October 1, 2021

Cooperative Finance Business

By cr1pt022

A cooperative (co-op) is owned by the same people it serves. Its offerings benefit the company’s members, also called user-owners, who vote on the organization’s mission and direction and share profits. Advantages that cooperatives offer include:

Lower taxes. Like an LLC, a cooperative doesn’t tax its members on their income.

Increased funding. Cooperatives may be eligible for federal grants that help them get started.

Discounts and better service. Cooperatives can leverage their business size, thus obtaining discounts on products and services for their members.
Forming a cooperative is complex and requires you to choose a business name that indicates whether the co-op is a corporation, such as incorporated (Inc.) or limited. The filing fee associated with a co-op agreement varies by state. In New York, for example, the filing fee for an incorporated business $125.

An example of a co-op is CHS Inc., a Fortune 100 business owned by U.S. agricultural cooperatives. As the nation’s leading agribusiness cooperative, CHS recently reported a net income of $829.9 million for the fiscal year ending Aug. 31, 2019.

Examples of cooperatives
Unlike the other types of businesses, co-ops are owned by the people they serve. Notable examples of co-ops include:

  • Land O’Lakes
  • Navy Federal Credit Union
  • Welch’s
  • REI
  • Ace Hardware
    Key takeaway: The five types of business structures are sole proprietorship, partnership, limited liability company, corporation and cooperative. Choosing the right structure depends largely on your business type. As your business grows, you’ll be able to switch structures to meet its needs.