Rantings of a sub-editor

September 15, 2010

Holding firm on ‘company’

Filed under: firm/company,word choice — substuff @ 11:32 am
Tags: , ,

A company and a firm are not the same thing. I hold firm on this mainly because my first chief sub, Dr Two-Degrees-in-Italian Davies, says it is so – and he has an annoying habit of being correct. However, it’s always good to question something if you don’t know the reason for it. Especially if you are being subjected to a barrage of “firms” and someone has just insinuated that by changing each one to “company” you are being a pointlessly pestilent pedant. The latter two, yes. But, I hope, never the former.

So I have been doing a little research. The results, I’m afraid to say, are far from conclusive. The best explanations come from the Guardian and The Times style guides, which both refer to a firm as a partnership.

The Times:
companies abbreviate to Co in, eg, John Brown & Co. Company is singular. Full points in company titles usually unnecessary, as in W H Smith and J Sainsbury. Do not abbreviate Ford of Europe to Fords, Swan Hunter to Swans etc. See Ltd, plc
NB. Do not confuse the words company and firm, even in headlines. A firm implies a business partnership, as in the legal or accountancy professions, estate agents etc

The Guardian:
firm strictly a partnership without limited liability, such as solicitors or accountants, but may be used in place of company in headlines

As “firm” usually refers to  solicitors, accountants and doctors (or even criminals and hooligans), I wonder if as well as specifying that the arrangement is a partnership, the word also implies that those involved are all experts in the same field – while a company may include members of several different fields. That’s just my own conjecture, though.

I have so far failed to find a crystal-clear explanation of the difference between the two terms. And the dictionary definitions are downright confusing.

OED (though I should mention that this is the “new edition for the 1990s”)
Company 3 a A commercial business, b (usually Co.) the partner or partners not named in the title of a firm
Firm 1 a a business concern b the partners in such a concern 2 a group of persons working together, esp. of hospital doctors and assistants

Collins
Company 4 a business enterprise 5 the members of an enterprise not specifically mentioned in the enterprise’s title
Firm 1 a business partnership 2 any commercial enterprise 3 a team of doctors and their assistants

 Anyone care to clear it all up with an elegant and devastating definition?

Advertisements

12 Comments »

  1. And the Telegraph stylebook says: “As a noun, usually means a partnership and should not be used as a synonymn for a company. Legal issues may be involved.”

    Scary.

    Comment by Stephen Rayner — September 15, 2010 @ 3:04 pm | Reply

  2. Fascinating. (No, really.)

    It seems “firm” orginally meant “signature”, hence presumably to a business carried out under the names of its owners.

    Company, I suppose, reflects that people are formally grouped (as a legal entity) when they incorporate.

    I guess the “legal issues” are the fact that people (or at least pedants) might assume something described as a firm is therefore a traditional business partnership, with unlimited liability. This in turn might lead people to give the supposed “firm” greater trust than they would a mere company (which can be dissolved without making its owners bankrupt).

    OED (The OED, 2nd ed, compact edition which I can still read without a magnifying glass), paraphrased:

    firm, from Latin firmare (confirmatory signature). 1. Signature (obsolete). a. The “style” or name under which the buisniess of commercial house is transacted. b. A partnership of two or more persons for carrying on a business…

    company … 7. Commerce a. An association formed to carry some commercial or industrial undertaking. b. The partner(s) in a firm whose names are not included in the title (“& Co”). c. The CIA [?!].

    I think company(7a) fails to reflect that nowadays company implies “limited liability company”, if only because unlimited liability companies are so rare.

    Comment by Rick Role — September 16, 2010 @ 11:17 pm | Reply

    • Excellent research, Mr Role. So it all hangs on this limited/unlimited liability business, effectively. I’m not sure of the practical difference, but will make it my business to find out.

      Comment by substuff — September 17, 2010 @ 9:47 pm | Reply

      • Thank you Ms Stuff.

        Please to lecture you some more? 🙂

        If a business goes bust (insolvent), the owners lose only the value of their shares if there is limited liability. This is the case with most company shares and also applies to partners in a “limited liability partnership” (LLP – a sort of partnership/company hybrid allowed to be registered in the UK since 2001).

        But the owners of a business with unlimited liability (such as a sole trader, a traditional partnership, or, very rarely, shareholders in a company with unlimited liability) can lose their personal assets or even be declared personally bankrupt if the business does not have enough money to meet its debts.

        Limited liability is a key ingredient of capitalism, encouraging investors to take risks by ensuring that they can never lose more than 100% of each investment, so complete strangers can be persuaded to give money to a business, and hence stock markets can function.

        The downside is that limited liability makes lenders more reluctant, because bad owners can walk away from insolvent companies with no incentive to reduce the shortfall. This is why banks often require owner-managers to offer private assets (such as their house) as security for a business loan.

        Comment by Rick Role — September 17, 2010 @ 10:23 pm | Reply

        • Excellent explanation! Thanks, that’s really helpful.

