Last week I was applying for a business licence as a sole proprietor. While you fill out the paperwork the government asks that you provide a “number” that designates what exactly your business will be doing. It’s called the “North American Industry Classification System (NAICS) 2022 Version 1.0 for Goods and services producing industries,” and it is a bit of a pain to navigate.
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I suppose that the government wants these codes so that they know what you are supposed to be doing/writing off as an expense. It’s also useful for seeing how much of the country’s gross domestic product (GDP) is created from which source of revenue. Politicians and statistic monkeys like these sorts of numbers.
Firstly, you have to know exactly what your business is producing, which can be a little difficult for us artist types. We tend to work broadly, and pick up whatever jobs we can to make ends meet. My practice is in a small setting, where I make limited numbers of goods, usually until I am satisfied with my proficiency in a technique, or the season is over. I have also taught others how to use equipment and certain techniques. My revenue stream also includes freelance writing, although that requires a different tax form (taxes are weird). I have sold retail, wholesale, and taught classes/workshops. Is that a services, a goods, or another type of business? This is a huge pool to start with, because retail wholesale and education have entirely different codes.
The NAICS works as an umbrella of numerical codes that gets more specific the more numbers there are. Six digit codes ####### are more specific than a two digit code ##. This section starts at 41#### and ends at 91####. Presumably there is another category that covers 00#### to 40####. If a category at the fifth number (####0#) has only one option, then the last digit will be a 0, but it still needs to be included for the code’s purposes (####10).
For our purposes the first layer is the layers where we can view the first two digits 41-91. The second layer will be the specific first two digits of the code, 41, 56, 71, etc. Every other layer will be named from the number’s position in the code, so there will be first, second, third, fourth, fifth, and sixth layers of specific information.
Enter The First Layer
41-91 - Services-producing industries
Variant of North American Industry Classification System (NAICS) 2022 Version 1.0 for Goods and services producing industries - Classification structure Code
41 Wholesale trade
44-45 Retail trade
48-49 Transportation and warehousing
51 Information and cultural industries
52 Finance and insurance
53 Real estate and rental and leasing
54 Professional, scientific and technical services
55 Management of companies and enterprises
56 Administrative and support, waste management and remediation services
61 Educational services
62 Health care and social assistance
71 Arts, entertainment and recreation
72 Accommodation and food services
81 Other services (except public administration)
91 Public administration
While viewing this there are a plethora of options. Reviewing this list is a good place to start, although it seems intimidating. On first glance elements of 41, 44-45, 51, 61 and 71 seem applicable to certain aspects of my work. Having five terms is no good. The majority of my work so far can narrow down the search between 41 & 44-45, so let’s look at the definitions of each. This is a small section from the entries, because they are quite detailed, and should be read in their entirety before making a decision.
41 Wholesale Trade - “This sector comprises establishments primarily engaged in wholesaling merchandise, generally without transformation, and rendering services incidental to the sale of merchandise.
The wholesaling process is an intermediate step in the distribution of goods. Many wholesalers are organized to sell merchandise in large quantities to retailers, and business and institutional clients. However, some wholesalers, in particular those that supply non-consumer capital goods, sell merchandise in single units to final users.” etc44-45 Retail Trade - “This sector comprises establishments primarily engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise.
The retailing process is the final step in the distribution of merchandise; retailers are therefore organized to sell merchandise in small quantities to the general public.” etc
Work from available references
I previously had registered a pottery business, and my accountant put a number on my tax forms. It was 414310. The full six digits provides both a definition and a set of examples.
414310 - China, glassware, crockery and pottery merchant wholesalers
“This Canadian industry comprises establishments primarily engaged in wholesaling household china, glassware, crockery and pottery.”Illustrative example(s)
ceramic kitchenware and tableware merchant wholesalers
household china and glassware merchant wholesalers
household crockery, pottery, ceramic and earthenware merchant wholesalers
This category is pretty on point for what I did at the time. Looking back at the first layer, we can see that 41#### means wholesale. Let’s follow that number back down to the “pottery” code.
414310’s Layers
41-91 - Services-producing industries
41 - Wholesale Trade
414 - Personal and household goods merchant wholesalers
4143 - Home furnishings merchant wholesalers
41431 - China, glassware, crockery and pottery merchant wholesalers
414310 - China, glassware, crockery and pottery merchant wholesalers
Now, which one is most applicable to what I am currently doing and want to do as a business. Wholesale might not be correct, but let’s not start with too many options. How about 414?
Enter The Third Layer
414 - Personal and household goods merchant wholesalers
“This subsector comprises establishments primarily engaged in wholesaling textiles, clothing, footwear, home entertainment equipment, household appliances, home furnishings, personal articles, pharmaceuticals, toiletries, cosmetics and sundries.”
