If you run a home improvement business, choosing the correct NAICS (North American Industry Classification System) code is more than just a formality. It plays a critical role in how your business is classified by federal, state, and local agencies, and it directly impacts your ability to secure licenses, apply for funding, comply with regulations, and win government contracts.
For most home remodeling and renovation businesses, the correct NAICS code is 236118 – Residential Remodelers. This code applies to contractors who focus on making structural and aesthetic changes to existing residential buildings, whether through full renovations, room additions, or specialized upgrades like kitchen and bathroom remodels. However, if your services are more specialized—such as painting, flooring, or drywall installation—there are more specific NAICS codes that may better reflect your operations.
Choosing the right code affects how you’re categorized for tax reporting, SBA loan eligibility, local permitting, and even how your business appears in public databases and government procurement platforms. An incorrect code can lead to denied applications, compliance issues, and missed business opportunities.
In this article, we’ll explain exactly what NAICS 236118 includes, when to use related codes, and how to properly select and register your classification. You’ll also learn about common mistakes to avoid, real-world examples of businesses using NAICS codes effectively, and how to turn your classification into a strategic asset.
Key Takeaways
- Primary Code: NAICS 236118 is the standard code for businesses offering general home improvement, renovation, and remodeling services.
- Business Impact: Your NAICS code affects your licensing, tax filings, access to grants and loans, and eligibility for government contracts.
- Code Variations: Specialized services like flooring (238330), painting (238320), or retail sales (444110) may require a different NAICS code.
- Strategic Advantage: A correct and well-used NAICS code improves visibility, supports compliance, and aligns your business with funding and growth opportunities.
- Practical Guidance: This guide provides actionable steps to find, verify, and use the best NAICS code for your home improvement business.
What is the NAICS Code for Home Improvement?
The primary NAICS code for businesses engaged in home improvement is 236118 – Residential Remodelers. This code applies to contractors and firms whose main business activity involves remodeling, renovating, or improving existing residential structures. It covers a wide range of services, from minor cosmetic upgrades to full-scale structural changes, all performed on existing homes rather than new constructions.
NAICS 236118 is intended for companies that manage and execute remodeling projects for single-family homes, duplexes, and multifamily buildings. It includes both general contractors who oversee entire renovation projects and firms that perform the work directly. This classification is also used by businesses that offer design-build services or act as project managers for home improvement work.
This code is essential for correctly classifying your business in government databases, on applications for business licenses, and when applying for programs through agencies like the Small Business Administration (SBA). It also determines how your business is tracked in economic data and how you’re grouped in directories and public records.
Here’s what typically falls under NAICS 236118:
- Remodeling of kitchens, bathrooms, and basements
- Room additions or expansions to existing homes
- Conversion of garages or attics into living space
- Interior and exterior upgrades, such as replacing windows or siding
- Restorative work after fire, water, or storm damage
- Handyman services that focus on structural or long-term property improvement
Businesses that focus solely on new construction, commercial buildings, or highly specialized trades may fall under different NAICS codes. However, if your core focus is upgrading and improving residential properties that already exist, NAICS 236118 is likely the most accurate fit. Correctly identifying your business under this classification helps ensure you’re eligible for the right programs, permits, and visibility within your industry.
Why NAICS Codes Matter for Home Improvement Businesses
Using the correct NAICS code is essential for home improvement businesses because it directly affects licensing, tax reporting, government contract eligibility, and access to small business funding programs. Regulatory bodies and financial institutions rely on your NAICS code to classify your business activities accurately, so errors can lead to delays, audits, or missed opportunities.
This classification helps federal and state agencies determine if your business qualifies for incentives such as SBA loans, disaster relief programs, and industry-specific grants. It also impacts how your business is reported in market research, economic data, and competitor analysis.
For example, a small contractor who selects a retail code instead of the proper remodeling code may be excluded from applying for a grant targeted at service-based home improvement professionals.
Related NAICS Codes for Specific Home Improvement Services
Not all home improvement businesses fall under the same NAICS code. While 236118 covers general residential remodeling, several related codes apply to specialized services within the home improvement industry.
