Using Corporations and Cooperatives

Next Generation Science / Common Core Standards Addressed! CCSS. ELA Literacy. RST Determine the central ideas or conclusions of a text; summarize complex concepts, processes, or information presented in a text by paraphrasing them in simpler but still accurate terms.

Bell Work / Student Learning Objectives What is the function of a corporation. Identify the advantages of a corporation. Identify the disadvantages of a corporation. What is the function of a cooperative. Identify the advantages of a cooperative. Identify the disadvantages of a cooperative.

Terms Cooperative Corporation Dividends Patronage payments S corporation Shareholders

Interest Approach Show the students a copy of an annual report of a local cooperative. Ask the students why such a document is printed. Ask the students to determine the objective of the cooperative.

What is a Corporation? There are several characteristics of a corporation. –The corporation is treated as a single entity; it can own property.

What is a Corporation? The corporation is owned by Shareholders. Capital is raised by selling shares of stock. The corporation is separate from the operator. Different classes of stock may be sold. The corporation is taxed as a legal entity.

What is a Corporation? The corporation pays Dividends to the shareholders to distribute profits. –Stock is limited to one class. –It is taxed as a partnership.

What are the advantages of a corporation? Agricultural corporations have numerous advantages.

What are the advantages of a corporation? Raising capital is easier than in partnerships and sole proprietorships. There is a separation between ownership and management. The business continues smoothly, regardless of illness or death. Ownership is easily transferred.

What are the advantages of a corporation? Liability of owners is limited to the stock purchased. Corporations provide a good way to pool resources of numerous individuals.

A Few Corporations!

What are the disadvantages of a corporation? A corporation may pose several disadvantages.

What are the disadvantages of a corporation? Organizing a corporation can be complicated and costly. They usually have additional bookkeeping and accounting costs. Freedom of actions and changes to the business is limited. It is expensive to end the business.

What are the disadvantages of a corporation? There are considerable legal aspects to consider. Double taxation may occur; the corporation’s income is taxed as is the dividend paid to stockholders is also taxed. May be less of a personal business.

How does a cooperative work? A Cooperative is a business organization where the owners are the customers. Growmark, Inc.

How does a cooperative work? Cooperatives emphasize member control. Members with a mutual interest organize cooperatives. Cooperatives are operated on a non-profit basis. Patronage payments are the profits paid to members based on their use of the cooperative.

How does a cooperative work? Most cooperatives operate on one- member, one-vote basis. Its members elect the board of directors. The board is composed of cooperative members. Cooperative stock does not increase or decrease in value.

What are the advantages of a cooperative? A cooperative offers numerous advantages to its members.

What are the advantages of a cooperative? The cooperative’s philosophy centers on member services. Liability is limited to the amount of the investment. Numerous people pool resources to start the cooperative.

What are the advantages of a cooperative? All members share control of the business; no one or two people can control the company. Long life of the cooperative is likely.

What are the disadvantages of a cooperative? Few disadvantages of a cooperative are apparent. –Legal formalities can be numerous. –A large share of ownership is impossible. –Management of the business is limited to the general manager.

Review / Summary What is the function of a corporation. Identify the advantages of a corporation. Identify the disadvantages of a corporation. What is the function of a cooperative. Identify the advantages of a cooperative. Identify the disadvantages of a cooperative.

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