Download - Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business
![Page 1: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/1.jpg)
Think Outside the Boss
How to Create a Worker-Owned Business?
![Page 2: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/2.jpg)
Agenda for Day
Presentation:
Introduction to coops
Entity Formation
Difference between Nonprofits and Coops
STRETCH BREAK - 5 mins
Managing the Business
Employment Law Issues
Getting the Green I: Loans and Memberships
Getting the Green II: Securities
How the Money Flows [Tax and Accounting]
![Page 3: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/3.jpg)
Agenda for Day Part II
Snack Break
Breakout Sessions
Real Live Worker Owners (Mandela Food
Cooperative, Arizmendi Cooperative)
Legal Issues (Janelle Orsi, Sushil Jacob)
Bookkeeping and Accounting (Esther Cervantes,
Mary Carleton)
Coop Academy and Legal Cafe Information
(Ricardo)
![Page 4: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/4.jpg)
![Page 5: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/5.jpg)
INTRODUCTIONSushil Jacob
Staff Attorney
East Bay Community Law Center
![Page 6: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/6.jpg)
Because the economy needs a new
“Operating System”
Why Worker
Cooperatives?
![Page 7: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/7.jpg)
Beyond Mainstream Perceptions
![Page 8: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/8.jpg)
How Coops Impact the
Economy
Cooperatives
are
everywhere!
![Page 9: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/9.jpg)
What Are Worker
Cooperatives?
In a worker co-op, the workers are the members
(and thus the owners).
![Page 10: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/10.jpg)
The Cooperative
Principles
1. Voluntary and open membership
2. Democratic member control
3. Members’ economic participation
4. Autonomy and independence
5. Education, training and information
6. Cooperation among coops (inter-cooperation)
7. Concern for community
![Page 11: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/11.jpg)
What Make Worker Coops Different
From Other Coops?
Sovereignty of Labor
Remove the boss, remove
the exploitation of labor
![Page 12: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/12.jpg)
History
Knights of
Labor
![Page 13: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/13.jpg)
Mondragon, Spain
![Page 14: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/14.jpg)
Cleveland, Ohio
![Page 15: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/15.jpg)
Why Worker Ownership?
Higher Job Satisfaction
Higher Incomes
Sustainability/Involvem
ent in the local
community
Resiliency in economic
downturns
![Page 16: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/16.jpg)
Next: Forming a Cooperative
Entity
![Page 17: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/17.jpg)
![Page 18: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/18.jpg)
Anuthara Hegoda, Law Clerk
Green-Collar Communities Clinic (GC3)
East Bay Community Law Center
Introduction to Legal entities
![Page 19: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/19.jpg)
LEGAL ENTITIES
1. What are legal entities and why do we form
them?
2. What is limited liability?
3. What are the most common forms of legal
entity?
![Page 20: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/20.jpg)
LEGAL ENTITY
A legal entity is the legal structure and rules under
which a business operates.
Examples of legal entities:
General stock corporation
Cooperative corporation
LLC
![Page 21: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/21.jpg)
SHOULD YOU FORM AN
ENTITY?
Factors to consider:
Liability
Tax considerations
Mission/formation
Business goals
Control
Costs of formation
Capital requirements
Liability
Tax Treatment
Mission/
Formation
![Page 22: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/22.jpg)
Liability
• Unlimited
• Can sue YOU
and your
business
Tax Treatment
• Avoid $800/year (min)
entity tax
• Taxed as partnership
Mission/Formation
• Avoid
organizational
formalities
PARTNERSHIPS
![Page 23: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/23.jpg)
PROS AND CONS OF ENTITY
FORMATION
Pros• Can limit liability
• Credibility
• Attract investors
• Tax election
• Governance structure
Cons•Potential additional tax
•Minimum franchise tax
•Corporate formalities
•Time and cost of formation
![Page 24: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/24.jpg)
• General Stock Corporation
• Cooperative Corporation
• Limited Liability Company (LLC)
LEGAL ENTITIES WE’LL
DISCUSS TODAY
![Page 25: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/25.jpg)
GENERAL STOCK
CORPORATION
• The most common form of business entity
• Owned by shareholders, governed by a board of directors
• General purpose: make a profit for shareholders
• Shares of stock usually issued in exchange for capital contributions
• Voting power directly related to number of shares owned
• Entity-level taxation
![Page 26: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/26.jpg)
COOPERATIVE
CORPORATION• Best incorporates cooperative principles of
democratic decision-making and worker-ownership
• General purpose: operate at cost for members
• Legal requirements e.g. notice period for member meetings, cap on capital distributions
• Must have “cooperative”
in business name
• One-member-one-vote principle
required by CA law
• Special tax deductions available
for patronage
![Page 27: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/27.jpg)
LIMITED LIABILITY COMPANY
(LLC)
• Similar to corporation but more flexible
• Limited liability
• Governed by Operating Agreement between members
• Lower level of corporate formalities than corporations
• Can incorporate one-member-one-vote principle, but not required by law
• Members considered partners, not employees
• Pass-through taxation
![Page 28: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/28.jpg)
FORMING A LEGAL ENTITY
Before incorporation:
1. Choose business name
• Check availability/avoid confusion
2. Prepare Bylaws or Operating Agreement
3. Prepare and file Articles of Incorporation or Articles
of Organization
4. File Statement of Information
![Page 29: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/29.jpg)
FORMING A LEGAL ENTITY
After incorporation:
1. Obtain employment identification number with
IRS and employer account number with state
2. Open bank account
3. Obtain necessary licenses/permits/insurance
4. Hire/retain accountant or bookkeeper
5. Implement operational and management structure
![Page 30: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/30.jpg)
REVIEW
1. What are legal entities and why do we form
them?
