Article: 50417
Overview
When completing your Federal Schedule C (Profit or Loss from Business), you are required to select a business code that best describes your business activity. The IRS uses these codes to classify the type of business or professional activity you conduct.
IRS Business Codes vs. NAICS Codes
While both the IRS business codes and the North American Industry Classification System (NAICS) codes identify types of business activities, they are not identical.
- The IRS uses a specific subset of code derived from the NAICS system for Schedule C reporting.
- Not all NAICS codes are permitted for Schedule C.
- You must select a code directly from the list in the IRS Schedule C instructions.
If you try to enter a code that is not on the IRS-approved list, the system will reject it.
Where to Find the Correct Code
You can find the full list of allowable business codes in the IRS Schedule C Instructions document.
- Scroll toward the end of the instructions to locate the list titled “Principal Business or Professional Activity Codes.”
- Choose the code that most closely matches your business activity.