Before setting up your construction business, you will need to incorporate your company. During the company incorporation process on Companies House, you will need to provide your company’s SIC code based on the nature of your business and services. There are over 600 codes on the list of SIC codes to choose from which can be overwhelming, especially as there is a variety of SIC codes related to construction and development. This article explains what a SIC code is and how to choose one for your new construction business.
What are standard industrial classifications?
A Standard industrial classification code (SIC code) is a five-digit business code which describes a company’s economic activities and business services. These codes help the Office for National Statistics (ONS) track the state and growth of United Kingdom (UK) companies. The condensed UK SIC code list maintained by Companies House is available on the gov.uk website. A private limited company (the most popular type) can have multiple SIC codes. Dormant companies and non-trading companies are also required to have a SIC code.
Your construction business can have multiple SIC codes if it has multiple business activities. SIC codes can also be updated via the next confirmation statement if ever the business’ activities evolve or the type of business service expands.
You’ll need a SIC code to file paperwork, such as tax documents and loan applications. And if you plan to accept credit cards as a home services contractor, credit card associations may process your SIC code to determine if your business qualifies for discounts or different rates.
To identify the SIC code that works for your business, you will want to work out the type of service activities your construction company will carry out.
If your construction company will focus on developing residential real estate then you will want to use the SIC code 41202 that covers the construction of domestic buildings. You will use this SIC code if your building firm develops housing as part of large development projects or for individuals.
Conversely, if your building firm will focus on non-residential buildings, such as offices and schools, you will need a different SIC code. In this case you will need to use the SIC code 41201.
If your building company does not focus on the construction and erection of buildings you will want to narrow down your firm’s services. Many construction companies specialise in building certain types of infrastructure as opposed to the development of building projects and there are SIC codes to reflect these specialisms:
- 42110 Construction of roads and motorways
- 42120 Construction of railways and underground railways
- 42130 Construction of bridges and tunnels
In the same way as some construction firms might focus on the construction of roads for cars and motorcycles, other construction firms focus on building utility projects. All of which also have their own SIC code that you should choose as suit your business:
- 42210 Construction of utility projects for fluids
- 42220 Construction of utility projects for electricity and telecommunications
- 42910 Construction of water projects (for example for water supply)
- 42990Construction of other civil engineering projects n.e.c.
- 43210 Electrical installation
- 43220 Plumbing, heat, insulation and air-conditioning installation
- 43290 Other construction installation
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If your business focuses on preparing building sites for construction you should select one of the SIC codes below to describe your business activities:
- 43110 Demolition
- 43120 Site preparation
- 43130 Test drilling and boring
- 43991 Scaffold erection
Conversely, your company might focus on finishing sites. In this case, you should select the SIC code that best reflects your special trade:
- 43310 Plastering
- 43320 Joinery installation
- 43330 Floor and wall covering
- 43341 Painting
- 43342 Glazing
- 43910 Roofing activities
- 43390 Other building completion and finishing
If you are unsure that any of the above SIC codes work for your construction or building business, you can use the SIC code 43999 that covers all other specialised construction activities not elsewhere classified (n.e.c).
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Once you have navigated the industry classification system and chosen a SIC code for your construction business and finalised the incorporation process, you will need to generate legal contracts to structure your business activities. Creating lawyer-approved agreements can be costly and it can be tempting to download free templates online. However, this process is risky and unnecessary thanks to contract management platforms like Legislate. Legislate allows to tailor the essential agreements to hire and grow your business such as employment, consultancy and internship agreements. To create a lawyer-approved contract for only £9.95, sign up to Legislate today!
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.