Using Corporations and Cooperatives

Next Generation Science / Common Core Standards Addressed!

• CCSS. ELA Literacy. RST. 11.12.2 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.

The End!