Vanshika Kapoor 16 June 2018
In modern times, the use of the word firm has become outdated and is restricted to legal, consultancy, and accountancy businesses. For all other businesses, the word company is being preferred. Even in the professions mentioned, there are more and more people who today prefer the use of the word company against their names instead of firm. Unlike a firm, a company has been registered and has shareholders. Here is the definition given by the Oxford dictionary to explain the term company. A company is “a commercial business.” This simple definition makes us understand that firm may refer to a particular type of business while company is the name used for businesses in general.
As far as the dictionary is concerned, the Longman dictionary says that a firm is usually a small company. If one goes by this definition, a firm is a type of company and the term is in effect a subset of the generic term company.
The definition given by the Oxford English dictionary for firm is as follows. According to the Oxford English dictionary, a firm is “a business concern, especially one involving a partnership of two or more people.”
In practice, a company could be a firm. A firm, irrespective of its size or area of operation is a business entity just like a company. Usually, the word firm is reserved for businesses providing services as is clear with the use of terms like accounting firms and consulting firms. However, there is no restriction on the usage of the word firm to be used with any company manufacturing products. There is a certain charm about the word firm that makes people adopt it to signify the business they are carrying. Somehow, the word connotes professionalism and secrecy that is not reflected by the word company. Furthermore, firms are generally sole proprietorship or a partnership firm.