What are the main differences between a business and a company?

I need to know for my business studies exam what the main differences are between a business and a company. I know that a company is a type of business, but I don’t really know much more.

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This entry was posted on Friday, June 25th, 2010 at 4:59 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “What are the main differences between a business and a company?”

  1. Well, the Company is the legal form running a business. So a business can be run by an individual or a sole proprietor, a partnership, joint venture (partnership among various legal entities), companies or corporations. Company is not a “type” of business; it is the legal entity which is running the business. Companies are formed according to the Laws or statutes governing the formation of companies (which in the US differ from state to state).

  2. “business” is not a term defined by the law. It is anyone acting in a commercial capacity, usually as a sole proprietor (someone in business for themselves). A sole proprietor runs the risk that any debt or liability of the business can be paid by his/her assets. So, many people form an entity that has limited liability. Typically these are limited liability companies (LLCs) or corporations. To form these, you file paperwork with your state, get federal tax id numbers, separate bank accounts, etc. The corporation or LLC is a separate legal entity from its owners, and the debts and liabilities of the corporation or LLC can be satisfied only with the assets of the corporation or LLC (provided they are properly formed, maintained, run and capitalized). I would say, however, that the terms “business” and “company” are both pretty sloppy, in legal terms. Not sure in MBA/business school terms if they are used differently.

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