Business vs Company
If you are engaged in an activity that earns you money on a continuous basis, you are said to be doing business. Whether you are running a retail shop or a wholesaler, whether you are a lawyer or a sportsperson, as long as you are making money out of your activity, and it is your career or profession, you are doing a business by selling goods or services. It does not matter whether you have registered yourself as a company or any other legal entity to have a legal sanctity for your business. Many people remain confused between a business and a company. There are indeed many differences between these two terms as will be explained in this article.
The most notable difference, whether you are running a business or heading a company, pertains to the way the entity has been structured financially and according to the provisions of law. It is less troublesome to launch a business than get it registered as a company, and this is precisely the reason why most of the entrepreneurs start up as just businesses, and not as companies. While it is a fact that setting up a company is a costly affair, it is possible to structure it legally in such a manner that it will be seen as a separate entity than its owner. This is one point, which assumes significance when business suffers losses or something else goes wrong.
If you are running a business, and have taken debts from several creditors, you are liable for the entire loan taken, and should there be losses in the business so that you are not able to pay back your creditors, creditors are well within their right to get back their money by selling your possessions. However, when you have got the business registered as a company, you have a limited liability, and in case of losses when you are not able to pay back the loans, debt remains the responsibility of the company, and creditors cannot touch your private possessions like your home or car.
It is OK to keep on running a business, and not wanting to convert it into a company. In fact, there are quite a number of businesses across the world that operate this way alone. These businesses have a desire to become more profitable, but they do not look to rule the world or become a big company. However, it is not feasible to keep running as a business once you have grown to a certain size, and this is when you need the protection of limited liability by incorporating into a company.
Difference between Business and Company
• Operating as a business has the benefit of low start up cost as you need to register your company in the states where your business has presence.
• On the other hand, starting as a company can be quite costly and time consuming.
• Companies can have shareholders, and this means they can raise capital easily.
• However, there are more governmental regulations to face as a company than as a business.
• You are valued as a serious player once you are a registered company, and businesses are more comfortable in dealing with you.