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A cooperative is a company that is 100% owned and democratically governed by its members, and it pays out all of its profits and gains to its members in proportion to their transactions with it.


A cooperative is a business that's owned and governed by the people who use it's services, and it pays out all its profits to its user-owners in proportion to their use.

Owners are service users and called "members"

Cooperative owners are not traditional shareholders. They're the people who regularly transact with it, and they're often called "members."

Common cooperative characteristics

Profits are paid out to members in proportion to their service use

Cooperatives distribute the profits they don't reinvest to their members in proportion to their individual transactions with the cooperative. These distributions are called "patronage dividends."

Democratic member governance

Members democratically govern their cooperatives, usually on a "one member, one vote" basis. This amounts to total member control over their cooperatives.

Members are shielded from corporate liabilities

Like a conventional company, a cooperative is a distinct legal entity from its members, so members aren't responsible for any liability, obligation, or commitment a cooperative makes in the conduct of its business.

1. Business plan, members, and funding

Use a business plan to form an association of members and collect membership fees to meet initial capital needs.

Typical cooperative startup steps

2. Capital deployment and growth

Deploy initial capital to start growing the business according to the business plan.

Cooperative examples

More information

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