In the business world, the naming of business settings varies. Businesses are classified according to the nature of work, ownership, organizational structure and the number or type of workers. Examples of common terms include firms, companies, establishments, corporations, organizations and institutions, just to name a few. Although used interchangeably, these terms denoted different business settings.
What is a Firm?
This is a business involved in the selling of services and products for profit, usually professional services. Although a firm can provide its products and services in more than one location, it is unified under the same owners hence must have the same Employer Identification Number.
Examples of firms include accounting firms, consulting firms, law firms and graphic design firms. The IRS does not control the operations of a firm.
What is a Company?
This is a business involved in any income-generating activity involving the sale of goods and services and includes all business trades and structures. Companies can either be corporations, sole proprietorships and limited liability companies, with each having different tax benefits and liabilities. Also, they must be registered under the Companies Act.
Types of companies include private limited company, a public limited company or a one-person company.
Similarities between Firm and Company
- Both are for-profit business entities
Differences between Firm and Company
Definition
A firm refers to a business involved in the selling of services and products for profit, usually professional services. On the other hand, a company refers to a business involved in any income-generating activity involving the sale of goods and services and includes all business trades and structures.
Types of activities
While firms are mainly involved in professional services, companies are involved in all business trades and structures.
Examples
Examples of firms include accounting firms, consulting firms, law firms and graphic design firms while examples of companies include private limited company, public limited company or one-person company.
Firm vs. Company: Comparison Table
Summary of Firm vs. Company
A firm refers to a business involved in the selling of services and products for profit, usually professional services. On the other hand, a company refers to a business involved in any income-generating activity involving the sale of goods and services and includes all business trades and structures. Both, however, are for-profit businesses.