, and Mexico to classify businesses by industry. It is a hierarchical system that groups businesses into industries based on their primary business activity.

NAICS is updated every five years to reflect changes in the economy and the emergence of new industries. The most recent update was in 2017, which introduced new industries such as the cannabis industry and e-commerce.

Why is NAICS important for businesses?

NAICS is essential for businesses because it helps them to identify their competitors and target markets. By knowing their industry classification, businesses can access data and information related to their industry, including market research, industry trends, and business statistics.

NAICS also helps the government to collect and analyze data on the economy, including employment, wages, and production. This data is used to make informed policy decisions and develop economic programs that support businesses and the overall economy.

How does NAICS work?

NAICS is a hierarchical system that groups businesses into industries based on their primary business activity. It is organized into sectors, subsectors, industry groups, industries, and national industries. Each level of the classification system is represented by a unique code.

The first two digits of the code represent the sector, which is the broadest level of classification. There are 20 sectors in NAICS, including agriculture, forestry, fishing and hunting, mining, construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, finance and insurance, and real estate and rental and leasing, among others.

The third digit of the code represents the subsector, which is a more specific level of classification. The fourth and fifth digits represent the industry group and the industry, respectively, which are even more specific levels of classification. The sixth digit represents the national industry, which is the most specific level of classification.

Conclusion

In conclusion, understanding NAICS is crucial for businesses operating in Canada. It helps businesses to identify their competitors and target markets, access data and information related to their industry, and make informed decisions about their operations. As a business owner or entrepreneur, it is essential to know your NAICS code and stay up-to-date with changes in the classification system to maximize the benefits it offers.