[ plain sailing ]
A co-op, in pictures
No legal reading required. Eight pictures, one idea each, in the order a person actually needs them. Every hard word is underlined and explains itself where it stands.
[ 01 of 08 · Even keel ]
A co-op is an ordinary business, with one unusual rule: every member gets one vote, however much money they put in.
what this means for youNobody can buy their way into control of the thing you build. The person who put in the most money still has one hand on the tiller, the same as you.
Prefer everything at once? read it all as one page.
[ this week, at no cost ]
What you can actually do before you talk to anybody
Four small things. None of them cost money, and none of them need a lawyer.
- 01Write down, in one sentence, who the members are going to be.
- 02Ask the two or three people most likely to join whether that sentence matches what they thought.
- 03Pick a number for what one membership share should cost, even a rough one, and say why.
- 04Write down how you want to decide things when the room disagrees.
[ the word decoder ]
Every hard word, in a sentence
The same wording you will meet anywhere else on this site. Tap a word to open it.
- articles of incorporation
The short public form that brings the co-op into legal existence. Filed with the state office, usually a page or two: name, address, purpose, and who is signing.
- bylaws
The co-op's own house rules, written by the members: who can join, how you vote, how surplus is shared, and how somebody leaves. Not filed with the state in most places, but the document you will live inside.
- capital account
A running record of the money the co-op is holding on a member's behalf: what they paid in, plus retained surplus credited to them, minus anything paid back out.
- dissolution
Closing the co-op down and settling what it owns and owes. Administrative dissolution is when the state closes it for you because a yearly filing was missed.
- EIN
The co-op's federal tax number, from the IRS. Free, and applied for online. Think of it as a Social Security number for the business.
- member class
A group of members who join on the same terms and hold the same kind of membership, for example workers in one class and buyers in another.
- operating agreement
The internal rulebook of an LLC. Co-op behavior can be written into one, but the law will not hold it there for you the way a cooperative statute does.
- patronage
How much a member used the co-op in the year: hours worked, goods sold through it, or purchases made from it. Surplus comes back to members in proportion to this, rather than to how much money they put in.
- registered agent
A person or service with a street address in the state who agrees to receive official mail for the co-op. It can be one of the members.
- statute
A law your state has passed. A citation like a chapter number is just its address in the law books.
- surplus
What is left over at the end of the year after the co-op has paid its costs. In an ordinary company you would call it profit.
Try one in a sentence: surplus comes home to members by .