How to form a cooperative business

how to form a cooperative business

What is a Cooperative?

Mar 23,  · Hampton Roads community colleges form workforce cooperative Tidewater, Camp and Thomas Nelson join to coordinate job training programs Published March 23, by Kate Andrews Three Hampton Roads community colleges are forming the new Community College Workforce Cooperative to create a one-stop shop for industries seeking large-scale job training in the region. Information about Form C, U.S. Income Tax Return for Cooperative Associations, including recent updates, related forms and instructions on how to file. Corporations operating on a cooperative basis file this form to report their income, gains, losses, deductions, credits, and to .

A cooperative is a private business organization that is owned and controlled by the people who use its products, supplies or services. Although cooperatives vary in type cooperaive membership size, all were formed to meet the specific objectives of members, and are structured to adapt to member's changing needs.

Cooperatives are businness by individuals who coordinate among themselves horizontal coordination coperative achieve vertical integration in their business activities. Although people have been working together for their mutual benefit throughout human history, the cooperative form of business organization began during the Industrial Revolution.

Cooperatives were useful for promoting the interests of the less powerful members of society. Farmers, producers, workers, and consumers found that they could accomplish more collectively than they could individually. The US Department of Agriculture listed three principles that uniquely characterize a cooperative organization:. The International Cooperative Alliance is a world-wide association of cooperatives.

The Statement of Cooperative Identity which it adopted in contains seven cooperative principles that are more socially-minded:. For example, members of grocery cooperatives procure grocery items from their cooperatives while members of worker cooperatives provide their labor to cooperatve cooperative. Agricultural cooperatives are user-owned and user-controlled businesses from which benefits are derived and distributed equitably on the basis of use.

From the farm to the kitchen table, agricultural cooperatives are present in nearly every stage of the food and fiber industries, and have been a part of U. Today, there are more fogm 3, agricultural cooperatives in the U.

Marketing, supply, and service cooperatives are the most common types of agricultural cooperatives organized in the United States. Marketing cooperatives assemble, coopeative, process, and sell members' products in both domestic and foreign markets.

The level of service provided depends on member needs and the product. Supply cooperatives purchase products and services for their members. They make large-scale purchases of fuel, seed, fertilizers, and crop protectants and pass their cost-savings on to members.

Service cooperatives provide members with specialized services, such as ginning, hulling, and horticultural advice, which are usually not economical for an individual farmer to obtain. Additionally, there are bargaining cooperatives, which are often called bargaining associations.

They bargain or negotiate with processors and other first handlers for better prices and terms of trade for their producer-members. Today's agricultural cooperatives, large and small, are an important part of the global market.

They have formed marketing agencies-in-common to jointly export their products, fo continue to serve their members by how to cook purple sticky rice for growth opportunities and the use of new technologies. The mission of cooperatives, however, always remains the same--to serve members.

Cooperatives offer several benefits to artists and craftspeople. By working together artisans can gain marketing advantages, reap quantity discounts on supplies through joint purchasing, and share studio space and equipment. Performing artists use the cooperative how to draft a cover letter to increase coopertive artistic freedom and control over performances.

Arts and Crafts cooperatives are democratic organizations that are governed on a one-member one-vote basis. Typically the cooperative members elect a board of directors that makes major policy decisions and may hire a manager or tl to maintain day-to-day operations.

Some artisans operate their cooperative as a collective where all members function as the board of directors and make decisions through consensus.

Through joint busineds artisans of all types can maintain their independence and creativity while reducing time spent on selling cooperatve promoting their art. Artisans can open a cooperative store to provide a retail and display place to sell and market their product. Cooperative members can pool their resources to hire a store manager, allowing them to devote more time to their craft. Because they are member-owners of the cooperative, they can decide how their pieces will be displayed aa devise equitable ways to rotate or share prime display sites within the store.

By marketing their products jointly, co-op members can earn more from sales because they don't have to pay a dealer or agent. They may also be able hoa reach a broader market through catalogue or retail sales. By forming a cooperative, artisan members can share cloperative space that they may be unable to obtain on their own. They how to make fresh white bread share expensive tools, kilns, or equipment by purchasing them together.

When artisans use similar supplies and materials they can use the cooperative for joint purchasing and save coooperative through bulk or quantity purchases. If they wish to, members can offer technical busniess, collegiality, and constructive critiques to one another.

Some arts and crafts cooperatives operate as performance troupes. These performing arts cooperatives are owned and democratically controlled by the performers, directors, stage hands, and other staff of the troupe.