Textiles, clothing, and personal articles are all applicable to me, so let’s look through the options here.
4141 Textile, clothing and footwear merchant wholesalersCAN
4142 Home entertainment equipment and household appliance merchant wholesalersCAN
4143 Home furnishings merchant wholesalersCAN
4144 Personal goods merchant wholesalersCAN
4145 Pharmaceuticals, toiletries, cosmetics and sundries merchant wholesalersCAN
4141, 4143, and 4144 seem applicable, so let’s look at their definitions
4141 - “This industry group comprises establishments primarily engaged in wholesaling textiles, clothing, clothing accessories, footwear, piece goods, notions and other dry goods.”
4143 - “This industry group comprises establishments primarily engaged in wholesaling home furnishings, such as furniture, china, glassware, crockery and pottery, floor coverings, linens and draperies.”
4144 - “This industry group comprises establishments primarily engaged in wholesaling personal articles, such as jewellery, watches, books, periodicals, newspapers, photographic equipment and supplies, sound recordings, video recordings, toys, hobby goods, and amusement and sporting goods.”
4141?
41411 Clothing and clothing accessories merchant wholesalersCAN
41412 Footwear merchant wholesalersCAN
41413 Piece goods, notions and other dry goods merchant wholesalersCAN
Maybe. What about 4143?
41431 China, glassware, crockery and pottery merchant wholesalersCAN
41432 Floor covering merchant wholesalersCAN
41433 Linen, drapery and other textile furnishings merchant wholesalersCAN
41439 Other home furnishings merchant wholesalers
At this time I was terribly confused. There are a lot of options, but the definitions aren’t ringing a bell for me. I don’t plan on making bed sheets or drapes. I make mostly wearable art, which could be accessories, but I don’t sew clothing for a living. I don’t sell notions. I don’t even have a shop accessible to the public.
Cross reference with another business
When in doubt, ask about.
My Grandma recently retired from her business where she owned and operated a yarn, notions, and tailoring business for 10 years. She sold yarn, books, patterns, knitting notions, sewing notions, chain mail weaving supplies, etc. When I asked her, Grandma didn’t remember exactly what the code she used was, but that she was classified under retail. Her business has some similarities to mine. Could I find a possible code for her business and use it?
41-91 - Services-producing industries
44-45 - Retail trade
459 - Sporting goods, hobby, musical instrument, book, and miscellaneous retailers
4591 - Sporting goods, hobby and musical instrument retailers
45913 - Sewing, needlework and piece goods retailers
459130 - Sewing, needlework and piece goods retailersIllustrative example(s)
knitting yarn and accessories, retail
needlework, retail
notions, sewing thread and needles, retail
piece goods (e.g., textile, cotton, linen, woollen), retail
remnant, retail
sewing supplies, retail
upholstery fabric, retail
yard goods (textile fabric), retail
This is a definite fit for Grandma’s shop. Do I fit in retail? Recall the definition for wholesale includes; “However, some wholesalers, in particular those that supply non-consumer capital goods, sell merchandise in single units to final users.” This sounds like retail, but the fact that I intend to sell wholesale (big batches of product pre-paid for and fully owned by the retail business) as well as by commission (product is held in trust by a retail business and payments are made as product is sold) means that I should be classified as a wholesale business (41####) even if I do intend to sell “single units to final users.” There is also a bit about products being “generally without transformation” in both definitions, which is interesting to me. You do you, government. I’m glad that you’re considering me and my artisan friends. Considering the hypothetical code for Grandma’s shop: How can I use this information to follow the umbrella layers down to my own code in the wholesale section? What If I look for something with a similar definition?
If I was a textile mill I would want something under 313.
Enter The Fifth and Sixth Layers
Unfortunately the “illustrative example(s)” are only on the bottom layer of the NAICS numbers.
Let’s keep digging….
41433 - Linen, drapery and other textile furnishings merchant wholesalers
”This industry comprises establishments primarily engaged in wholesaling household linens, draperies and other textile home furnishings, including bedding.”414330 - Linen, drapery and other textile furnishings merchant wholesalers
“This Canadian industry comprises establishments primarily engaged in wholesaling household linens, draperies and other textile home furnishings.”Illustrative example(s)
bath mats and bathroom sets merchant wholesalers
bed coverings merchant wholesalers
curtains merchant wholesalers
draperies merchant wholesalers
household furnishings tapestries merchant wholesalers
household linens merchant wholesalers
Bath mats? Draperies? Absolutely not.
(Okay, maybe one day I will make a rocking set of nuno felted curtains, — Oooh put that on the list — but linens and draperies are not my jam.)
