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Everything you need to know about the key differences among business, profession and employment.
Learn about the Difference between Business, Profession and Employment!
Difference between Business, Profession and Employment
Difference # Business:
1. Formation – Born out of desire to make money.
2. Qualifications – No formal qualifications needed other than a burning desire to succeed.
3. Membership – Businessmen can become members of an association—voluntarily.
4. Nature of work – Serve customers well putting resources to best use. You need to deliver services at an affordable price too.
5. Motive – Make money by meeting customers’ needs.
6. Resources – Put resources to best use always to survive and flourish in a competitive environment.
7. Rewards – Profits.
8. Risk and uncertainty – Business environment is risky and full of uncertainties.
9. Transferability of interest- Ownership interest transferable.
10. Code of conduct – Moral and ethical behaviour born out of inner desire to serve customers well, no formal code exists.
Difference # Profession:
1. Formation – Earn a degree and a certificate of practice.
2. Qualifications – Degree, skills, knowledge and expertise in a field required.
3. Membership – Professionals are required to be members of a professional body regulating their affairs.
4. Nature of work – Serve clients by offending expert advice, quality service and showing genuine commitment.
5. Motive – Offer best advice and quality service for a fee.
6. Resources – Invest your time, money, effort to acquire expertise and offer the same to clients.
7. Rewards – Professional fee.
8. Risk and uncertainty – Professional life is tough, competitive and very challenging.
9. Transferability of interest – Not possible.
10. Code of conduct – Code exists and to be followed.
Difference # Employment:
1. Formation – Appointment letter specifying what to do and how to do.
2. Qualifications – Employee must have job related skills, knowledge and experience.
3. Membership – Employees can join unions and employers can form associations to protect their interests—voluntarily.
4. Nature of work – Employer and employee bound by terms of the employment contract specifying duties and responsibilities.
5. Motive – Employer wants results; employee wants wages for a living.
6. Resources – Employers offer inducements and employees offer contributions.
7. Rewards -Salary /wages; bonus, benefits.
8. Risk and uncertainty – Employee’s life governed by the employment contract and hence not so risky unless the firm closes down.
9. Transferability of interest – Not transferable.
10. Code of conduct – Employees required to fulfill job obligations.
Difference between Business, Profession and Employment
Difference # Business:
1. Mode of establishment – A business enterprise is established according to an entrepreneur’s will and legal formalities.
2. Nature of work – Providing goods or services to the consumer in exchange of money.
3. Qualifications – No formal education is required to start business.
4. Main objective – A businessman’s main objective is to earn profit.
5. Investment – Capital is required depending on the nature and scale of business.
6. Risk – Risk of profit and loss is unknown.
7. Reward – Earning profits from sale of goods and services.
8. Transfer of Ownership – A businessperson can transfer the rights of his/her business to another person by completing some legal formalities.
9. Code of conduct – Businesspersons are not supposed to follow a fixed code of conduct.
10. Measurement of Efficiency – Efficiency of business can be measured on the basis of profits earned.
11. Advertising – For a business, it is imperative to advertise and promote its products and services well in order to succeed.
12. Regulation – Companies in India are regulated under the provisions of the Companies Act.
Difference # Profession:
1. Mode of establishment – Membership of a professional body and certificate of practice is mandatory to become professionally qualified.
2. Nature of work – Providing expert personalized services of a special nature for a fee.
3. Qualifications – Specialised knowledge and training is crucial to be professionally qualified.
4. Main objective – A professional renders expert services for a fee.
5. Investment – Limited amount of capital is required to establish an office.
6. Risk – Moderate risk as fee is generally sufficient and regular.
7. Reward – Rendering professional services for fixed fees.
8. Transfer of Ownership – A professional cannot make another person render the same specialised services on his behalf.
9. Code of conduct – A set professional code of conduct has be followed to maintain high professional standards.
10. Measurement of Efficiency – The quality of services and the number of clients determine efficiency of a professional.
