NAICS codes and size standards
In SAM.gov registration this is two dropdowns you click past in a minute. It is also the thing that decides whether the federal government considers you a small business — which is the entire basis of every set-aside you will ever chase. Worth ten minutes.
The regulation is not subtle about the link. 13 CFR 121.201 is titled “What size standards has SBA identified by North American Industry Classification System codes?” and opens: “The size standards described in this section apply to all SBA programs unless otherwise specified in this part.” Pick the code, inherit the number.
Three rules that catch almost everyone
If you take nothing else from this page, take these. Each one is a place where the intuitive answer is wrong, and each is written into 13 CFR part 121.
Receipts are a five-year average, not last year
For a firm with five or more completed fiscal years, annual receipts means "the total receipts of the concern over its most recently completed 5 fiscal years divided by 5." So one blowout year does not push you over on its own, and one bad year does not pull you back under. Less than five full fiscal years in business? Total receipts divided by the weeks you have been in business, times 52.
A part-timer counts as a whole employee
"Part-time and temporary employees are counted the same as full-time employees." There is no FTE conversion. Six hours a week counts identically to sixty. And it is not a headcount today — it is the average across every pay period in the preceding completed 24 calendar months.
Your affiliates count too
SBA adds the average employees of your business to the average employees of each affiliate. If you are structured around a parent company, a spouse's business, or entities under common ownership, you are probably not being measured alone. Affiliation is its own thicket of rules and it is where a great many size protests are decided.
Employees or dollars? Depends on your industry
Size standards are, in SBA's words, “usually stated in number of employees or average annual receipts” SBA — Table of size standards — headcount for most manufacturing, receipts for most non-manufacturing. SBA's published rules of thumb are most manufacturers at 500 employees or fewer and most non-manufacturers under $7.5 million in average annual receipts, and it says plainly that there are exceptions by industry. SBA — Size standards
Treat those two numbers as orientation, never as your answer. Look up your actual codes in SBA's size standards tool or the full table, which defines itself as “the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a small business for SBA and federal contracting programs.” SBA — Table of size standards Note the parenthetical — subsidiaries and affiliates, again.
How to pick yours
- Describe what you actually sell, not what you hope to sell. The code should match the work you can show past performance for. Aspirational codes do not win contracts and they do complicate size.
- Take more than one if more than one is true. You can hold several, and you select them during SAM registration. GSA — Register your business
- Check your size under each code separately. Size is judged per code. Being small under your primary code tells you nothing about the others.
- Match the solicitation. Every solicitation is issued under one NAICS code, and that is the standard you are measured against for that bid — not your primary code, and not the most favourable one you hold.
Questions people actually ask
What is a NAICS code and why does it matter for contracting?
It is the industry code describing what you sell. It matters because SBA attaches a size standard to every one of them — 13 CFR 121.201 is literally titled "What size standards has SBA identified by North American Industry Classification System codes?" and states that "the size standards described in this section apply to all SBA programs unless otherwise specified in this part." Your code is what determines the number you have to stay under to be small, and being small is the entire basis of every set-aside.
How many NAICS codes can I have?
More than one, and most established firms have several. You select them during SAM.gov registration. The important consequence is that size is judged per code, not overall — you can be small under one and large under another. A solicitation is issued under a specific NAICS code, and that is the one you are measured against for that bid.
Is my size based on last year's revenue?
No, and this is the single most common mistake. Under 13 CFR 121.104, annual receipts for a firm with five or more completed fiscal years means "the total receipts of the concern over its most recently completed 5 fiscal years divided by 5." A five-year average. One enormous year does not disqualify you, and one terrible year does not rescue you. If you have been in business less than five full fiscal years, it is total receipts divided by the number of weeks in business, multiplied by 52.
Do part-time employees count toward the employee size standard?
Yes, fully. 13 CFR 121.106 states that "part-time and temporary employees are counted the same as full-time employees." There is no full-time-equivalent math here — a person who works six hours a week counts exactly the same as a person who works sixty. The count is an average across every pay period in the preceding completed 24 calendar months, not a snapshot of today.
Do my affiliates count toward my size?
Yes. SBA adds "the average number of employees of the business concern with the average number of employees of each affiliate." This catches people who structure around a parent, a spouse's company, or a common owner and assume each entity is measured alone. Affiliation is its own body of rules and it is where a lot of size protests are won.
Where do I look up the actual number for my code?
SBA publishes both a size standards tool and the full table; the table states it represents "the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a small business for SBA and federal contracting programs." Standards are "usually stated in number of employees or average annual receipts," and which unit applies depends on your industry. Look up your specific codes rather than relying on the rules of thumb — SBA says outright that there are exceptions by industry.
Next: register in SAM.gov, check SDVOSB eligibility — being small under at least one of your codes is one of its requirements — or how certification works.