Many people ask what is the difference between a company and a business?A business is run by people and not a board of directors.

A company becomes an entity in its own right where people who own a business are still responsible for that business.  Accounting for companies is governed by Company Laws which differ from business laws.

Accounting for Companies involves a lot more than accounting for small businesses. With a small business the accounting procedures are comparatively simpler because there are stakeholders and not shareholders involved. Large companies or companies with a number of shareholders need to receive regular accounting updates.

A publicly listed company is different from a privately owned company and is much more involved because this type of company structure is dealing with general public shareholders who would have bought shares in a company.

A board of directors is responsible to company shareholders.

The difference between a company and a business is that when you register a company, the company becomes an “entity” in its own right governed by company laws. These company laws will vary a bit between countries but regardless of this the basics are similar.

In the US a company is called Inc. which is short for incorporated and this distinguishes it into an entity in its own right. Then the Incorporated business operates under the incorporation laws of the US and the state in which it is incorporated.

In Australia, a company is known as a Pty. Ltd. Or Proprietary Limited company and is under the jurisdiction of the Australian Securities Investment Commission or better known as ASIC. Each Australian company upon registration is given a Company Registration Number (CRN) and this serves to distinguish it as its own legal entity.

If registering an incorporated company in the US or a Pty.Ltd company in Australia, they are both subject to the incorporations law governing companies in their respective countries.

In Australia, when you register a Pty.Ltd company, this business can now legally operate in every state of Australia whereas if you were to register a business name, then that business name is only applicable to the Australian state in which it is registered.

Before registering any business, you will need to decide on what the best structure for that business is going to be. Then once this decision is made, be aware of what the accounting needs of that business structure are going to be.

Accounting for companies is more involved compared to the accounting needs of a business but you will have many advantages and rules that are applicable only to a company and are designed to facilitate business investment and growth. Whereas many of these advantages do not extend to a personally owned and operated small business operating under a Australian Business Number (ABN)

Before making any business structure decision I recommend that you consult with an Accountant or legal advisor who will be better able to advise you on what the accounting for companies needs will be in your country.