2. What is limited liability?
3. What are the most common forms of legal
entity?
![Page 31: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/31.jpg)
![Page 32: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/32.jpg)
Anuthara Hegoda, Law Clerk
Green-Collar Communities Clinic (GC3)
East Bay Community Law Center
Nonprofit Organization
![Page 33: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/33.jpg)
“We’re a nonprofit organization . . .
We didn’t plan it that way, but that’s how
it worked out.”
![Page 34: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/34.jpg)
What does it mean to you?
![Page 35: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/35.jpg)
What is a nonprofit?
A corporation
That may be tax-exempt
Organized and operated exclusively
for a charitable purpose (aka
“exempt purpose”)
![Page 36: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/36.jpg)
![Page 37: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/37.jpg)
![Page 38: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/38.jpg)
![Page 39: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/39.jpg)
![Page 40: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/40.jpg)
![Page 41: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/41.jpg)
![Page 42: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/42.jpg)
![Page 43: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/43.jpg)
We know so much about healthy,
sustainable gardening . . . We should
start an URBAN FARM and teach
people about healthy eating through
a CAFÉ!
Green
Commonwealt
h Farm & Cafe
![Page 44: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/44.jpg)
Nonprofit or co-op? 4 main factors to
consider
1. Purpose
2. Control
3. Funding
4. Profits
![Page 45: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/45.jpg)
Nonprofit or co-op? Factors to
consider
1. Purpose
Who do you primarily hope to benefit?
Can you articulate an “exempt purpose”?
![Page 46: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/46.jpg)
Let’s make Green
Commonwealth Farm &
Café a nonprofit!
![Page 47: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/47.jpg)
It’ll be a 501(c)(3), and get
donations and grants, and
be exempt from taxes!
![Page 48: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/48.jpg)
501(c)(3)
Tax-Exempt
Nonprofit
Corporation
CHARITABLE
/
EDUCATION
AL Purposes
PERSONAL/
COMMERCIAL
Purposes
![Page 49: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/49.jpg)
![Page 50: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/50.jpg)
![Page 51: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/51.jpg)
![Page 52: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/52.jpg)
![Page 53: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/53.jpg)
Nonprofit or co-op? Factors to
consider
2. Control
Worker-owner control vs. majority
“independent” board
![Page 54: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/54.jpg)
Nonprofit or co-op? Factors to
consider
3. Funding
Investments vs. contributions
![Page 55: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/55.jpg)
Nonprofit or co-op? Factors to
consider
4. Profits
Distribution vs. reinvestment in the
exempt purpose
![Page 56: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/56.jpg)
QUIZ: What are the 4 main factors to consider
when choosing between a nonprofit and a co-
op?
1.
2.
3.
4.
![Page 57: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/57.jpg)
1. Purpose
2.
3.
4.
QUIZ: What are the 4 main factors to consider
when choosing between a nonprofit and a co-
op?
![Page 58: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/58.jpg)
QUIZ: What are the 4 main factors to consider
when choosing between a nonprofit and a co-
op?
1. Purpose
2. Control
3.
4.
![Page 59: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/59.jpg)
QUIZ: What are the 4 main factors to consider
when choosing between a nonprofit and a co-
op?
1. Purpose
2. Control
3. Funding
4.
![Page 60: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/60.jpg)
QUIZ: What are the 4 main factors to consider
when choosing between a nonprofit and a co-
op?
1. Purpose
2. Control
3. Funding
4. Profits
![Page 61: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/61.jpg)
The Bottom Line
A co-op is a for-profit business
that benefits its members (the
worker-owners)
A nonprofit organization is an
organization dedicated to serving
the community at large
![Page 62: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/62.jpg)
![Page 63: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/63.jpg)
GovernanceA Few Things Everyone
Should Know About
GovernanceWhoa! It’s all about
governance!