          Comment by substuff — September 18, 2010 @ 7:06 pm | Reply

  3. A couple of spanners in the works:

    – companies can indeed be unlimited liability companies – although it is uncommon, especially for small companies

    – from my experience I would agree that firms are typically partnerships or even sole trader businesses, which typically have unlimited liability. However – I am a partner (or if you are really pedantic, a member, actually) in a limited liability partnership (an accountancy firm) and most large accountancy and law firms are now LLPs. No-one distinguishes between LLPs and unlimited partnerships – they’re all referred to as “firms” by staff and clients alike.

    To really complicate matters, a major client of mine is an investment bank – and *everyone* refers to the bank (an unlimited company) as “the firm” (albeit I think this may be a throw-back to when most banks were indeed unlimited partnerships, as some still are).

    In short, my overriding view is:

    – a company is a technical term – ie, an incorporated entity which for UK companies is registered at Companies House – but don’t assume it’s anything to do with liability.

    – a firm is a colloquialism – it is used (often technically incorrectly) to refer to many types of entity, although typically a partnership or a sole trader’s business- but don’t assume that too is anything to do with liability.

    Clear as mud eh?

    Comment by Paul C — September 19, 2010 @ 3:54 pm | Reply

    • “Company” may be ambiguous, but “firm” has a formal legal meaning and is the word used to describe unlimited liability partnerships in court documents:

      “The claim form must be headed with the title of the proceedings, including the full name of each party. The full name means, in each case where it is known: (a) in the case of an individual, his full unabbreviated name and title by which he is known; (b) in the case of an individual carrying on business in a name other than his own name, the full unabbreviated name of the individual, together with the title by which he is known, and the full trading name (for example, John Smith ‘trading as’ or ‘T/as’ ‘JS Autos’); (c) in the case of a partnership (other than a limited liability partnership (LLP)) – (i) where partners are being sued in the name of the partnership, the full name by which the partnership is known, together with the words ‘(A Firm)’; or (ii) where partners are being sued as individuals, the full unabbreviated name of each partner and the title by which he is known; (d) in the case of a company or limited liability partnership registered in England and Wales, the full registered name, including suffix (plc, limited, LLP, etc), if any; (e) in the case of any other company or corporation, the full name by which it is known, including suffix where appropriate.”
      paragraph 2.1, Practice Direction 16: Statements of Case, supplementary to the Civil Procedure Rules, April 2010 [bold emphasis added]

      Comment by Rick Role — September 19, 2010 @ 4:46 pm | Reply

      • I’m not really sure that’s technically correct, or instead an out of context Goole (no offence intended).

        Either way, my simple point is that the term “firm” means different things to different people as outlined in my reply above.

        Irrespective of the absolutely correct technical usage (of which I am unconvinced there is one), it’s a little ambiguous to assume a common understanding by a reader.

        Comment by Paul C — September 19, 2010 @ 5:29 pm | Reply

        • I don’t assume that every reader – or even most readers – would know the difference.

          In this case, most readers of most publications wouldn’t know, and even fewer would care; but, rightly or wrongly, it would matter to some readers (especially if one wants to write with authority, as even mass-market journalists aspire to do).

          Where the writer is blessed with a choice of words in common usage, it is surely better to prefer those which are both formally and informally apt (so that the sentence is understood correctly by everyone) than to opt for a word which is formally incorrect.

          The latter usage is likely to mislead knowledgeable readers who assume that the word is carefully chosen. It is also liable to reduce the writer’s esteem in the eyes of readers who suspect that the word was chosen casually – and these may be (deservedly or undeservedly!) the publication’s most influential readers.

          To put it another way, if there is a choice of colloquial words, where’s the harm in preferring the one which is indisputably correct?

          OMG I think I’m channelling Simon Heffer. Send for an excorcist!

          Comment by Rick Role — September 19, 2010 @ 6:16 pm | Reply

          • Of course. So we are in violent agreement.

            All I’m saying is that there is no inviolate, indisputable meaning of the word “firm” – and personally, I would avoid its use in print for that reason.

            Comment by Paul C — September 19, 2010 @ 6:25 pm | Reply

  4. That’d be “GooGle” 🙂

    Comment by Paul C — September 19, 2010 @ 5:29 pm | Reply

  5. This question must be examined from two main perspectives:

    – Legal perspective and;
    – Linguistic perspective.

    From legal perspective there is no such business structure as firm. The word “firm” is used interchangeably with the term “company”.

    From a linguistic point of view company is a broader notion of business entity. The notion of “company” embraces the notion of “firm”. In simple words, all business entities are usually referred as companies. Only those of companies that are partnerships are usually referred as firms. (E.g. law firms, accounting firms – those are usually partnerships)

    Here is an in depth analysis of this question for those who are interested: https://www.millforbusiness.com/difference-between-firm-and-company/

    Comment by Isabelle — August 4, 2016 @ 1:31 am | Reply


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: