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Guilherme Mazui

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What is the Difference Between Business and Company?

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The main difference between a business and a company lies in their legal status and structure. Here are the key differences:

  1. Legal Status: A business does not have a distinct legal status and operates under the legal framework governing the specific form of business ownership, such as sole proprietorship or partnership. On the other hand, a company is a separate legal entity with its own rights, responsibilities, and obligations.
  2. Liability Protection: In a business, the owners are personally responsible for the debts and legal responsibilities of the organization. In a company, the entity is responsible for its own debts and legal affairs, providing limited liability protection for its shareholders.
  3. Size and Scope: A business is usually smaller than a company and focuses on one specific industry. A company is often larger than a business and focuses on many markets.
  4. Taxation: Businesses and companies may have different tax rules and rates, depending on their structure and jurisdiction.

In summary, a business refers to any profit-generating activity, while a company is a distinct legal entity with its own rights and obligations. When starting a new venture, it is essential to understand the distinction between a company and a business and consider your goals, needs, and long-term vision.

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  • What is the Difference Between Business and Company?
  • Comparative Table: Business vs Company

    • Comparative Table: Business vs Company

    Here is a table comparing the differences between a business and a company:

    Feature Business Company
    Definition A business is a general term for any economic activity involving the exchange of goods or services. A company is a specific type of business structure, incorporated and registered under the law, and considered a separate legal entity from its owners.
    Legal Status Not a separate legal entity from its owner(s). A separate legal entity from its owners, providing limited liability protection.
    Taxation Owners pay taxes on business income through their personal tax returns, depending on the business structure (e.g., sole proprietorship, partnership, or limited liability company). Companies pay taxes on their profits, and shareholders pay taxes on dividends received, leading to double taxation in some cases.
    Ownership and Management Ownership and management are often intertwined, with owners or partners making business decisions. Ownership and management are separate, with shareholders owning the company and a board of directors overseeing the management.
    Easiness to Form Generally easier and less expensive to set up compared to a company. More complex and expensive to set up compared to a business. Requires registration with the appropriate government agency and adherence to specific legal requirements.
    Raising Capital Limited ability to raise capital from external sources, as banks and investors may perceive businesses as riskier investments. Can issue shares and stock options to raise capital from external sources, making it easier to access funding for growth and expansion.

    Please note that this table provides a general overview, and specific differences may vary depending on the type of business and company structure involved.

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    Guilherme Mazui

    Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.