11. Advertising – Professionals are forbidden to advertise their services by professional bodies.
12. Regulation – Professionals are regulated by the guidelines laid down by the professional associations such as Bar Council, Engineering Council of India, The Institute of Chartered Accountants of India etc.
Difference # Employment:
1. Mode of establishment – Official appointment letter of the employer is needed for a person to become an employee.
2. Nature of work – Performing the work assigned by the employer under employment contract.
3. Qualifications – Qualification required depends on the nature of work to be done.
4. Main objective – An employee’s objective is to earn livelihood in the form of salary along with job satisfaction.
5. Investment – Capital is not required for employment. However, these days, those seeking employment hire special agents who help them find the desirable job at a fixed fee.
6. Risk – Bare minimum risk as the employee gets regular and fixed salary. On the flip side, many companies lay off employees during economic recession or revenue loss.
7. Reward – Earning regular salary by serving the employer.
8. Transfer of Ownership – An employee cannot transfer the ownership of his work to an outsider.
9. Code of conduct – The terms and conditions laid down in the employment contract are to be followed.
10. Measurement of Efficiency – The quality and quantity of work performed decides the efficiency of an employee.
11. Advertising – An employee is not required to place any advertisement for his or her services.
12. Regulation – Employees and salaried professionals are regulated by the terms and conditions of employment.
Difference: Business, Profession and Employment
Difference # Business:
1. Mode of Establishment – Business may be established with the decision of an entrepreneur.
2. Qualification – No minimum qualification is required to start a business.
3. Capital Investment – Capital requirement depends on the scale of business.
4. Risk – In business, there is always risk and uncertainty.
5. Main Objective – The main objective of business is to earn profit.
6. Code of Conduct – There is no prescribed code for business.
7. Reward – Profit is reward of business.
8. Nature of Work – Provision of goods and services to the public.
9. Transferability of Ownership – Possible after following necessary legal formalities.
Difference # Profession:
1. Mode of Establishment – Profession may be established on completion of a course and obtaining a degree from an institute.
2. Qualification – Qualification, expertise and training in a specific field, as prescribed by the profession body, is required.
3. Capital Investment – Limited capital investment is required.
4. Risk – In profession, there is a little risk.
5. Main Objective – The main objective of profession is to provide service.
6. Code of Conduct – Code of conduct is prescribed by the professional associates.
7. Reward – Fee is reward for profession.
8. Nature of Work – Rendering personalise and expert services.
9. Transferability of Ownership – Not possible.
Difference # Employment:
1. Mode of Establishment – Employment is established by entering into a service agreement or by receiving appointment letter.
2. Qualification – Qualification depends up on the nature of job.
3. Capital Investment – No capital investment is needed.
4. Risk – In employment, there is no risk involved.
5. Main Objective – The main objective of employment is to earn income in the form of salary, by satisfying the employer.
6. Code of Conduct – The terms and conditions of service contract are applicable on employee.
7. Reward – Remuneration is the reward for employment.
8. Nature of Work – Performing work as per service contract.
9. Transferability of Ownership – Not possible.
Distinction between Business, Profession and Employment
Profession is a vocation involving rendering of personal services of an expert nature in return for a fee. Doctors, lawyers and chartered accountants are examples of professional experts. Employment means working under an employer in return for wage or salary.
