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As tax season approaches, one question often pops up for those working in the gig economy or self-employed: “What is my business activity code?”
Also known as NAICS (North American Industry Classification System) codes, business activity codes play a vital role in your tax filing process. These codes allow the IRS to classify your work, making it easier to ensure that your reported income and expenses align with industry standards.
For freelancers, contractors, and gig workers who drive for Uber or deliver food with DoorDash, selecting the correct NAICS code is more than just a checkbox. It affects tax reporting, determines potential deductions, and can even influence your audit risk.
This guide explains everything you need to know about choosing the right business activity code and provides specific NAICS codes for popular gig economy jobs.
NAICS codes are six-digit identifiers assigned to various industries, allowing governmental agencies like the IRS to track and analyze economic activity. These codes provide insights into different sectors of the economy and are especially helpful for tax administration. When you file your taxes using a Schedule C, you’re required to list a business activity code that reflects your primary source of income.
For gig workers and freelancers, the NAICS code helps the IRS understand what type of business you’re running, ensuring that your tax filings are categorized accurately. The right code can also make a difference when identifying potential deductions, as certain industries tend to have specific expense patterns. Choosing the correct NAICS code for your business is crucial for accurate tax reporting and maximizing allowable deductions.
With the rise of the gig economy, many people are working in roles that may not seem like traditional businesses but still require accurate reporting. Here are suggested NAICS codes for some of the most common gig economy roles:
NAICS 485300 - Taxi and Limousine Service
This code is appropriate for those providing on-demand transportation services, such as Uber and Lyft drivers. Although you’re not operating a traditional taxi, this category is the closest fit and accurately represents rideshare services. When it comes time to deduct your business mileage, higher mileage amounts won't set off the same audit red flags as say, a painter.
NAICS 492000 - Couriers and Messengers
If your primary work involves delivering food within local areas, this code is a good match. It accurately describes the work done by DoorDash, UberEats, and similar food delivery services.
NAICS 492000 - Couriers and Messengers
This code also applies to grocery delivery services, where workers deliver groceries from stores to customers. Shipt, Instacart, and similar services fall under this category as they involve delivering goods locally.
NAICS 492000 - Couriers and Messengers
For gig workers involved in package delivery, such as Walmart Spark and Amazon Flex drivers, this code accurately describes their activity. It covers couriers and messengers who transport packages within local areas.
NAICS 812990 - All other personal services
This code is suitable for those providing on-demand handyman, cleaning, and general household services. TaskRabbit and Thumbtack workers who assist with tasks around the house, such as repairs or deep cleaning, fall under this classification.
NAICS 721110 - Hotels, motels, bed & breakfasts
This code applies to individuals who rent out their homes, apartments, or other properties for short-term stays. It includes platforms like Airbnb and VRBO, where hosts provide temporary accommodations for travelers.
NAICS 721110 - Hotels, motels, bed & breakfasts
This code is for those offering pet care services, such as dog walking, pet sitting, or pet boarding. It accurately represents platforms like Wag! and Rover, where gig workers provide pet-related services.
NAICS 532112 - Automotive Equipment Rental & Leasing
For individuals renting out personal vehicles, such as on platforms like Turo and GetAround, this code is the most suitable. It covers the leasing of passenger cars to customers for short-term use.
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NAICS 531210 - Offices of Real Estate Agents and Brokers
This code is specifically for self-employed real estate agents, brokers, and other professionals who work in buying, selling, or leasing properties. It applies to individuals involved in residential, commercial, or industrial real estate transactions. Using this code helps real estate professionals accurately report income and claim relevant business deductions, such as mileage for client showings, advertising expenses, and office supplies.
NAICS 484110 - General Freight Trucking, Local or 48412 General Freight Trucking, Long-Distance
These codes are designed for self-employed truck drivers and small trucking businesses that transport freight. 484110 is used for local trucking services, where deliveries are made within a short distance or a metropolitan area, while 484121 applies to long-distance trucking services that transport goods across states or cover extended routes. Choosing the correct code based on your typical delivery range helps ensure accurate tax reporting and allows you to claim specific expenses, such as fuel, maintenance, and lodging for long hauls.
NAICS 541611 - Administrative Management and General Management Consulting Services
This code is ideal for self-employed consultants who provide business, management, or administrative consulting services. It includes professionals offering advice on business operations, strategic planning, organizational structure, and other management-related topics. Consultants who primarily focus on specific areas, like IT, human resources, or financial advising, may have specialized NAICS codes, but 541611 is a versatile option for general consulting. Using this code allows consultants to report income accurately and claim business expenses, including travel, client meetings, software, and office supplies.