Performing arts cooperatives offer member artists more artistic freedom and control over performances than is usually available in more traditional stage companies and dance troupes. Business cooperatives are formed by businesses to purchase supplies or obtain services at a lower cost.

They vary widely both in size and type and include cooperatives of individual business proprietors such as individual taxi-cab owners joining together for dispatch services, small cooperativw such as retail pharmacies, hardware stores or plant nurseries that purchase supplies cooperatively and real estate information-sharing cooperatives. Parents are attracted to child care and preschool cooperatives because they offer high quality, affordable child care businees early education programs for children.

The parent involvement allows parent input and intimate knowledge regarding their preschoolers' out-of-home experiences, as well as opportunities to interact with other parents. As members, parents elect a board of directors that establishes policies and hires qualified staff who run the day-to-day operations.

Coperative cooperatives, also known as parent participation nursery schools PPNSdate back to when a group of faculty wives at the University of Chicago organized a cooperative program to provide social and educational experiences for their young children, and to gain child-free time to pursue volunteer activities. Gusiness preschool cooperatives usually offer enrichment activities for children for two to four hours per weekday.

The program is staffed by an expert in early childhood education and parents assist in the classroom. Parent involvement contributes to the quality of the program and also cuts down on operational costs. Because PPNS programs often busihess significant parent participation requirements, they tend to attract children with one parent who is at home full-time.

Child care cooperatives offer quality care for children while their parents work. Although many aspects of the programs are identical to PPNS programs, they usually differ from them in three significant ways: they offer full-day care, more staff are hired, and parent how to negotiate a house purchase requirements are significantly reduced.

A growing number of PPNS programs are modifying or offering options buslness their programs so they can accommodate employed parents. Many offer additional "after preschool" child care services. Some allow nannies or grandparents to complete the parent participation requirements or participation options that can be completed during evenings or weekends.

Other programs offer members the option of reducing their parent participation requirements by paying an increased fee. Employer-Assisted Cooperative Child Care can be a useful model for on- or near-worksite child care. In the employee model, parents at the worksite develop a child care cooperative ocoperative previously described.

The employer may assist businesx cooperative by helping with start-up expenses, contributing financially, or businwss providing in-kind assistance like utilities, use of buildings and outdoor firm, duplicating, secretarial assistance, or other goods or services. In a child care consortium, businesses, rather than parents, are the members and they join together to provide near-worksite child care for their employees.

In this model, businesses share the costs and benefits associated with employer-assisted child care programs. The consortium model is helpful to smaller companies, or those with a small ti population who don't have a sufficient population to support a child care center on their own.

Some larger businesses buusiness involved in consortia because they want to "try out" offering child care benefits to their employees. Baby-sitting cooperatives allow parents to equitably exchange baby-sitting services so they can enjoy a night coopeeative or travel on business trips.

These cooperatives are less formal and involve relatively short-term arrangements. When parents take care of a child or children from a member family they earn points or scrip that can be "spent" when they need baby-sitting services. Hkw credit union is a member-owned, non-profit, financial cooperative organized by consumers to encourage savings and to obtain loans at the lowest possible cost.

Its members share a common bond such as having the same occupation or employer, belonging to the same association or religious group, or living in the same community. Members elect a board of directors on a one-member one-vote basis. Credit unions aa at a time when banks were not very interested in the consumer market, especially in small deposits and loans typically needed by working-class people.

The credit union idea came to the United States from Germany, where the first credit union was formed about years ago. The first U. In California, the first credit union was formed in Fresno in and the first California credit union law was signed in This paved the way for the widespread development of credit unions cooperwtive the state. The number of credit unions grew even more rapidly after the formation of the California Credit Union League in and the passage of the Federal Credit Union Act of California passed an updated version of its credit union law inwhich explicitly affirms the democratic purposes of credit unions.

Community Development Credit Unions are credit unions how to form a cooperative business in predominantly low-income communities. In addition to providing for consumer needs, they have an explicit mission of community reinvestment and revitalization. They provide financing for housing acquisition and rehabilitation bussiness for small businesses, bjsiness privately and cooperatively owned.

CDCUs were developed in response to findings that how to add symbols on facebook financial institutions take out more capital from low-income communities than they put in. California credit unions businrss be chartered under either federal or state laws, but most are federally insured. In both membership and economic terms, credit unions comprise the largest consumer cooperative firm in California and represent bow large share of the how to get medical insurance in california services industry.

Food cooperatives are one type of consumer cooperative. They range from multi-outlet supermarkets to small buying clubs with a few members. They are formed by consumers to obtain lower prices and greater control over ubsiness range and quality.

Many cooperative supermarkets began as small buying clubs and developed into storefront cooperatives as membership increased. The first consumer food cooperative in California was formed in in San Francisco.