![Page 64: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/64.jpg)
![Page 65: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/65.jpg)
Every member has one vote…In the election of the board and major
decisions
Power
Power
![Page 66: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/66.jpg)
Cooperatives don’t have to be
this:
![Page 67: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/67.jpg)
Alvarado Street
Bakery Elects a
Board
Arizmendi Bakery
is a Collective
Members
Board
Every
Member is
on the
Board
![Page 68: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/68.jpg)
Members
Board Every Member
is on the Board
Cooperative with a
small Board of
Directors
Collective
![Page 69: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/69.jpg)
Officers don’t necessarily have more power than
othersSecretary: Gives notices, tracks membership, keeps minutes, etc.
President: Signs official documents
Treasurer: Keeps accounts
The State of California
wants to know that
SOMEONE is doing
this stuff.
![Page 70: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/70.jpg)
![Page 71: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/71.jpg)
Members Elect the Board on a
One Member, One Vote Basis
This means that co-ops
are ultimately
accountable to members,
even if members don’t
call the shots on a day to
day basis.
![Page 72: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/72.jpg)
It helps to remember that there are
different realms in which people
exercise control:
1. Worker Owners/Members: Elect the Governing Board
and make certain major decisions.
2. Governing Board: Appoints the Officers and
managers; make high level decisions that steer the
company/organization toward its goals.
3. Officers: Corporations generally require President,
Secretary, and Treasurer. These are primarily
administrative in nature, and have special powers if you
want them to.
4. Managers: Manage the day-to-day operations.
![Page 73: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/73.jpg)
I’m going to work in an
organization where my voice
matters, I have control over
my work, I can use my
creativity, build community,
and have fun!
![Page 74: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/74.jpg)
Everyone is
behind the
wheel!
![Page 75: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/75.jpg)
![Page 76: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/76.jpg)
Beware of the
Tyranny of StructurelessnessI know
what we
should
do!
Rex
![Page 77: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/77.jpg)
Cooperatives often make the mistake of
not adopting clear governance
procedures.
Need to be quite specific about stuff like:
•Procedures for meetings
•Procedures for making, reviewing, and adopting proposals
•Process for giving notice and creating agendas
•Spheres of decision-making, management, and operations
•Committees, Circles, Spheres, Managers, etc.
•Composition and election of governing bodies/committees,
etc.
•Voting rights
•Procedures for amending governing documents
•Conflict of interest policies
Note that this stuff is partially dictated
by the statute that governs the entity.
![Page 78: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/78.jpg)
Documents can’t look like
this:
![Page 79: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/79.jpg)
Give Governance Models
Some Legal TeethNeed to be quite specific about stuff like:
•Procedures for decision-making, AND
•Spheres of decision-making, management, and operations
•Committees, Circles, Spheres, Managers, etc.
•Composition and election of governing bodies/committees,
etc.
•Place, time, process for meetings
•Process for giving notice and creating agendas
•Voting rights
•Procedures for amending governing documents
•Conflict of interest policies
![Page 80: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/80.jpg)
Meetings can’t feel like hell.
![Page 81: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/81.jpg)
Get trained. Learn the system.
Practice it. Grow to love it.
![Page 82: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/82.jpg)
Some worker cooperatives are
exploring Holacracy(www.holacracy.org)
1. Distributing Governance Throughout the
Organization, rather than requiring that all decisions flow up the
chain of command. Division of the organization into semi-autonomous
circles that are strategically interlocked to ensure communication flows up
to a general circle.
![Page 83: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/83.jpg)
2. Roles: Each person in the
organization fills multiple
roles and can move in
and out of the roles
somewhat flexibly, rather
than filling a single
position with a single job
description. Within a role,
people have a lot of
autonomy.
3. Accountabilities:Each role is accountable
to a circle of people - i.e.,
they report to that group
on how they are doing
with the tasks required of
that role.
Role: Accountable to: Recycling Building Management Circle
Grant Writer Fundraising Circle
Cartoonist Communications Circle
Window Washer Building Management Circle
Legal Advice Legal Services Circle
Happy Hours Fun Circle
![Page 84: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/84.jpg)
4. Highly Structured Meetings!
•Everyone Has a Voice: Most meetings are held
by going in a series of circles, which helps to
ensure that everyone has a voice. Everyone can
bring a proposal.
• Keeps Personality Politics at Bay: The high
level of structure keeps personality politics from
dominating organizational culture, and keeps
individuals from taking up too much space with too
much talking.
•Different Meeting Process for Different Types
of Meetings: Governance meetings, strategy
meetings, and tactical meetings.
![Page 85: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/85.jpg)
5. Proposals Move Things Forward!
• Anyone can bring a proposal. In fact, everything discussed in
the context of a governance meeting is discussed in the context of
a proposal.
