In the book entitled Software Requirements, 3^rd edition, by Karl Wiegers and Joy Beatty, the authors classify software requirements into three levels—business requirements, user requirements, and functional requirements:

• Business requirements: These are the high-level business objectives of an organization, why the organization needs to build the system, and what the benefits are to the business. Suppose a software outsourcing company wants to provide better training to their employees. This is a business requirement. To achieve this goal, the executive team decides to build an internal training and learning system to include all of the technologies the company uses, together with sample applications of each technology.
• User requirements: These define the tasks that users can perform with the system. These requirements can be written as use cases or user stories. For example, in the training system, users can take exams and, once they pass these exams, they can gain certificates. This is a user requirement that specifies the tasks users can perform with the system.
• Functional requirements: These specify the behaviors of the system in terms of how users can fulfill the tasks defined in user requirements. They describe what engineers must build into the system so that users can accomplish their tasks. For example, in the training system, users should be able to retake an exam only if they have failed that exam less than three times.

As you can see, business requirements establish the goals and objectives of a system. User requirements focus on what users can do in the system to achieve that goal, while functional requirements provide the details of the behavior that the system should have under specific conditions.

Business requirements are usually written in the vision and scope document, while user requirements are stored in the User Requirements Document (URD), and functional requirements are written in the Software Requirements Specification (SRS). Large projects tend to write all of these documents upfront. Teams that use Agile methodologies adopt another approach.