NAICS 561730 - Landscaping Services
This code is appropriate for self-employed landscapers and small landscaping businesses providing services like lawn care, garden design, tree trimming, and general outdoor maintenance. It includes professionals who work on residential, commercial, and industrial properties. Selecting this code ensures accurate tax reporting for landscaping income and allows for deductions on expenses like equipment, fuel, plants, and maintenance supplies necessary for landscaping work.
NAICS 711510 - Independent Artists, Writers, and Performers
This code is ideal for freelance writers who create content independently, whether for blogs, websites, magazines, or other publications. It covers a wide range of writing services, including copywriting, journalism, technical writing, and creative writing. Using this code helps freelance writers accurately report income and allows for deductions on business-related expenses, such as computer equipment, research materials, and software subscriptions essential for their work.
NAICS 541430 - Graphic Design Services
Ideal for freelancers offering design services, including branding, web design, advertising graphics, and digital illustration. This code allows graphic designers to claim relevant expenses, such as design software, computer equipment, and professional memberships.
NAICS 541511 - Custom Computer Programming Services
This code applies to freelance web developers, app developers, and software programmers who create custom solutions. Common deductions include computer hardware, software licenses, and technical training.
NAICS 541921 - Photography Studios, Portrait
Freelance photographers and videographers who offer portrait, event, or commercial photography can use this code. Deductible expenses often include camera equipment, lighting, props, and editing software.
Choosing the right NAICS code may seem challenging, especially if your business doesn’t fit perfectly into one category or it's your first time being self-employed. Here’s a step-by-step guide to help you find the best match:
Selecting the appropriate NAICS code is more than just a formality—it can affect your taxes in several key ways:
Using the right NAICS code allows the IRS to categorize your business correctly, ensuring that your reported income and expenses align with industry standards. This is especially relevant for gig economy jobs, where expenses may differ significantly based on the type of work.
Certain deductions are common within specific industries, and the IRS may view your expenses in the context of your NAICS code. For instance, mileage and vehicle expenses are typical for drivers (Uber, Lyft), while office supplies and software expenses are common for freelance writers or designers. An accurate code helps you maximize allowable deductions by providing clarity on which expenses are typical for your industry.
Incorrectly categorizing your business could raise red flags with the IRS, especially if your reported expenses deviate significantly from what’s typical for your industry. For instance, if a delivery driver claims unusually high home office expenses, it may trigger scrutiny, furthermore if a freelance designer is claiming they drove 100,000 business miles with the IRS mileage rate, that also may trigger a red flag at the IRS. By choosing the correct NAICS code, you help minimize audit risks.
Here are some of the most common questions about NAICS codes for gig economy workers:
Do I have to use an NAICS code if I’m a gig worker?
Answer: Yes, if you file a Schedule C, you need to select an NAICS code that represents your primary business activity.
Can I change my NAICS code if my business activities change?
Answer: Yes, you can update your NAICS code each tax year based on your primary income-generating activity.
What if my business doesn’t fit perfectly into one NAICS category?
Answer: Choose the code that best describes your main activity. The IRS expects you to select the code that most closely matches, even if it’s not an exact fit.
Can I use multiple NAICS codes?
Answer: Generally, you should use one code that reflects your main business activity. However, if you operate two distinct businesses, you may file separate Schedule Cs with different codes.
Where do I enter my NAICS code on my tax forms?
Answer: NAICS codes are typically entered on Schedule C, in the section labeled “Principal Business or Professional Activity.”
Everlance automates mileage tracking and organizes expense categories, making it easy to see which expenses are deductible based on your industry. Having organized records is essential for supporting your NAICS code selection, as it ensures you can demonstrate that your expenses align with industry norms.
Choosing the right NAICS code is crucial for accurate tax filing, maximizing deductions, and avoiding potential IRS issues. Whether you’re driving for Uber, delivering for DoorDash, or offering freelance services, selecting the proper code can help you simplify tax season and potentially increase your tax savings.
Remember to double-check your code each year as your business activities evolve, and take advantage of tools like Everlance to keep your records in order. A well-organized tax strategy starts with a single code, but it can lead to significant savings and peace of mind.
Brad Thibeau is the Head of Growth & Partnerships at Everlance. Brad has worked at Everlance since 2021 with a focus on helping self employed people save time and money on their taxes.
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