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Agribusiness Library

Agribusiness Library

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Agribusiness Library

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  1. Agribusiness Library Lesson L060008: Cooperatives as Unique Corporations

  2. Objectives 1. Compare and contrast the distinguishing characteristics of corporations and cooperatives. 2 Compare and contrast the advantages and disadvantages of corporations and cooperatives.

  3. Terms Cooperative Corporation Dividends Patronage payments S corporation Shareholders

  4. What are the characteristics of a corporation and a cooperative? • Corporations and cooperatives • A. A corporation is a business that is treated as a single entity, yet it is owned by several people. • 1. The corporation is treated as a single entity; it can own property. • 2. The corporation is owned by shareholders —people who own stock in the company. • 3. Capital is raised by selling shares of stock. • 4. The corporation is separate from the operator.

  5. What are the characteristics of a corporation and a cooperative? • 5. Different classes of stock may be sold. • 6. The corporation is taxed as a legal entity. • 7. The corporation pays dividends (a share of the profits) to the shareholders to distribute profits. • 8. A sub-chapter S corporation is a special type of corporation. • a. Stock is limited to one class. • b. No more than 75 shareholders are allowed. • c. It is taxed like a partnership.

  6. What are the characteristics of a corporation and a cooperative? • B. A cooperative is a business organization where the owners are the customers. • 1. Cooperatives emphasize member control. • 2. Members with a mutual interest organize cooperatives. • 3. Cooperatives are operated on a non-profit basis. • 4. Patronage payments are the profits paid to members based on their use of the cooperative.

  7. What are the characteristics of a corporation and a cooperative? • 5. Membership is voluntary. • 6. Most cooperatives operate on a one-member, one-vote basis. • 7. Its members elect the board of directors, which is composed of cooperative members. • 8. Cooperative stock does not increase or decrease in value.

  8. What are the advantages of a corporation and a cooperative?What are the disadvantages of a corporation and a cooperative? • Advantages and disadvantages of corporations and cooperatives • A. Agricultural corporations have numerous advantages. • 1. Raising capital is easier in corporations than in partnerships and sole proprietorships. • 2. There is a separation between ownership and management.

  9. What are the advantages of a corporation and a cooperative?What are the disadvantages of a corporation and a cooperative? • 3. The business continues smoothly, regardless of illness or death. • 4. Ownership is easily transferred. • 5. The liability of owners is limited to the stock purchased. • 6. Corporations provide a good way to pool the resources of numerous individuals.

  10. What are the advantages of a corporation and a cooperative?What are the disadvantages of a corporation and a cooperative? • B. A cooperative offers numerous advantages to its members. • 1. The cooperative’s philosophy centers on member services. • 2. Liability is limited to the amount of the investment. • 3. Numerous people pool their resources to start the cooperative. • 4. All members share control of the business; no one or two people can control the company. • 5. A long life of the cooperative is likely.

  11. What are the advantages of a corporation and a cooperative?What are the disadvantages of a corporation and a cooperative? • C. A corporation may pose several disadvantages. • 1. Organizing a corporation can be complicated and costly. • 2. Corporations usually have additional bookkeeping and accounting costs. • 3. Freedom of actions and changes to the business are limited. • 4. It is expensive to end the business.

  12. What are the advantages of a corporation and a cooperative?What are the disadvantages of a corporation and a cooperative? • 5. There are considerable legal aspects to consider. • 6. Double taxation may occur; the corporation’s income is taxed, as is the dividend paid to stockholders. • 7. It may be less of a personal business.

  13. What are the advantages of a corporation and a cooperative?What are the disadvantages of a corporation and a cooperative? • D. Very few disadvantages of a cooperative are apparent. • 1. Legal formalities can be numerous. • 2. A large share of ownership is impossible. • 3. Management of the business is limited to the general manager.

  14. REVIEW What are the characteristics of a corporation and a cooperative? What are the advantages of a corporation and a cooperative? What are the disadvantages of a corporation and a cooperative?