The main points of distinction between business, profession and employment are given below:
Distinction between Business, Profession and Employment:
Business:
1. Mode of establishment – Promoter’s decision registration and other formalities as prescribed by law
2. Nature of work – Goods and services provided to the public
3. Qualifications – No minimum qualifications are essential
4. Basic motive – Earning profits by satisfying needs of society
5. Capital – Capital investment required as per size of the firm
6. Reward – Profits
7. Risk – Profits are uncertain and irregular
8. Transfer of interest – Transfer possible with some formalities
9. Code of ethics – No specific code of conduct, moral and ethical dealings only
Profession:
1. Mode of establishment – Membership of a professional body or certificate of practice
2. Nature of work – Personalized services of expert nature
3. Qualifications – Education and training in a specialized field
4. Basic motive – Rendering service
5. Capital – Limited capital necessary for establishment
6. Reward – Professional fee
7. Risk – Fee is regular and certain, never negative
8. Transfer of interest – Not possible
9. Code of ethics – Professional code of ethics, generally public advertisements prohibited
Employment:
1. Mode of establishment – Service contract or letter of appointment
2. Nature of work – Performing work assigned by the employer
3. Qualifications – Specialised knowledge not required in all cases
4. Basic motive – Earning wages or salary by serving the employer
5. Capital – No capital required
6. Reward – Salary or wages
7. Risk – Fixed and regular pay, no risk
8. Transfer of interest – Not transferable
9. Code of ethics – Rules and regulations of the employing organisation
Difference between Profession, Employment and Business
Professions are those occupations which involve the rendering of personal services of a special and expert nature. A lawyer who practices the legal profession takes up cases and offers his technical advice and specialized services for suitable payment. So do the chartered accountant and the medical practitioner.
Since specialized services have to be rendered by professional persons, they have to satisfy the minimum academic and other qualifications prescribed by. Law or by the association to which they must belong in order to be able to practice their profession. Such requirements exist for lawyers, engineers, doctors, etc., who practice professions as their occupations.
In this class of occupations, a person has to work under an agreement or rules of service and perform such work as may be assigned to him by the employer. Remuneration for such work takes the form of wages or salaries and allowances. Sometimes people belonging to professions take up employment with the Government or private agencies. Firms employ chartered accountants and hospitals engage doctors and nurses in regular service.
As an economic activity, business is so familiar to us that it seems almost unnecessary to go back to its literal meaning of ‘being busy’. All occupations require a person to be busy but what really matters for a proper understanding of business is what keeps him busy. Business is known to us by the institutions that conduct it and, therefore, we may try to mark its essential characteristics by examining the nature of work performed by some of them.
The village farmer who tills his land and sells his produce, the village shoe-maker who makes shoes to order, the various kinds of shops in the market in the rural and urban areas dealing in various articles and commodities in demand, the restaurants that cater to the needs of different classes of population, the banks, insurance companies, transporters’ cold storage companies, theatres and the on-line-selling service, the factories turning out manufactured goods of all kinds required by consumers and producers are some examples of business firms familiar to us all.
Some of them are working on a small scale and making both ends meet. Some others are functioning on a large scale and are providing livelihood to thousands. Some are owned and controlled by individuals, some others by groups of private individuals, and yet others by the Government.
Thus whether it is Ghasita Ram’s shoe repair shop, Ramanna’s grocery store, Jayant and Parikh’s motor repair garage, Bata’s shoe factories or store, Birla’s textile mills, Shri Ram’s chemical plants, Tata’s Iron & Steel Company, Mahindra’s jeep factory or the Government-owned Central Bank of India or Life Insurance Corporation of India, Indian Airlines, Indian Railways, or Bharat Electronics or Hindustan Insecticides—these all are engaged in business. What is common to them all? What is it that entities them all to be called businessmen or business forms?
Inter-Relationship of Business, Profession and Employment:
Although business as an activity is distinguished from profession and employment mainly on account of factors of investment and risk, yet one cannot forget the important role played by professional experts and employees in the success of modern business.
Professionals of various types like consulting engineers, chartered accountants, cost accountants, management consultants, legal experts, doctors, architects and the like are retained by business firms for tackling a variety of complicated technical problems that go with modern large-scale business.
Besides, because large business firms employ a large number of specialists and expert knowledge in the conduct of modern business, management of business is becoming a professional job. As am economic institution of recognized importance, business provides employment to a large number of persons in the country.
