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Cooperative

Cooperative form another category of business structure among the different types of business structure. A cooperative is a group of persons who join together or co-operate, to carry on an economic activity of mutual benefit. Mutual benefit among the members of the co-operative is the key and establishing characteristic of cooperative.

Generally, a cooperative comprises a legal entity owned and democratically controlled by its members. Membership is open, implying that anyone who satisfies certain non-discriminatory conditions may join. However, most cooperatives are governed on a strict "one member, one vote" basis, to avoid the concentration of control in an elite. Economic benefits are distributed proportionally according to each member's level of economic interest in the cooperative, for instance by a dividend on sales or purchases. So, if you intend your business to take a form where all the members involved get an equal share of the profit then cooperative is the answer!

Cooperatives could be classified as either consumer or producer cooperatives, depending largely on the mutual interest that their membership shares. Classification is also often based on their function or trade sector. For example, a group of services in a neighborhood dealing with dairy products could form a cooperative. ‘Sameness’ in the nature of the activity carried out is one of the key that determines the formation of a cooperative.

Worldwide, some 800 million people are members of cooperatives, and it is estimated that cooperatives employ some 100 million people.

There are several kinds of co-operatives which exist, some of them are:

1. Worker cooperative
Worker cooperatives are wholly owned and democratically controlled by its "worker-owners". This implies that the employees as well as the employers in this setup are workers.

2. Agricultural cooperative
Such entities are widespread in rural areas. In this kind of structure, people with business pertaining to agriculture can come together and set up a cooperative. This leads to cutting down of risks and ensures a minimum amount with regard to profits. In the United States, there are both marketing and supply cooperatives.

So, based on your need and objective behind setting up a business, you could choose if needs to be a co-operative, sole proprietorship or corporation.



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