Understanding the difference between company and business name in Details.
BUSINESS VS COMPANY.
Over the years, there have been a lot of confusion and misconceptions about the terms, BUSINESS and a COMPANY.
Thousands, if not millions of people probably think that those terms can be used interchangeably, but NO!! They are quite distinct from each other.
In this manuscript, we’ll be stating the difference and enlightening you on both concepts distinctively. We are sure that after reading this article from the beginning to the finish line, all the riddles about these two concepts would be unraveled and solved, you’ll obviously be an expert in distinguishing the characteristic features of both perfectly.
What is a business??
A business refers to an enterprise anchored by a person (an entrepreneur) or a group of people (entrepreneurs) working together to pioneer and deal with commercial activities, marketing transactions, sales of commodities, and rendering of services, for the sole aim of making profits and earning returns.
According to Merriam-Webster’s dictionary, A business is an activity of buying and selling goods and services. This is a definition and description that is probably stuck in our heads as it is simple and concise to remember and comprehend.
Beginning a business depends upon the time, money, and effort one is willing to spare.
As spotted out earlier, a business might be an enterprising reality anchored by either a single entrepreneur or a group of entrepreneurs, this leads to an important aspect of the concept of BUSINESS. We’ll mention and talk about the kinds of business.
TYPES OF BUSINESS:
Majorly, there are two types of business, they are:
– Sole proprietorship.
This kind of business is often referred to as “a one-man business”. It is fully pioneered, managed, and founded by a single entrepreneur, the entrepreneur takes the responsibilities for the business’s funding, maintenance, losses, and profit-making. It is owned and governed by an individual (no partners involved).
Furthermore, it has no acclaimed legal entity, No sharing of profits or losses, No legal formalities, No separate entity from the entrepreneur or business owner, and no managing body (the business entrepreneur has every decision-making rights over the business).
In other words, a sole proprietorship business is seldom referred to as SOLE TRADERS HIP and SOLE BUSINESS OCCUPANCY.
Examples of a sole proprietorship can be:
– An entrepreneur managing a kiosk.
– A store manager.
– A wholesaler managing a warehouse single-handedly.
– A vendor who produces and peddles his/her own products.
This kind of business often involves a group of entrepreneurs and individuals working together for the common interest of attaining the business’s goals (Successful business transactions and profits generation). This group of individuals contributes funds to raise the capital in financing the business’s growth and continuity, they take part in the decision-making aspect of the business, share a part in the liability and loss responsibilities of the business, and gain in the profit distribution of the business.
As earlier spotted, a Partnership business is made up of two or more persons who contribute their resources, efforts, and interest to sponsor a business enterprise with the agreement of sharing the risks, losses, and profits of the business together.
Examples of partnership business are:
– A law firm.
– Physicians and doctors heading an enormous hospital.
What is a Company??
A company refers to a legal reality and entity in its own profound and acclaimed right.
It is created, pioneered, and directed by a group of individuals involved in a business and also operates a business and commercial enterprise.
The entity of a company is separate and distinct from the entity profile of the shareholders or the individuals involved.
A company is necessarily registered under some legal entities for proper recognition and permission to run its business activities without any kind of legal reservations or hindrances.
The words SHAREHOLDERS and DIRECTORS are common words in the register of a Company. Obviously, the shareholders are the participants and the individuals involved in the affairs of the company, they own shares and stocks in the company… The directors are people that head and govern the overall affairs and activities of the company.
Oftentimes, Companies produce and market goods and commodities in large stock carrying their own entity with the sole aim of making profits and returns.
Some characteristic features of every company are:
– Possession of a managing body.
– Separate legal entities from the participants.
– Legal formalities and registration.
– Production of their own commodities from raw to finished goods.
TYPES OF COMPANY.
Primarily, on the number of participants and shareholders, there are three (3) major types of company, they are:
– Public Limited Company.
– Private Limited Company.
– One-person Company.
Public Limited Company:
This might also be shortened to PLC, which is a kind of company that accepts eligible participants from the public to own shares and stocks in the company. The shares and stocks are made into business publicly, possess a practically hindered and limited liability, Possesses an unlimited number of participants and shareholders as guided by the company law.
The group involved in this kind of company is usually relatively enormous and large.
Private Limited Company:
This is a smaller group compared to the public Limited company, the number of participants in this kind of company setting is relatively minimal.
In the stock market, the shares are not publicly marketed or traded.
Similar to the Public Limited Company, it also possesses a hindered and limited liability, they have fewer legal regulatory affairs.
This kind of company can also be transformed into a Public Limited Company by selling its shares to the public, oftentimes, this is done to generate huge funds in keeping the company on its feet when its growth begins to decline and get lopsided.
As the name implies, this is a kind of company that is owned, pioneered, and governed by an individual single-handedly. In this system, practically, only an individual shoulders the entire funding responsibility of the company. There might be other participants and shareholders in this kind of company, but obviously, their efforts and impact on the company’s affairs are lukewarm and meager.
THE DIFFERENCE BETWEEN A BUSINESS AND A COMPANY.
First, it is important to note that:
A BUSINESS is an aspect of a COMPANY, it is the chief purpose of the company, and a COMPANY is also part of a BUSINESS, but they are distinct and shouldn’t be used interchangeably.
Those two terms mustn’t be interchanged or mistaken for the other.
We are sure that with the notes we’ve given about the two concepts, some of you already know the significant dissimilarities between the two terms.
Nevertheless, we’ll be writing on several differences between the two terms for better understanding.
The major difference between a BUSINESS and a COMPANY are:
– Legal structure and registration.
– Taxes and losses.
– Set up the structure.
Legal structure and registration:
The legal formalities of a business are distinct from that of a company in the sense that companies have a lot of legal procedures to go through before recognition and permission to stand partially Independent as their own legal entity.
Unlike Businesses, companies are mandated to get registered under company legal law acts before beginning their operations.
The Company’s name and legal entity are separate from the participants’ entity. While a business name is the same as the owners’ entity.
Taxes and losses are managed and tackled by the entrepreneur/ entrepreneurs alone either periodically or annually.
If the business is in partnership, there might be an added tax return commission known as the “Partnership Tax Return”. While a Company often possesses a simple tax return commission. Every Company has a file named “Corporate Tax Return” annually, usually at the end of every business year, and it manages and tackles the company’s tax-related matters.
Set up structure:
Setting up a business is relatively very easy and straightforward, as long as the capital is ready, and the business strategy is activated, then the processes can be started. Meanwhile, it is more complex and hectic to freshly set up a company, because the company would have to go through registration processes, acquire a legal and a formal entity different from that of the participants, gain legal recognition and permission, and decide on the commodities to start producing not exempting the sources of its capital and raw materials to begin operation.
Unlike Businesses, Companies require a huge amount of money to set up.
This factor is self-explanatory. The possession of a Business is very much different from a Company. A business is often owned and managed by an individual single-handedly or a group of individuals without legal separation from the business’s entity. While a Company entails participants known as shareholders who own stocks and shares in the company and are responsible for the legal obligations of the company. A Company also has a board of directors who governs and manages the affairs of the company.
A Business ownership idea is frequently conceived by a single individual, but a company’s own idea is conceived by a group of individuals forming a body.
Above are the key difference and dissimilarities between a BUSINESS and a COMPANY.
We are positive that this article must have broadened your knowledge and perception of the two distinct concepts