4141 - Textile, clothing and footwear merchant wholesalers
“This industry group comprises establishments primarily engaged in wholesaling textiles, clothing, clothing accessories, footwear, piece goods, notions and other dry goods.”414110 - Clothing and clothing accessories merchant wholesalers
“This Canadian industry comprises establishments primarily engaged in wholesaling clothing and clothing accessories for adults and children.”Illustrative example(s)
athletic clothing merchant wholesalers
foundation garments (e.g., underwear, undergarments, lingerie) merchant wholesalers
fur clothing merchant wholesalers
handbags and pocketbooks merchant wholesalers
knit wear merchant wholesalers
men's and boys' clothing and furnishings merchant wholesalers
Maybe this applies to what I am doing. Knitwear is part of what I do. I did plan on knitting some fancy and less fancy garters to sell. Wedding garters would be considered lingerie, and regular garters would be considered a foundational garment.
Next!
414130 - Piece goods, notions and other dry goods merchant wholesalers
“This Canadian industry comprises establishments primarily engaged in wholesaling piece goods, notions and other dry goods.”Illustrative example(s)
buttons merchant wholesalers
clothing fasteners merchant wholesalers
clothing patterns merchant wholesalers
knitting yarns merchant wholesalers
notions merchant wholesalers
piece goods (e.g., textile, synthetic, cotton, silk, rayon) merchant wholesalers
textile fabric merchant wholesalers
textile yard goods merchant wholesalers
yarn and thread merchant wholesalers
zippers merchant wholesalers
Well, if Grandma ran a fibre mill and did wholesale production then this would be her new code. Knitting yarns, yarn and thread, fabric, and notions were all goods that she sold. It doesn’t cover her tailoring work, but I’m not sure where “garment maintenance” would be found. It does include clothing patterns, and I would consider knitting patterns to be clothing patterns (even if you don’t make clothing). Unfortunately this code is not for me. That said, this means that I am close to the right place, and should continue searching. This time, poking around horizontally instead of vertically.
Maybe something around 4144 will fit?
41446 - Toy and hobby goods merchant wholesalers
“This industry comprises establishments primarily engaged in wholesaling toys and hobby goods.”414460 - Toy and hobby goods merchant wholesalers
“This Canadian industry comprises establishments primarily engaged in wholesaling toys and hobby goods.”Illustrative example(s)
board games merchant wholesalers
fireworks merchant wholesalers
handicraft and hobbycraft kits merchant wholesalers
puzzles merchant wholesalers
science kits or sets merchant wholesalers
If making a gazillion Do-It-Yourself kits for needle felting or dying was my jam, then this would apply to me, but it doesn’t. I really don’t want to spend my time doing that.
Have a Tea, Then Review the Choices
My options have been narrowed down to 414330, 414130, and 414110. Reviewing the Illustrative example(s) of 141330 eliminates it outright. I am not selling textiles for general household decoration and room furnishing. 414130 is also eliminated because I do not sell notions, fabric yardage, nor yarns (yet. I would like to dye and sell some yarns. I have plans! Plans I tell you!). Which leaves us with 414110. The Illustrative example(s) has an extended list that encompasses all types of clothing, athletic wear, accessories, and event bullet proof vests. Handkerchiefs, hosiery, adult outerwear, umbrellas, ties, millinery (hats), knitwear, skirts, scarves, sleepwear, accessories, and corsets are all included. The bold examples are things that I have or desire to make, although I’m not sure where tea cozies fit in. Let’s just pretend that they are a hat, yes?
“Never trust a man who, when left alone with a tea cosy, doesn’t try it on.”(Billy Connolly)
This entire event is an exercise in hot and cold, up and down the NAICS’ umbrella layers. It takes patience, and an understanding of who you are and what your business wants to do. Perhaps it can help refine the myriad of ideas that plagues your enthusiastic creative mind.
When the doubt continues past this point, contact an accountant.
I should also consider:
41-91 -Services-producing industries
71 - Arts, entertainment and recreation
711 -Performing arts, spectator sports and related industries
7115 - Independent artists, writers and performers
71151 - Independent artists, writers and performers
711511 - Independent visual artists and artisans
“This Canadian industry comprises establishments primarily engaged in creating visual art and craft works using a studio-based method of production. These works are artistic and cultural objects, designed by the producing establishment, made in small quantities, of any material. The typical labour force is an artist, artisan or craftsperson, sometimes assisted by other artists, artisans, craftspersons or apprentices.”711513 - Independent writers and authors
“This Canadian industry comprises independent individuals (freelance) primarily engaged in creating artistic and cultural literary works, technical writing or copywriting.”
I do freelance writing. I have been practicing what has always been called a “studio practice” by my professors.
GAH. Have I been in the wrong spot the entire [bleeping] time?!