Company, Corporation or Business — What's the Actual Difference?

Note: This article describes Danish legal terminology and company forms specifically — "virksomhed", "selskab" and "firma" — and how they map to English concepts like "business", "company" and "sole proprietorship".

"Should I sell my firm, my company or my business?" In everyday speech, most people use these words as if they mean the same thing — and in many contexts, it doesn't make much of a difference. But legally, the underlying Danish terms actually cover different things, and it's worth knowing the difference when you're buying or selling.

Business ("virksomhed"): The broadest term

"Virksomhed" is the most general of the terms. It covers any form of commercial activity — from a sole proprietorship run by one person with no employees, to a large publicly listed corporation with thousands of employees. When we talk about "business sales" generally, that's deliberate, because the term covers all the ownership forms you might encounter as a buyer or seller on our platform.

Company ("selskab"): A legal entity

A "selskab", by contrast, is a very specific legal construction — typically a private limited company (ApS) or a public limited company (A/S), but forms like general partnerships (I/S) and limited partnerships (K/S) also fall under the term. A company is an independent legal person, separate from you as owner, with its own registration number, its own finances, and generally limited liability for the owners. When we talk about a share purchase rather than an asset purchase, it's precisely this legal entity being traded.

A sole proprietorship, by contrast, is not a company — here you're personally liable with your entire wealth, and there's no legal separation between you and "the firm".

What are the 4 main business/company types in Denmark?

When talking about business types in a legal sense, this usually means the 4 most common forms you can register in Denmark. The choice of form has a direct impact on liability, capital requirements and — not least — how a deal needs to be structured if the business is ever sold.

Sole proprietorship

Owned by one person, who is personally liable with their entire private wealth for the business's debts and obligations. There's no requirement for starting capital, making it the fastest and cheapest form to establish.

General partnership (I/S)

Owned by two or more people (partners), who are personally, jointly and severally liable for the business's debts — meaning a creditor can demand the entire debt be paid by a single partner. There's also no starting capital requirement here.

Private limited company (ApS)

A limited liability company for one or more owners, where liability is generally limited to the capital contributed — not personal wealth. It requires at least DKK 40,000 in starting capital and is the most common company form for small and medium-sized Danish businesses.

Public limited company (A/S)

A larger limited liability company, where the owners (shareholders) are only liable for the amount they've contributed by purchasing shares. It requires at least DKK 400,000 in starting capital and is typically used by larger businesses, or where there's a desire to raise capital from multiple investors.

Note: If instead you're looking for a breakdown by industry rather than legal form, a distinction is often made between manufacturing businesses, trading businesses and service businesses — read more about how industry type affects time to sell and valuation.

Firm ("firma"): The practical, everyday word

"Firma" is the most informal of the three terms — in everyday speech, it's often used for any kind of commercial entity, regardless of whether it's legally a sole proprietorship, an ApS, or something else entirely. Legally, "firma" actually has a more specific meaning: it can refer to the trade name — the designation a business operates under toward the outside world. But in practical usage today, "firma" is largely synonymous with "virksomhed" in the broad sense.

Why does the difference matter to you?

• When buying: If it's a company (selskab), you need to consider the company's history, any obligations, and the entire legal framework. If it's a personally owned business without a company form, the deal often looks different — typically as a pure asset purchase.
• When selling: Liability differs. If you sell a company, it's generally the company's obligations that come with it — not your personal ones. If you sell (the assets of) a personally owned business, the picture is different.
• For tax: The taxation rules depend directly on whether you own a personally run business or a company — see our overview of tax and VAT when selling a business.

What about "group" and "holding company"?

Two related concepts that often come up: A group ("koncern") is a set of companies linked together through ownership, typically with a parent company at the top. A holding company is a company whose primary purpose is to own shares or interests in other companies — often used to own an operating company, precisely to achieve the tax and structural advantages we describe in our article on the significance of company structure when selling.

So which term should you use when listing for sale?

In practice, you can safely use "firma", "selskab" and "virksomhed" interchangeably in everyday conversation — most Danes do, and it doesn't hurt understanding. But if you encounter a context where it legally matters — for example a contract, a transfer agreement, or a conversation with your accountant — it's worth knowing that "selskab" is the precise term for the legal entity, while "virksomhed" and "firma" are the broader, more informal designations.

Frequently asked questions

Is a sole proprietorship also a "firma"?

In everyday speech, yes — but legally it's not a company (selskab). There's no separation between you as a person and the business, and you're personally liable for everything the business does.

Why do you call it "business sales" and not "company sales"?

Because the platform covers all ownership forms — from sole proprietorships and webshops to ApS's and A/S's. "Virksomhed" (business) is the word that encompasses them all.

Does it matter for the price whether I sell a company or a personally owned business?

Yes, both the structure of the deal itself and the taxation can differ. See our walkthrough of asset purchases and share purchases for the full difference.

Whether you call it your firm, your company or your business, you can see the current selection of businesses for sale, or list your own for sale right here on the site.