Co Op Business Plan

As with any business structure, cooperatives have their own set of strengths and weaknesses.One of the greatest benefits of having a cooperative model in business is the democratic style of management.

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Members are taxed once on their income from the cooperative itself, and not separately on an individual and corporate level.

For-profit cooperatives are generally taxed as normal companies but they can reduce tax exposure by issuing patronage dividends (refunds issued to people purchasing their goods or services).

Co-ops are organized to provide competition, improve bargaining power, reduce costs, expand new and existing market opportunities, improve product or service quality, and obtain unavailable products or services (products or services that profit-driven companies don’t offer because they see them as unprofitable).

Unlike in business ownership, which is based on the percentage of the business a person owns, ownership in a cooperative is based on equity contribution or how much of the products or services the member purchases.

Plus, all members and shareholders have to be active in the organization so the load of work can be divided almost equally.

Unlike other forms of business ownership, a co­operative society is exempt from income tax up to a certain limit.

Members who work within the cooperative are also qualified to get significant merchandise discounts.

Since cooperatives are member owned and controlled, they enjoy more autonomy compared to businesses controlled by investors.

Cooperative businesses can be as small as a community buying club or as large as a Fortune 500 company.

People typically join a cooperative business to enjoy the benefits of group purchasing, pooled risk, and the empowerment of owning and controlling the company.


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