2018-03-27 07:42:46 Starting a Business English Understand the difference between a business cooperative and a regular for-profit business. This includes how you become owner of the... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Company-Co-Operative-Meet-To-Make-Business-Decisions.jpg https://quickbooks.intuit.com/ca/resources/starting-business/co-operative-member-owned/ What Is a Cooperative (Coop)?

What Is a Cooperative (Coop)?

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A cooperative, or coop, is a business owned by its members. The members are the people who use the cooperative’s products, supplies, or services. Some cooperatives require members to have a membership, while others simply require a member to use their services. If you receive telephone service from a telecommunications cooperative, you’re part owner of the cooperative.

As a member of a cooperative, you have voting rights to help run the business. You get the same number of votes as everyone else, even if you buy more or don’t buy as many products or services. Even if you purchase five times as many goods as somebody else from a grocery store cooperative, you both receive only one vote. If you want to start a cooperative, it’s usually less expensive to register than other types of businesses. Your cooperative still needs to have a board of directors. Cooperatives don’t usually have investors, so you have to rely on your customer base to help you raise money.

As a member of a cooperative, you also get a portion of the profits. People who buy more from the cooperative get more back. Keep in mind there’s usually a delay between when you’re awarded the rights to profits and when they’re paid out. For example, you may be entitled to $1,000 of net income earned by a cooperative this year. But the cooperative may not have the money to pay everyone back right away, so you may receive your $1,000 over a period of 20 years. Although the money is yours, you might have to wait a while until you see a check come in the mail.

The idea of a cooperative is for member-owners to work together to provide better services. It isn’t about making money or expanding to other markets. Whether you’re looking to start or join a cooperative, you should understand that the long-term goal is to create a community-owned business.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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