Although the modest daily sales were financially sound, the store lasted only a short time. In the s there was a burst of cooperative activity throughout the United States in response to the Great Depression.

In California two long-lived consumer cooperatives were formed, in Palo Alto in and in Berkeley in Although the closure of the Berkeley food cooperative was a setback for the consumer cooperative movement, many other food businesd in California are thriving and expanding; most have been formed within the last 20 years.

In addition to traditional economic benefits associated with cooperative food purchasing, these cooperatives often emphasize nutritional quality and the politics of production and distribution. Cooperatives' priorities in these areas vary, and this is reflected in differing policies on labor and capital investment, as well as in financial policies such as patronage refunds, markups, and discounting.

Food cooperatives are governed by a board of directors, elected by the members on a one-member one-vote basis. Volunteer work by members is not a requirement of membership, but some members do volunteer time to their cooperative.

In addition to storefront food cooperatives there are numerous buying clubs in California, consisting of a group of individuals or households coming together to buy food in bulk to take advantage of quantity discounts and to obtain a range of foods not available locally.

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Oct 22,  · A cooperative business, also known as a co-op, is a type of organization that is both owned and controlled by its members, who also happen to use the services and products of the cooperative. A worker cooperative or producer cooperative is a cooperative that is owned and democratically controlled by its "worker-owners". There are no outside owners in a "pure" workers' cooperative, only the workers own shares of the business, though hybrid forms exist in which consumers, community members or capitalist investors also own some shares. Mar 24,  · What is a Cooperative Business? A cooperative (co-op) is a business or organization owned by and operated for the benefit of its members. Profits or earnings are distributed among its co-op can be a for-profit business or a non-profit co-op runs similarly to a corporation, because members purchase shares and elect a board of directors and officers.

A cooperative business, also known as a co-op, is a type of organization that is both owned and controlled by its members, who also happen to use the services and products of the cooperative.

These businesses are different from other types of companies, because they are formed and operate for the benefit of their members. In that sense, they are nonprofits. These businesses run pretty much across the board in terms of size. Some are small buying clubs owned by members of local communities. Others are large Fortune companies. People usually join a cooperative for the benefits — to enjoy such things as the pooling of risk, the ability to make a large purchase in a group, to become empowered and feel like they are part of a meaningful company.

Cooperative businesses are organized for the purpose of improving the bargaining power of the individual members and the product or service quality provided by the members. They also aim to reduce costs incurred during the production process, to provide competition to larger companies with deeper pockets, to expand opportunities in the market and take advantage of them, and to obtain products and services that would otherwise be unavailable because for-profit companies see them as unprofitable.

Regular business ownership is based on what percentage of the business is owned by individuals, so it is prorated. A cooperative business is somewhat different. Ownership of a cooperative is based on how much equity each member has contributed.

This is what makes a cooperative business so different from other kinds of businesses. With a cooperative, you need to use the products and services of the cooperatives to be able to invest in the cooperative. Similarly, you cannot buy the products or use the services of the cooperative unless you are also an investor.

It may seem like this is a chicken-and-egg problem, but it is typically solved upon the formulation of the cooperative. At that time, it is determined which comes first — the buying of shares or the purchase of products. As far as control is concerned, there is, again, a difference from a regular business. In a regular business, each share is allotted a single vote. That means investors can purchase as many shares as they need to gain a certain level of control in the business.

In a cooperative, things are very different. Each member gets only a single vote, creating equality of voting rights. All the members then participate in the running of the cooperative business and share the responsibilities involved. There are many cooperative advantages and disadvantages that you need to consider before you decide whether it is the right type of business for you. One of the greatest advantages of a cooperative company is the equality involved in its management and how democratic it is overall.

The members can have all of their needs met without having to defer to a single person. This equitable type of organization makes the cooperative business a lot more stable than a regular business.

Members will come and go without necessarily disrupting the way things work. In fact, whenever change is necessary, it will take the entire group of members to decide on it. Also, because each member has just a single vote, everyone has an equal footing in the business no matter how many shares they own. The cooperative is a body of its own. It is considered a legal individual, so it takes responsibility for its own debts rather than relying on the employees, directors or shareholders — with the exception of situations when there has been fraud or negligence.

A cooperative business confers its own set of economic advantages to its members. Take consumer cooperatives, for example: The members of such cooperatives receive dividends for their patronage. Those dividends are determined by how much members spend on the products of the cooperative. Members who also happen to be employees of the cooperative are also entitled to discounts on merchandise.

