Topic 1.7: Organization, Roles, and Responsibilities

Sole proprietorship

A business owned by one person. The owner retains all control and profits but is personally liable for all business debts.

Partnership

A business owned by two or more people who share decisions, profits, and personal liability.

LLC (Limited Liability Company)

A business form in which the owners (called members) retain control and profits but are not personally liable for business debts.

Corporation

A business owned by shareholders and governed by a board of directors. The corporation itself controls profits and is liable for debts-owners personal assets are protected.

Shareholder

A person or organization that owns shares (a piece of equity) in a corporation.

Board of directors

A group elected by shareholders to oversee the corporations executive leaders and major decisions.

Executive leader

A top leader (e.g. CEO) responsible for the business’s overall vision, operations, strategy, and performance.

Specialized department

A team responsible for a specific functional area (e.g. Sales, Operations, Finance) that develops expertise in that area.

Outsourcing

Hiring an outside business to perform a function instead of doing it in-house, used to increase efficiency, reduce cost, or access skills the business lacks.

Sales/Marketing Department

The function that conducts market research, develops sales strategies, manage brands, and builds customer relationships.

R&D; Research and Development

The function that innovates around new and existing goods, services, and processes.

Operations Department

The function that manages the technical process of making goods or delivering services to customers.

Accounting Department

The function that tracks expenditures and earnings and prepares financial statements.

Finance Department

The function that secures and manages funds and uses financial data to recommend strategies.

Human Resources (HR)

The function that recruits, trains, and evaluates employees

Personal Liability

A business owner’s personal financial responsibility for the debts and obligations of the business. Sole proprietors + partners have it, LLC + corporate stakeholders are protected.