When building or expanding a business in technology, one of the first things leaders encounter is the need to classify their work under the right code. In the United States, that classification falls under the North American Industry Classification System (NAICS). For anyone leading a remote team, starting a new venture, or managing projects, knowing the information technology NAICS code is more than just paperwork—it affects compliance, funding opportunities, and how the business is recognized in the market.
What is the Information Technology NAICS Code?
The NAICS is a standardized system used by federal agencies to classify businesses for statistical and administrative purposes. Each industry has its own set of codes, and information technology spans across several of them, depending on the specific type of service.
Here are some of the most commonly used IT-related NAICS codes:
| NAICS Code | Description |
|---|---|
| 541511 | Custom Computer Programming Services |
| 541512 | Computer Systems Design Services |
| 541513 | Computer Facilities Management Services |
| 541519 | Other Computer Related Services |
| 518210 | Data Processing, Hosting, and Related Services |
Understanding which code applies to your business is critical. For example, a software development startup may fall under 541511, while a cloud-hosting company would be better aligned with 518210.
Why Does the NAICS Code Matter?
For business owners and team leaders, choosing the correct code impacts more than just tax filings. It influences:
- Government Contracts: Many federal contracts are tied to NAICS codes. Bidding on opportunities requires your business to be aligned with the right classification.
- Funding and Grants: Programs designed to support technology companies often reference specific codes.
- Market Research: Industry reports and competitive analysis often use NAICS codes, giving you a clearer view of your business landscape.
For remote-first organizations, it also helps in establishing credibility when working with clients and partners across regions.
How Remote Leaders Should Approach IT Classification
For remote team leaders, HR professionals, and startup founders, understanding your business classification helps you make strategic decisions. Remote organizations often operate in several areas of technology at once. For instance, you might build custom software while also offering system design consulting. In that case, choosing the primary NAICS code depends on the core service that drives revenue.
A helpful approach is to:
- Identify your core service: What is the main solution your team delivers?
- Check client contracts: Sometimes your client base will expect a specific classification.
- Consider growth direction: If your team plans to expand more into hosting or SaaS, that may shift your alignment over time.
How Kaizen Approach Fits In
At kaizen approach, we work with leaders to streamline operations, improve team performance, and ensure the right systems are in place for growth. Part of that process includes helping organizations clarify their classification and compliance needs. Our focus is not only on choosing the right NAICS code but also on ensuring that your team structure and processes align with your long-term strategy.
By focusing on continuous improvement—true to the kaizen philosophy—we help companies avoid costly misclassifications and set a foundation for sustainable growth. This is especially valuable for startups and remote-first companies that want clarity as they scale.
Real-World Example
Imagine a startup building a platform for project management. At first, the company may only need to classify under 541511 (Custom Computer Programming Services). But as they evolve and begin hosting client data, the more accurate classification may shift toward 518210 (Data Processing, Hosting, and Related Services). By recognizing this early, leaders can:
- Adjust their compliance and security planning.
- Apply for the right funding programs.
- Position themselves correctly in the marketplace.
Practical Steps for Business Leaders
To ensure accuracy, here are practical actions you can take:
- Check the official NAICS directory (U.S. Census NAICS Search).
- Review your contracts and business model regularly.
- Engage expert support when you are unsure. Partnering with consultants like Kaizen Approach can reduce confusion and risk.
Final Thoughts
The information technology NAICS code may seem like a technical detail, but for business leaders, it is a foundation for growth. Choosing the right classification helps secure opportunities, keeps compliance in check, and provides clarity for your team. Whether you are leading a distributed workforce, managing HR policies, or scaling a startup, making the right choice early can save time and resources later.
For organizations looking to strengthen their foundation while building a culture of continuous improvement, Kaizen Approach offers support to align strategy, compliance, and team performance. You can learn more at Kaizen Approach.
