This article provides information about “How to Differentiate Business from Profession and Employment?”:

One can broadly differentiate business from profession and employment on the following criteria:

Differentiate Business from Profession and Employment:

1. Basis for Establishment:

The basis for establishing a business is very simple. What is needed is conception of a business idea, conviction about the profitability of this idea, and finally giving it a practical shape by observing legal formalities, if any, and organising and operating the various factors of production. In a profession, however, the membership or enrollment of a recognised professional association or institute is necessary.

A doctor, for instance, must be a member of, or enrolled with, the Medical Council of India, which is a professional association in the field of medicine. A lawyer must be a member of, or enrolled with, the Bar Council of India, which is a professional association in the field of law.


A chartered accountant must be a member of the Institute of Chartered Accountants of India. A businessman, however, need not be a member of any professional association, though there may exist such an association (like the Chambers of Commerce and Industry). In employment, the basis for establishment is the service agreement.

2. Qualifications Needed:

No formal education is compulsory for entering into the world of business. What is needed is the technical competence and business acumen of the entrepreneur. A professional man, on the other hand, must possess some minimum academic or other qualifications to be eligible for entering into a profession.

To becomes a lawyer, for instance, the minimum academic qualification required is the possession of the law degree (say LL. B.); for a doctor, it is M.B.B.S. or any other recognised degree; and the like. In employment, qualifications depend upon the nature of job. No academic qualifications, for instance, need be possessed by a peon; whereas a production engineer needs specialised knowledge in his field to be successful.

3. Nature of Work:

A business exists to provide goods and services to the society, keeping in view the needs of the average customers. A professional person renders specialised and personalised services to his clients. A doctor, for instance, renders different medical advice to different patients. In employment, the nature of work is decided by the employer and is broadly defined in the service agreement.

4. Capital Requirements:


Capital is the life-blood of business. No business activity, however small it might be, can be conducted without capital. The capital required in a business depends upon its nature and size. A bid manufacturing business, for instance, needs bigger amounts of capital compared to a bid trading or service enterprise, because a manufacturing business has to arrange for a wider range of factors of production.

In profession, some amount of capital is required for proper establishment; nonetheless, it is usually much smaller compared to a business activity. In employment, there is no need for capital investment.

5. Risk and Reward:

A business operates in the midst of uncertainty which can cause wide variability in its earnings (called profit), that is, its earnings may be too small on one occasion and too large on another, and there may sometimes be even losses. The reward of professional (known as fees) is generally fixed, which may, however, be graded according to the volume or quality of expertise provided.

It is more regular and certain than that of a businessman’s profits; it is never negative. In employment, no individual risk is involved and an employee is sure to get his remuneration (which may be in the form of wage or salary).

6. Transfer of Interest:


In business, transfer of interest is possible after following necessary legal formalities. Such a transfer of interest is not possible in profession. This is so because business is a kind of property which can pass from one individual to another, like any other type of property, say a house.

Profession is not a property; it is a skill which cannot be acquired through legal transfer. It needs to be acquired through a formal process of learning. The interest is just not transferable in employment.

7. Code of Ethics:

A professional is expected to follow a more rigorous code of ethics specifically provided for the profession. Professions have their associations which regulate the activities of their members. We may note that the professional ethics in many costs prohibit the practitioners from making public advertisement for example note a doctor or an auditor cannot advertise.

This is not so in employment and business. A businessman depends greatly on advertising for increasing the sale of products and consequently profits.

8. Emphasis on Social Service and Sense of Mission:


The consideration of social service and sense of mission is the hallmark of professional activity more than a business or employment. A doctor, for instance, when completes education and is granted degree, he or she is generally administered the ‘oath of service to society’. Such a spirit generally lacks in a businessman.

He is primarily guided by the profit objective. This does not, in any way, mean that a professional person should not earn income. He must, but through social service. Also, this is not to deny that all businessmen overlook social responsibilities.

No doubt, present-day businessmen are increasingly assuming social responsibilities, they, nonetheless, continue to be profit conscious. For them social responsibility comes later and profits first; a professional gives precedence to social service over monetary considerations.