A SIC code known as a Standard Industrial Classification code is a five-digit code used to group companies existing in the UK based on their business activities. These codes are designed to allow Companies House to understand what your business does quickly.
There are over 600 individual SIC codes in the UK. SIC codes are mainly used by government agencies and authorities (such as the Office for National Statistics and Companies House) to selectively categorise and identify the core business activities of the companies functioning in the UK. SIC codes are also used by official UK governing offices and Companies House to track business and economic progression, struggling industries, emerging markets and more.
What is your SIC code?
A SIC code is required when registering your company at Companies House. You will be requested to give at least one SIC code to outline what kind of activities your business does. It is mandatory to provide a SIC code even if your company is not trading or dormant.
To choose your SIC code, you must look at the condensed SIC code list provided by Companies House. The list has over 600 possible economic activities for your business. Out of this, there are 21 main industry categories. The most acceptable way to choose the correct SIC code for your business is to look at the available industries. Then you need to select the most relevant one to your business and then look for companies using the SIC code within the section for the economic activity that best correlates to your business.
You must select the 99999 SIC code if your company is dormant, and if it’s a non-trading company, you must choose the non-trading 74990 SIC code. Suppose it is a situation where your company has become non-trading or dormant after a period of activity. In that case, you must update your SIC code when sending the following confirmation statement to Companies House.
In addition, if a non-trading or a dormant company will be active after a period of inactivity, you should find out the correct SIC code that will correspond best to your new business activities and update the information when sending the information for the following confirmation statement.
Remember that SIC codes will be displayed as a public record. This means they could influence your possibility of obtaining exceptional financial support or acquiring a specific service such as an insurance policy. Service providers can sometimes use your SIC code as a way of analysing your business. So, if you’re going to choose the wrong SIC code, it’s going to risk your ability to receive financial investments or even insurance.
Most people decide that one SIC code is fit enough for their business. However, you could choose up to four SIC codes if the activities carried out by your business are diverse or intricate and cannot be represented by only one code.
However, you must be cautious of using more than one SIC code for property-related businesses, as this might pose a challenge with mortgage lenders, HMRC and other financial providers. In such situations, we strongly suggest taking professional advice and help from an accountant before engaging in any activities with third parties.
If you think you have selected the wrong SIC code and want to change it to another, you can make the change in Companies House and notify them of the change you made. This usually is not an issue because it’s an easy mistake and can be rectified quickly. There will also be no penalty charged or action against you for changing your SIC code. However, it is always best to not rush the process and choose the correct SIC code for your business.
A SIC code is mandatory when sending your confirmation statement to Companies House. Since a confirmation statement is made by your company annually, you will be able to update your business trading activities with Companies House by changing your SIC code.
Why is it important to know about SIC codes?
It is essential to know about SIC codes and choose the right one for your business. Once you select a SIC code for your company, it will be displayed on the public register of companies, together with other important company details registered at the Companies House.
The UK government might utilise SIC codes to supervise different industries. For example, the government might use SIC codes to analyse all manufacturing businesses in an economic survey. More often, the government uses SIC codes for statistics and studies.
The government uses SIC codes for tax classification and sorting out company filings.
You will also need your SIC code when engaging in government contracts and applying for loans. Specific projects and loans can be limited to business sizes or industries. The SIC code you have chosen for your company can help you, and the government ascertain qualified.
When applying for a loan, the lender could ask you for your company’s SIC code. By using the SIC code, the lender might be able to determine if your business is involved in a high-risk industry.
When your business sells products or services to other entities, you might want to use SIC codes to connect to potential customers. For example, when you decide to select potential clients from a specific industry, you can check their SIC codes to determine if they are suitable to sell to.
When deciding on setting up a market analysis, you might want to consider utilising SIC codes. During market analysis, you will be comparing your business to other similar companies. You can be assured that you are indeed reaching your business to other firms that exist in the very same industry by using SIC codes.
Understanding which SIC code fits your business could be pretty complex at times. If you require some assistance in understanding and applying these to your business, contact our team of experienced and professional accountants for a friendly and fast service.