Cooperative (co-op) Definition
A Cooperative or co-op is a for profit or non-profit entity that is non taxable. It is a form of business that stands to eliminate the middleman in hopes of gaining a larger profit or savings for a group as a whole. This means that the members of a co-op are in charge of making decisions for the entity as a whole.
Cooperative (co-op) Meaning
Cooperatives are often formed to benefit a specific group like a bunch of farmers or residents in a particular building. The advantage is that each member owns a bit of the co-op. Then they reap the benefits by the amount of transactions that take place. Oftentimes, farmers establish these to ensure that there is less competition in pricing. They also do this so the co-operative can make the most out of profits. At the same time, the co-op can purchase items that the group as a whole will need to run each of their individual farms.
For residents living in a building a co-op can be beneficial because it gives each member a share of the equity in the building. The member can then buy more equity or sell for whatever the market will take. Other benefits of a residential cooperative business model include the ability to rent a space for way less than market value. Co-operatives are very well established throughout the world for various other entities. A co-op business can be in the form for utilities and banking institutions, or for agricultural benefits and residences as discussed above.
See Also:
C Corporation
Sole Proprietorship
General Partnership
Limited Partnership