The prosperity of a business concern depends not merely on the foresight and the resources of businessmen, but is equally determined by availability of the right type of employees with positive attitude towards work. Thus, while business provides opportunities for employment, the employees provide the organized and devoted effort which is essential for any business house to make the best of its investment.
Difference between Business, Profession and Employment
Business:
i. Meaning – Business is an economic activity which involves production &distribution of goods &services.
ii. Qualifications – Here, specific qualification is not required.
iii. Monetary Returns – A businessman earns monetary rewards in the form of profits.
iv. Capital – Here, the scale of business determines i the amount of investment to be made.
v. Decision Making – A businessman is free to take decisions that serve the best interests of his business.
vi. Risk – Risk is involved in every business.
vii. Commencement – Business can be started when all legal formalities are completed.
viii. Transfer of Ownership – Here, the ownership can be transferred from one person to another after completion of legal formalities.
ix. Tenure – Here, no fixed tenure is applicable.
x. Code of Conduct – Businessman is not required to follow any code of conduct.
Profession:
i. Meaning – Profession is an economic activity wherein expert services are provided.
ii. Qualifications – Here, specific qualification is required.
iii. Monetary Returns – A professional charges fees for the rendered by him.
iv. Capital – Here, only self-employed professionals need to make an investment.
v. Decision Making – A professional can take decisions related to his profession on his own. However, the professionals need to follow the code of conduct laid by the governing body.
vi. Risk – Self-employed professionals face limited risk.
vii. Commencement – A professional can start working only after receiving the certificate of practice.
viii. Transfer of Ownership – Here, the ownership can be transferred to someone who is equally qualified and competent to render services.
ix. Tenure – Here, no fixed tenure is applicable.
x. Code of Conduct – A professional is required to follow the code of conduct laid down by the governing body.
Employment:
i. Meaning – Employment is an economic activity where one person works for another person.
ii. Qualifications – Here, nature of work determines the required qualification level
iii. Monetary Returns – An employee receives monetary rewards in the form of salary / wages.
iv. Capital – Here, no money is required to be invested.
v. Decision Making – An employee can take decisions confined only to his field of work.
vi. Risk – There is no risk if the employer and employee adhere to the contract.
vii. Commencement – An employee can start working when the contract is signed by both the parties and the employee completes the joining formalities.
viii. Transfer of Ownership – Employment cannot be transferred as every job offered is an individual and independent contract, provided certain provisions and guidelines are given on Government level.
ix. Tenure – Here, tenure may be mentioned in the contract or appointment letter.
x. Code of Conduct – An employee has to follow the code of conduct mentioned at the time of contract till he is under an employer.
Difference: Business, Profession and Employment
It is necessary for us to draw the curtain between business, profession and employment.
1. Formation:
A business is set up to serve the needs of customers profitably through regular production and/or exchange of goods and services. It is promoted by a person with a profit motive in mind. He does everything possible to make it happen by completing all legal formalities. A professional requires expertise, skills and knowledge in a specialized field. He has to earn a professional degree and agree to abide by a. common, code of conduct established by a professional body.
Clients pay a fee for the services rendered by a professional. Employment, on the other hand, is a contractual obligation between an employee and an employer. Employee offers his services for wages paid by the employer. Business and profession, it is worth noting here are usually self-employment ventures. Employment, of course, makes people work under someone else.
2. Qualifications:
Businessmen do not need degrees to achieve success (e.g. Remember Dhirajlal Hirachand Ambani of Reliance Industries?) They need not possess any paper qualifications to set up a venture. Professionals, however, need to acquire prescribed qualifications—in the form of knowledge, skills and expertise relating to a specialized field-through preparation, hard work and practice. Employees need to possess job related skills, knowledge and experience. Employment, in any case, does not happen without a set of well-established qualifications prescribed for a post.
3. Membership:
Businessmen may join hands and form an association to protect their common interests. However, it is not compulsory for everyone to join the same. Professionals are governed by the rules formulated by a professional body. Membership here is compulsory. In case of employment, both employees and employers need not join any trade union or association compulsorily.