Here are some common alternatives:
- 238320: Painting and Wall Covering Contractors
For businesses focused on interior and exterior painting or wallpaper installation. - 238330: Flooring Contractors
For companies that install, refinish, or repair flooring such as hardwood, tile, or carpet. - 238390: Other Building Finishing Contractors
For services like drywall installation, acoustical ceiling work, or decorative trim. - 238990: All Other Specialty Trade Contractors
A general category for niche services not covered under more specific construction codes. - 444110: Home Centers
For retail businesses that sell home improvement products like tools, fixtures, or materials, similar to hardware stores or big-box retailers.
Choosing the right code ensures your business is properly classified for tax, licensing, and marketing purposes.
Examples of Projects Covered by NAICS 236118
NAICS code 236118 applies to businesses engaged in the full spectrum of residential remodeling and renovation work. This includes both interior and exterior improvements made to existing residential structures. Projects under this code are not limited to cosmetic upgrades but often involve structural, mechanical, and system-level changes intended to improve functionality, increase home value, or restore habitability.
Contractors working under this classification typically perform tasks like reconfiguring floor plans, installing new electrical or plumbing systems, upgrading insulation, replacing windows and doors, and enhancing energy efficiency. Exterior work might involve replacing siding, adding decks, installing new roofing, or expanding existing structures.
The code also encompasses specialized services such as converting attics into living spaces, creating accessible environments for aging homeowners, and handling post-disaster rebuilding efforts following events like fires or floods. In many cases, businesses also manage subcontractors, oversee permit processes, and coordinate inspections to complete projects from start to finish.
For example, a residential remodeler contracted to add a second-story extension to a home, while simultaneously updating the kitchen, installing new HVAC systems, and managing all structural reinforcements, would be appropriately classified under NAICS 236118.
How to Find and Register the Right NAICS Code
You can find and register the correct NAICS code for your home improvement business by using official government resources and selecting the code that best matches your primary business activities. This process is important for tax filings, business licenses, and applications for government programs.
To identify and register your NAICS code:
- Visit the official NAICS website at naics.com or use the U.S. Census Bureau’s NAICS search tool.
- Enter keywords related to your services, such as “remodeling,” “renovation,” or “flooring.”
- Review the code descriptions to find the one that aligns most closely with your core services.
- Use this code when registering your business with state and federal agencies, including the IRS and your local business licensing authority.
- If your services change or expand, update your NAICS code accordingly to reflect your current business model.
Accurately registering your code helps ensure you remain compliant with government regulations and are eligible for industry-specific benefits.
Common Mistakes to Avoid with NAICS Codes
Using the wrong NAICS code can lead to issues with business classification, missed opportunities for funding, and problems during audits or compliance checks. Many home improvement businesses unintentionally select codes that do not accurately reflect their core services.
Avoid these common mistakes:
- Choosing a retail or product-based code when your business provides services, such as remodeling or installation
- Using a general contractor code when your work is specialized, like flooring or painting
- Failing to update your NAICS code after expanding your services or shifting your business focus
- Selecting a code based on what seems similar rather than reading the official description
- Ignoring the financial and regulatory implications tied to your NAICS classification
Being precise with your NAICS code not only improves your business credibility but also ensures you are properly positioned for tax reporting, licensing, and government contract eligibility.
Real-World Examples of Using NAICS Codes Effectively
Understanding how NAICS codes function in real business scenarios helps clarify their value beyond basic compliance. Many home improvement businesses have used their NAICS classification to unlock funding, streamline operations, and gain a competitive edge.
A small remodeling company in Florida correctly classified under NAICS 236118 was able to qualify for an SBA microloan specifically targeted at residential service providers. Because their classification aligned with the program’s criteria, they secured funding faster and expanded their team.
In another case, a California-based flooring contractor originally used a general remodeling code, which led to confusion during a city zoning review. After updating their classification to NAICS 238330 (Flooring Contractors), they resolved the issue and obtained the proper permits without delay.
A design-build firm in Texas used their NAICS code strategically when applying for federal disaster recovery contracts. Because they were listed under the correct remodeling classification, they appeared in procurement databases and were invited to bid on residential reconstruction projects after a hurricane.
These examples show that selecting and using the right NAICS code can directly affect your access to capital, compliance with local regulations, and even your eligibility for government contract work.