Agency and company are the terms used in the context of the corporate world while the company in simple words refers to an entity that is different from its owners and is formed to engage or do business for a long period of time while agency in simple words refers to that person or organization which works on behalf of others for a fixed commission for a stipulated period of time. In order to get a better understanding about both terms, one should know the difference between agency and company –
Agency VS Company
Compensation
In the case of a company, the owners of the company get compensation in the form of profits which the company earns after deduction of all the operating and non-operating expenses done by the company while in the case of an agency the agency earns a commission for the work done. In simple words, while in the case of a company the company can earn profits as well as incur losses but when it comes to the agency it will get a commission no matter what the result is.
Business Continuity
In the case of a company, there is continuity of business in the sense that the business keeps running for a long period of time as the company is a distinct person having its own identity besides its keep doing the same business while an agency does not have that business continuity as they keep switching between various businesses. In simple words, the company is like a soap opera just like soap opera keeps going for years company also keeps running for years while the agency is more like a web series just like web series comes to end in a short span of time in the same way agency work for a particular company ends in a short span of time.
Type of Business
In the case of a company the company can undertake only that business for which it was established, hence for example a company that is in the manufacturing sector will be able to do business related to that only and if there is some opportunity in the service sector than it is very difficult for a manufacturing company to undertake business in the service sector. When it comes to the agency since the agency involves providing services on a commission basis it can easily undertake services for any business. In simple words when it comes to the company there is a limitation on the type of business that the company can do but when it comes to the agency there is no such limitation as the agency can do all types of business.
Risks Involved
In the case of a company, there are huge risks involved with doing business as business requires a substantial investment or capital on the part of the company and if the business fails then all that investment will be lost resulting in losses for the owner or shareholders of the company while in case of agency there are fewer risks involved as the agency does not require too much investment rather it requires contacts and services on the part of the agency and is less risky if one compares it with the company.
Number of Parties Involved
In the case of the company, there are a number of parties involved like shareholders, creditors, employees, owners of the company, suppliers, and so on while in the case of an agency there are only 2 parties one is the agent or agency and other is the company which with the agency is dealing.
Levels of Management
In the case of a company, there are many hierarchies or layers of management like top-level management, middle-level management, and lower-level management while in the case of an agency there are no such management hierarchies thus it is less complex if one compares it with a company.
As one can see from the above that there are many differences between the two and that is the reason why an individual should not make the mistake of considering both agency and company as they both are miles apart from each other.