4. Nature of Work:
A business is set up to profitably satisfy the needs of customers. The primary motive is to earn profits by meeting the requirements of customers by offering top quality goods and services at economical prices. Professionals render services to clients by charging a fee. They maintain close ties with clients and try to offer the best services. The employment relationship is a contractual obligation between the employer and the employee. Both are bound by the terms of employment contract.
5. Motive:
The basic motive of every business is to make money by meeting the requirements of customers. Professionals try to meet the needs of clients—observing a strict code of conduct set up by a professional body. The primary purpose of employment is to get results in accordance with a legally binding contract between an employer and an employee.
6. Resources:
Businessmen need money to set up a venture. To make it successful, he has to invest his time and burn the candle of energies on a daily basis. Professionals acquire skills, knowledge and expertise through tremendous amount of hard work, years of preparation and practice. In the case of employment employers offer wages for services rendered by employees.
Employers offer inducements (wages, bonus, benefits) in return for contributions (work carried out, instructions followed, rules observed and results delivered) made by employees. Employment, thus, does not require any commitment—like in a business—of resources right from the word go.
7. Outcomes/Results/Rewards:
Businessmen aim to make money by meeting the requirements of customers. If they serve the cause of customers efficiently and effectively and move closer to the hearts of customers, there is no upper limit for the rewards to be made (remember Haldiram’s Samosas, Pulla Reddy Sweets and Bikanerwala Namkeens) Professionals aim to build image and reputation in the market by serving the interests of clients.
The fee, however, is directly linked to the brand value of a professional in the market place, (e.g. remember top advocates—Ram Jethmalani, Harish Salve or a heart surgeon like Naresh Kumar Trehan of Medanta Hospitals?) Employers, on the other hand, pay wages for services rendered by employees. The rewards are, more or less, fixed and get revised only after a certain interval.
8. Element of Risk and Uncertainty:
Businesses operate in an environment marked by risk, complexity, turbulence and uncertainty. There is no guarantee of profits. You never know when your business will be wiped out by competition. Your business might be hit by huge taxes imposed by government (e.g. Tobacco business, entertainment business, casino operations). Society may seek closure of a business on grounds of environmental pollution. Anything may happen anytime and you cannot foresee and predict anything with certainty.
Professionals, of course, need not live under the shadow of threat and fear. They can carry out their operations to the best of their ability. As long as they are able to meet client requirements, there is no threat to their existence. Employment is backed up by a certain amount of income for a specified period of service delivered as per the terms of appointment.
9. Transferability of Interest:
A businessman can transfer the ownership right in the business by fulfilling legal formalities according to the laws of the land. Professional skills are associated with a person and he cannot obviously trade these with anyone else for any purpose. Likewise the job offered to X and the wages to be paid to X cannot be offered to anyone else as long as X remains an employee of a firm as per the terms of a contract. (Of course, if X dies it can be offered to his wife or children if they are otherwise eligible).
10. Code of Conduct:
Businessmen have a compelling necessity to meet the requirements of customers. They are not governed by any externally imposed code of conduct. Professionals, however, are bound by an ethical and moral code of conduct set up by a professional body. Employees are bound by the limits set by the employer as laid down in the employment contract.
Difference between Business, Profession and Employment
Business:
i. Formal basis for establishment or commencement- Individual decision plus registration formalities where required by law.
ii. Qualification- Specialized knowledge not found in all cases.
iii. Capital- Capital requirement varies according to scale.
iv. Transfer of interest- Transfer possible with required formalities.
v. Individual risk- Present
vi. Return- Profit or a share thereof.
vii. Nature of work- Goods and services provided to individuals and groups.
Profession:
i. Formal basis for establishment or commencement- Membership of a professional body.
ii. Qualification- Expertise and training in a specific field necessary.
iii. Capital- Some amount required for establishment.
iv. Transfer of interest- Not possible.
v. Individual risk- Present.
vi. Return- Professional fee.
vii. Nature of work- Personalized service.
