Difference Between Business & Finance

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The concepts of investment and business interrelate in economic activities.
The concepts of investment and business interrelate in economic activities. (Image: Investment image by Svitlana Boldyryeva from <a href='http://www.fotolia.com'>Fotolia.com</a>)

A business needs investments to engage in operating activities in the short term and long term. Senior management ensures that corporate liquidity and asset levels are adequate to meet operating needs.

Business Defined

A business is an organization that sells goods or provides services with a profit motive. Types of businesses vary by location, size and legal requirements. A company needs to report financial accounts at the end of each month or quarter.

Significance

A business plays a significant role in the economy. It creates wealth by purchasing raw materials and converting them into finished products. A business also supports economic activities by hiring staff and paying income taxes.

Finance Defined

Finance is a business activity that helps a firm record transactions and report accounting statements at the end of each month or quarter. These statements include balance sheets and income statements.

Function

Finance plays a crucial role in the economy. Financial institutions help businesses raise funds on securities exchanges. A company seeks funding on a financial market by selling stocks or bonds to investors.

Business and Finance

Business and finance are distinct concepts, but they often interrelate. For instance, the owner of a startup company may need to focus on business requirements and funding options to operate in the short term.

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