Selecting a Schedule C Activity Code for an Arts / Crafts Business

Categorize Your Business for IRS Schedule C

Boards of pottery in potters workshop
Richard Drury/Taxi/Getty Images

IRS Form 1040 Schedule C asks for an Activity Code. What is this and how does a person with an arts and crafts business pick the right one?

These activity codes are based upon the North American Industry Classification System (NAICS) six-digit code. Arts and crafts business owners who file Schedule C can fall under a few different NAICS codes.

IRS Principal Business or Activity Codes

You can find the complete list of codes for Schedule C and other types of tax returns and S-corps from the IRS. For example, it is included at the end of the ​Instructions for Schedule C.These instructions are updated each year.

  • Arts, Entertainment & Recreation: 711510 - Use this if you are an independent artist, in this case a self-employed artist or crafter.
  • Educational Services: 611000. Use this if your primary business purpose is teaching arts / crafts classes
  • Manufacturing: If your arts / crafts business has risen to the level of a production line business select the appropriate code.  These codes are in the 300000 series. They include 315000 for apparel manufacturing, 332000 for fabricated metal product manufacturing, 337000 for furniture and related product manufacturing, 322000 for paper manufacturing, 313000 for textile mills, 314000 for textile product mills, 321000 for wood product manufacturing, and 339900 for other miscellaneous manufacturing, 316990 for otherleather and allied products, 316210 for footwear, 327100 for clay product and refractory manufacturing, 327210- for glass and glass product manufacturing, and 327900 for other nonmetallic mineral product manufacturing. 
  • Retail Trade: For those operating an arts / crafts shop. These codes are in the 440000 series. You may consider 451130 for sewing, needlework and piece goods stores, 453220 for gift, novelty and souvenir stores, 48310 for jewelry stores, or 45390 for miscellaneous store retailers. There are also codes for clothing and accessories stores. Depending on your primary business purpose, you may also consider entries under nonstore retailers such as 454112 for electronic auctions or 454111 for electronic shopping.
  • Unclassified Establishments: This is the catch-all code when you just can't decide how else to categorize your business. It is 999999.

Which IRS  Principal Business or Professional Activity Code Should You Use?

Pick the code that most closely describes the main purpose of your business. The IRS suggests first looking at your primary business activity. If it's manufacturing, look there. If retailing, look there. Then think of the activity that produces most of your sales or receipts. If you make and sell a few different items, which one produces the most sales?

If you use tax preparation software, it can lead you through questions to help determine how to classify your professional activity. If you use a tax preparer, ask them for advice and tell them as much as you can about your main source of sales.

Discuss with your tax preparer if you have been using a code you are not sure about, or want to change from the catch-all code to a more specific code.