Browse Definitions :
Definition

cooperative (co-op)

A cooperative, often shortened to “co-op,” is a business that is owned and operated by and for the benefit of its members.

A cooperative is formed when several people identify an unmet need. For example, artisans in a downtown area might see the need for a conveniently located market; freelancers might identify the need for a co-working space. Potential members then conduct cost and feasibility studies and explore financing possibilities.

A cooperative may or may not incorporate but should draft a document stating membership requirements and responsibilities. The purchase of shares confers membership and members may vote on business issues on a vote-per-member basis. Cooperatives are usually run by elected directorial boards.

Profits and losses typically flow through to members in accordance with the number of shares they hold and are reported on the tax returns of the members. As is the case with partnerships, sole proprietorships and some other business structures, a cooperative is not considered a separate legal entity and, as such, is not required to pay taxes.

Cooperatives are common in the agricultural, energy, financial, arts, healthcare and retail sectors but they can be established to serve just about any consumer need provided by other types of businesses. Examples of well-known cooperatives include Ace Hardware, Associated Press (AP), Bob’s Red Mill, Land O’Lakes, Piggly Wiggly, U.S. Central Credit Union and Whole Foods.

Cooperatives can be seen as an early expression of the current trend toward collaborative consumption.

See also: entrepreneur, startup, C corporation, S corporation, limited liability company (LLC)

 

This was last updated in December 2015

Continue Reading About cooperative (co-op)

SearchCompliance

  • information governance

    Information governance is a holistic approach to managing corporate information by implementing processes, roles, controls and ...

  • enterprise document management (EDM)

    Enterprise document management (EDM) is a strategy for overseeing an organization's paper and electronic documents so they can be...

  • risk assessment

    Risk assessment is the identification of hazards that could negatively impact an organization's ability to conduct business.

SearchSecurity

  • unified threat management (UTM)

    Unified threat management (UTM) describes an information security (infosec) system that provides a single point of protection ...

  • physical security

    Physical security is the protection of personnel, hardware, software, networks and data from physical actions and events that ...

  • attack vector

    An attack vector is a path or means by which an attacker or hacker can gain access to a computer or network server in order to ...

SearchHealthIT

SearchDisasterRecovery

  • risk mitigation

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • call tree

    A call tree is a layered hierarchical communication model that is used to notify specific individuals of an event and coordinate ...

  • Disaster Recovery as a Service (DRaaS)

    Disaster recovery as a service (DRaaS) is the replication and hosting of physical or virtual servers by a third party to provide ...

SearchStorage

  • cloud storage

    Cloud storage is a service model in which data is transmitted and stored on remote storage systems, where it is maintained, ...

  • cloud testing

    Cloud testing is the process of using the cloud computing resources of a third-party service provider to test software ...

  • storage virtualization

    Storage virtualization is the pooling of physical storage from multiple storage devices into what appears to be a single storage ...

Close