Employment:
i. Formal basis for establishment or commencement- Service contract.
ii. Qualification- Specialized knowledge not necessary in all cases.
iii. Capital- No capital required.
iv. Transfer of interest- Not transferable.
v. Individual risk- None.
vi. Return- Salary.
vii. Nature of work- Performing work assigned by superiors.
Difference between Business, Profession and Employment
Difference # Business:
i. Mode of Establishment or Commencement – Commencement of business depends on entrepreneur’s decision and other legal formalities, if necessary.
ii. Nature of Work – It involves providing goods and services to the public.
iii. Qualification – It does not require any minimum qualification.
iv. Reward or Return – Reward for business is profit.
v. Capital Investment – It requires capital investment as per size and nature of business.
vi. Risk – It involves high degree of risk as profits are uncertain and irregular.
vii. Transfer of Interest – Transfer of interest with some formalities.
viii. Code of Conduct – No code of conduct is prescribed.
ix. Motive – The basic motive of business is to earn profit.
Difference # Profession:
i. Mode of Establishment or Commencement – It commence on getting membership of a professional body and certificate of practice.
ii. Nature of Work – It involves rendering of personalized expert services.
iii. Qualification – It requires expertise and training in a specific field.
iv. Reward or Return – Reward for profession is professional fees.
v. Capital Investment – It requires limited capital for establishment.
vi. Risk – It involves moderate risk as fee is generally regular and certain.
vii. Transfer of Interest – It is not possible to transfer the interest.
viii. Code of Conduct – Professional code of conduct is to be followed.
ix. Motive – The basic motive of profession is to render service besides earning income.
Difference # Employment:
i. Mode of Establishment or Commencement – It commence on getting an appointment letter and entering into service agreement.
ii. Nature of Work – It involves performing work as per service contract or rules of service.
iii. Qualification – It requires qualification and training as prescribed by the employer.
iv. Reward or Return – Reward for employment is salary.
v. Capital Investment – No capital is required.
vi. Risk – It does not involve risk as employee gets fixed and regular pay.
vii. Transfer of Interest – It is not possible to transfer the interest.
viii. Code of Conduct – Norms of behaviour as laid down by the employer have to be followed.
ix. Motive – The basic motive of employment is to earn livelihood in the form of salary.
Difference between Business, Profession and Employment
Business:
1. Mode of establishment – Entrepreneur’s decision and fulfillment of legal formalities as prescribed by law.
2. Nature of work – Production or purchase and sale of goods and services.
3. Motive – Earning profits is the main motive.
4. Qualifications – Specialized know-ledge is helpful but not essential.
5. Necessity of Capital – Capital is needed according to the nature and size of the business.
6. Reward – Profits
7. Risk and uncertainty – Present.
8. Transferability of interest – Possible.
9. Code of Conduct – Not governed by a code of conduct.
Profession:
1. Mode of establishment – Membership of a professional body and certificate of practice.
2. Nature of work – Personalized service of expert nature.
3. Motive – Rendering service and earning income.
4. Qualifications – Professional qualifications and training are essential.
5. Necessity of Capital – Limited Capital is required for establishment of office.
6. Reward – Professional fee.
7. Risk and uncertainty – Present, but less.
8. Transferability of interest – Not possible at all.
9. Code of Conduct – Professional code of conduct must be followed.
Employment:
1. Mode of establishment – Appointment letter or service agreement.
2. Nature of work – Performing the job assigned by the employer.
3. Motive – Earning salaries or wages.
4. Qualifications – Qualifications and training as prescribed by the employer.
5. Necessity of Capital – Capital is not re-quired at all.
6. Reward – Salary or wages, bonus, etc.
7. Risk and uncertainty – No risk.
8. Transferability of interest – Not possible.
9. Code of Conduct – Rules laid down by the employer are to be followed.
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