Classification of Economic Activities: Discussions in Commerce for CA Exam

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(I) Profession

Any activity, which requires special knowledge and skill to be applied by an individual to earn a living, is known as Profession.

Example: Engineers, Film-stars, Architects, Dancers, Artists etc.


  • Occupation for which individual has to acquire a special knowledge and skill.
  • To provide service though they may charge fee.
  • Individual get money for providing such a service is usually known as ‘fee’ .

(II) Employment

When a person works regularly for others and gets wages/salary in return, he is said to be in Employment.


  • It is an occupation where a person (called employee) is to work for employer.
  • There are certain terms and conditions of work like, hours of work, duration of work, leave facility etc.
  • The employees get salary or in return of their work.
  • Legally employer-employee relationship is based on a contract.
  • Main purpose behind employment is to secure assured income through wages and salaries.

(III) Business

Business is defined as an activity involving regular production or purchase of goods and services for sale, transfer and exchange with an object of earning profit. Example: Mill owners, transporters, bankers, traders, tailors, taxi operators etc. are doing business.


  • Person is engaged in manufacturing or buying and selling of goods and services.
  • Activities must be carried on regularly.
  • Sole objective of business is to earn profit.
  • Every business requires some investment in cash or kind or both.
  • Every business involves an element of risk.

Comparison of Business, Profession and Employment

Comparison between Business, Profession and Employment
EstablishmentDecision to start business and compliance of legal formalities required.Membership of a professional body is essential.Enter into service contract with employer.
QualificationSpecific qualification not required.Professional knowledge and training in same field is essential.As per needs of employer and job involved.
CapitalCapital investment is required.Some amount of capital investment is required for establishment.No capital investment is required.
Nature of workProduction or purchase

and sale of goods

Expert servicePerformance of job
Return or rewardProfitProfessional feeWage or Salary
RiskThere is risk of loss.Risk of not getting sufficient fee.No risk
MotiveProfit motiveService motive though fee is charged.Motive is to earn a livelihood.

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