Cooperative businesses are owned and controlled by the members, so they are more autonomous compared to businesses controlled by their investors. Another factor that leads to more control within a cooperative is the fact that all the members of the cooperative need to be active within the cooperative so they can divide the workload equally among themselves. Cooperative businesses also exempt members from income tax, up to a point. The members will only be taxed based on the income they receive from the cooperative and not individually or on the corporate level.

Cooperatives that operate for profit are taxed just like regular businesses. However, they can reduce their exposure to taxation by paying their members in the form of patronage dividends in the form of refunds and discounts on products and services.

Cooperatives also receive financial assistance in the form of loans and grants from the government. Cooperative businesses are based on the philosophy of mutual help. Membership instills a spirit of independence, cooperation and tolerance. Cooperative businesses have fewer incentives for large investors when attracting capital. They will mostly attract smaller investors, while the larger ones generally stay away after knowing that the size of their investment does not determine the size of their influence.

Cooperatives also sometimes experience problems when they try to get debt capital from banks and other financial institutions. This makes cooperative businesses an ideal business model for those with low startup costs. Traditional businesses have centralized power, so they can make decisions quickly. With cooperative businesses, all of the members need to be involved, which makes it more time-consuming. When fast decisions are necessary, a cooperative may run into some issues.

Because everyone has equal authority, deliberations may take a while. Most cooperative businesses do not have professional managers because they are just too expensive. Co-ops do not attract skilled professionals unless those professionals also happen to be members.

Many do not have the necessary resources to support the high salaries. For this reason, the co-op can eventually fail because of poor management and organization. A business to be successful requires long-term effort. With a cooperative, the lack of a profit incentive may lead to lack of interest, which renders the cooperative inactive after a while. The steps involved should only be taken in light of this rule. The steering committee: This special group of people can identify the core values and mission of the cooperative as well as represent the potential members of the cooperative business.

You can then develop a plan and do the necessary research to develop the organization. The feasibility study: At this stage, you study the opportunities present in the market.

You should consider market challenges, financing and operational costs as well. Look into the possibility of getting financial and technical assistance from the government. Draft the legal documents: All cooperatives are legal individuals and need to be incorporated.

This is usually done by state statute and involves drafting the articles of incorporation and bylaws. Hire legal counsel to do that for you. Be very comprehensive about the scope of the business. The bylaws can start out basic and then grow with the business.

Get financing: Whatever your cooperative does, you will need financing. The initial financing can come from the members themselves. However, you can also look into the possibility of getting financing from the government and financial institutions. Launch the cooperative: Have a cooperative business and staff.

Start meeting the needs of your members, and your business is guaranteed to last. Of course, the members of the local community who reap most of the benefits of a cooperative are those who also happen to be members. Since they are governed in a democratic fashion, they provide the benefit of local ownership. There is more local resilience, more accountability, more rootedness in the community, more local spending, more participation, more equity, more creativity and more relevant development.

When a business is rooted in its community, it tends to last longer. Also, they do not give money to owners who are absent from the day-to-day running of the business. Because they are run in an equitable fashion, they are not likely to take advantage of local resources in a harmful way, since the members are also members of the community. The skills gained by the members in the democratic running of the business can be used to run other local affairs.

Many cooperatives give back to the community and establish good ties through sponsorships and fundraising. A few of them even use their resources to create new enterprises or services that will meet the specific needs of the areas where they operate. Cooperatives occupy a unique space in the context of their wider communities. These organizations are viable enterprises that put the needs of their members and communities first.

Because of their humanistic approach to things, they tend to transform the industries within which they operate and lead them toward being more responsive and humane in their practices. Mutual life insurance companies, a type of cooperative business, were the first to bring true accountability to their business. The government took notice of this and mandated guarantees for all insurance companies, whether profit-driven or not.

Consumer food cooperatives led the movement away from processed foods and toward local foods and fair trade practices. These trends are becoming more popular in grocery stores. Worker cooperatives have raised standards for work conditions for employees in all industries. Cooperatives are bound by their nature to consider the well-being of the communities where they operate, and most of them do. Cooperatives have contributed a lot to socioeconomic development around the world.

They implement the values that their members' needs, and these are typically the values that are best for the community at large. The very model on which cooperative businesses are built is a form of social benefit, and these businesses are proof to the world that it is possible to pursue economic growth while remaining socially responsible. Nicky is a business writer with nearly two decades of hands-on and publishing experience.

Women on Writing. She also studied business in college.

3 thoughts on“How to form a cooperative business

  1. Este es mi artista favorito hasta me hice un tatuaje de la cara de Marilyn Manson. Y es para toda la vida. Es el mejor.

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