Business, Profession and Employment

Earning a livelihood is possible in three different ways, and commerce studies each as a distinct mode of economic activity: business, profession, and employment.

A business is an economic activity undertaken to produce or exchange goods and services with the object of earning profit; it requires capital investment of varying amounts, the reward is profit (which is uncertain and can even be a loss), and a businessperson bears the risk of the venture personally. Entry into most kinds of business is comparatively free, and the interest in a business (a shop, a firm, shares in a company) can usually be transferred to someone else.

A profession is an occupation that requires specialised knowledge and skill to be applied by the professional in the affairs of others -- a doctor, a lawyer, a chartered accountant, an architect. It normally requires a recognised qualification and membership of a professional body, the reward is a professional fee fixed largely by the professional's own judgement of the service rendered, and the personal skill of the professional cannot be transferred to another person, even if the practice itself can, to a limited extent, be handed over.

Employment is an arrangement in which a person (the employee) agrees to work for another (the employer) under a contract of service, following the employer's instructions, in return for a fixed, pre-decided remuneration -- wages or salary -- that does not depend on the profit or loss of the employer's business. An employee bears no financial risk from the employer's business results and cannot transfer the job to anyone else.