Difference between Company and Firm
|
Basis |
Company |
Firm |
|---|---|---|
|
Meaning |
A company is a legal entity formed under the laws of a particular jurisdiction, typically for the purpose of engaging in commercial activities and generating profits. |
A firm is a business entity or enterprise engaged in commercial activities with the aim of generating profit. |
|
Legal Structure |
In a legal context, a company typically refers to a business entity that is registered and incorporated under the laws of a particular jurisdiction. |
The term firm is more commonly used in a broader sense to refer to any business enterprise or commercial organisation, regardless of its legal structure. |
|
Type |
It can be a private limited company, public limited company, or other types of entities recognised by law. |
It can include companies, partnerships, sole proprietorships, and other forms of business entities. |
|
Ownership and Management |
A company is owned by its shareholders and managed by its board of directors and officers (such as the CEO, CFO, etc.), who are appointed or elected to oversee the company’s operations and decision-making. |
The ownership and management structure of a firm can vary depending on its legal form. For example, a firm could be owned and managed by a single individual (sole proprietorship), by multiple partners (partnership), or by shareholders and a board of directors (corporation). |
|
Scope of Operations |
A company may operate in various industries and sectors, providing goods or services to customers, clients, or other businesses. It can have a wide range of activities, products, and services. |
A firm can operate in different industries and sectors, encompassing various business activities and operations. |
|
Legal Recognition |
A company is a legally recognised entity with specific rights, obligations, and liabilities under the law. It has its own legal personality separate from its owners or shareholders. |
While a firm may also have legal recognition depending on its legal form (such as a partnership or corporation), the term firm is often used more informally to describe businesses in general, without necessarily implying a specific legal structure. |
|
Example |
Tata Group |
McKinsey & Company |
Difference between Company and Firm
Company and Firm refer to business entities engaged in commercial activities. Company typically refers to a legally registered and incorporated business entity; whereas, firm is a broader term that can encompass various types of business organisations.