Are you confused about the difference between a company and a business? Well, when I was young, I always thought that both of them are the same as I did not know how to differentiate them. It was until recently that I found that the two had different purposes and benefits. I thought that it would be useful for someone who is trying to learn about trading.
What is a Business?
In simple terms, a business basically means something that you do to earn money. For example, my business could be reselling sneakers. I buy sneakers at a lower price and sell them at a higher price in markets such as xStock, eBay, or Carousell. In other words, having a business means essentially you are just trying to set something up to generate profit.
There are all kinds of businesses that anyone can venture into, it is completely up to you to decide what you want to sell to earn money. You can do your own research to find out what works best for you, it is always better to do something that you are aware of so that it easier to sell.
By having a business, things are more directly related to you. Meaning to say that if you take a loan to operate your business, it would go under your personal debt instead of the business loan. This means that you are tied down to your business and you would be accountable for the debts.
Types of Business
1. Sole Proprietorship/ Trader
By being a sole trader, it basically means that you are the one that is responsible for your business, and if there were to be any debts incurred or legal actions taken, it would be directed to you. You may also hire employees to help run the business.
2. Partnership
A partnership in business consists of two or more people. Similar to a sole proprietorship, any legal actions taken or debts incurred by the business will be held accountable to the partners of the business.
However, the business can choose to come up with a contract that states that certain situations may override the rule of having to share the burdens and profits of the business. Usually, a proper discussion of the contract will be held to protect the business partners and ensure that more trust is being put into working together with the other partners.
3. Franchise
When you feel that your business is ready to take the next step, maybe you would want to set up a franchise as having a franchise would allow you to earn a license that protects your brand, operating procedures, and trademark of the business. By starting a franchise, you have ensure your business is able to meet certain standards, using certain products and maintaining the reputation of your brand.
Having a franchise is essentially expanding your business as it allows you to open up more stores to operate your business.
What is a Company
In a company, it comprises of more people and is usually bigger than a business. They usually earn more money and they are legally protected by the registration of the company. A good example would be Google as they have many employees and they are all over the world being a world-leading brand that offers great online services.
If you think about it, business is just the start but the company is the goal that you want to achieve whereby your business turns into a branded company that is easily recognized by your customers. For example, if our business is selling sportswear and Nike is also selling the exact product, which one would perform better? Well, you could argue that you might go for the cheaper ones but most people are looking for quality. For that, they would go for Nike for sure since their brand is so well known for selling sports goods of great quality.
When you are in need of fundings, you can borrow money under the company’s name and that would mean it is the company that owed money instead of you. This would allow
Business vs Company
Before you invest in a company, you should be able to differentiate between a company and a business so that you can research better if the investment would be profitable for you. It would be better to analyze the companies only when you understand how what a company is.
Main Differences
- The key difference is that you have to decide what you have to know what direction your business is going, if you are looking to expand your business then the company is the way to go as the company protects your personal life better.
- It costs less to start a business as compared to a company.
- Debts of your business can allow creditors to take your personal belongings such as your cars or even your house as any debts incurred in the business are tied directly with you. For a company, the debts incurred would be considered as company debt and creditors would not be able to touch your personal assets.
