Question

Compare business with profession and employment.

Differentiate between the three types of economic activities, namely business, profession and employment.

Answer 1

Sr. No.	Basis of distinction	Business	Profession	Employment
1.	Commencement	A business can be started by an entrepreneur depending on his or her decision to do so and subject to the fulfillment of certain legal formalities.	A profession can be commenced only after the successful completion of a (professional) degree or a certificate course.	Employment commences when the appointment letter and the service agreement are signed by the employer and the employee.
2.	Investment	The amount of capital required depends on the size and nature of the business.	A limited capital investment is required.	Capital is not required.
3.	Risk involved	Profits are unpredictable. The degree of risk involved depends on the nature of the types of goods produced by a business and the scale of business operations.	A comparatively low degree of risk is involved.	The risk involved is negligible.
4.	Transfer of ownership	Ownership can be transferred subject to the fulfillment of some legal formalities.	Ownership cannot be transferred, as a professional has acquired the required degree and the skills only for himself or herself.	Ownership is not possible.
5.	Reward or remuneration	The reward is in the form of profits. Business activities are undertaken to earn profits through the production and sale of goods and services.	The reward is in the form of fees. Professionals provide expert services and earn fees for their specialised services.	The reward is in the form of wages or salary. An employee works under an employer as per an employment agreement and receives a fixed wage or salary.
6.	Code of conduct	Business does not have a prescribed code of conduct.	A profession has a prescribed code of conduct, which is established by the professional bodies or institutions.	Employment involves a code of conduct prescribed by the employer or organisation.
7.	Qualification	There is no prescribed qualification required to start or run a business. Anyone can engage in business regardless of formal educational qualifications.	A profession requires specific prescribed qualifications, which are usually academic or technical degrees or certifications recognized by relevant professional bodies.	The qualifications needed for employment vary and are determined by the employer, matching the job requirements. These may range from basic to advanced qualifications depending on the role.