This allows everyone to follow their passions and
inspirations, and also have a voice in the direction of the
organization.
• Proposals are adapted through a structured feedback process.
•Proposals are accepted if no one objects to the proposal on
the basis that it moves the organization backward in its mission or
harms the organization.
• Accepted proposals can be revisited and adapted at any
time. This allows the organization to be nimble, experiment, shift
course quickly, and adjust to small changes, all while moving
forward.
![Page 86: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/86.jpg)
Let’s encourage hundreds of
thousands of existing
businesses to sell to workers
and convert to cooperatives!
Because
![Page 87: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/87.jpg)
![Page 88: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/88.jpg)
Elizabeth Yates, Law Clerk
Green Collar Communities
East Bay Community Law Center
Employment Law and Coops
![Page 89: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/89.jpg)
Roadmap
Traditional Employment vs. Cooperatives
Who is Considered an Employee / When Employment Laws Apply
Four Major Categories of Workers NOT Considered Employees
![Page 90: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/90.jpg)
Traditional Employment =
Working for Others
![Page 91: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/91.jpg)
Obligations of Employers
• Maintaining workers
compensation insurance;
• Paying minimum wage
and overtime;
• Payment of payroll taxes
and other withholdings;
• Complying with standards
for hours and working
conditions;
• Complying with
occupational safety and
health laws;
• Posting of certain kinds of
notices and posters
related to employees’
rights; and
• Adhering to certain
recordkeeping
requirements.
Verifying employees’
eligibility to work in the
U.S.
![Page 92: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/92.jpg)
Cooperatives: Working WITH
Others
![Page 93: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/93.jpg)
True or False:
Coops do NOT have to worry
about Employment Laws.
![Page 94: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/94.jpg)
FALSE!
▪ Why?
▪ Because coop members might be considered employees under current labor and employment laws.
▪ So, the coop might need to comply with laws that are designed to protect workers!
![Page 95: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/95.jpg)
Ok, so what do we do… ?
▪ Be safe = assume everyone is an employee.
▪ Then work backwards from there to see if you can find any exceptions.
![Page 96: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/96.jpg)
4 Ways for People to Work Together and
NOT be Employees:
1. PARTNERS: People that work together for
their mutual benefit
2. VOLUNTEERS: People that do unpaid work
for public benefit, humanitarian, or charitable
purposes
3. INTERNS/TRAINEES: People that do
unpaid work for their own educational benefit
4. INDEPENDENT CONTRACTORS: People
that do work, but do so in an independent
manner
![Page 97: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/97.jpg)
For more info on
partnerships, see pages 64-
69 in your TOTB Manual.
If NO “master-servant” relationship,
then NO employment laws apply
Partner Factors:
1) Control & operation of
business
2) Participation in profits and
losses
3) Employment security
PARTNERS: MUTUAL
BENEFIT
![Page 98: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/98.jpg)
Volunteers: Public Benefit
But typically, you
CANNOT volunteer
for a for-profit
business. NOTE: most coops do NOT
fit under the charitable, religious, or humanitarian categories unless they are 501(c)(3) nonprofits.
As a general rule, you CAN volunteer for nonprofit
organizations that are engaged in charitable,
religious, or humanitarian purposes.
![Page 99: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/99.jpg)
Interns/Trainees: Own
Educational Benefit
YES, for-profit
businesses can
have unpaid
interns!
BUT Interns
should be there
to LEARN!Want more info on these
criteria? See pages 60-62 in the
TOTB Manual.
![Page 100: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/100.jpg)
Independent Contractors:
Independent Manner
Who controls the
manner and means of
production
How much skill is
required
Who owns the tools and
instrumentalities
Location of the work
Duration of the
relationship
Right to assign
additional projects to the
hired party
Extent of discretion
over work hours
The method of
payment
Whether the work is
part of the regular
business of the hiring
party
The provision of
employee benefits
The tax treatment of
the hired party
Just call them
Independent
Contractors?
![Page 101: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/101.jpg)
Green Commonwealth Farm
Our coop founders decide to create an urban farm with
30 new members
Goals: access to fresh produce and also profit
All members are required to spend 3 hours per week
volunteering on the farm to get cheap produce
Each members spends time irrigating the farm, tilling
the beds, and harvesting, and also handle some
administrative tasks
Each 3-hour shift has a supervisor that manages the
members
What If:
![Page 102: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/102.jpg)
To be safe…
Be more democratic!
Argue that your members are all partners and do the following:
(1) Have all members serve on the Board of Directors.
(2) Make decisions by a consensus process or with supermajority voting; this arguably gives each member a strong voice in each decision.
(3) Give each member a lot of control over their own work, or create many semi-autonomous departments or committees that control their own work, procedures, and hours.
(4) Make it somewhat difficult to fire people, by requiring a vote of a large number of members.
![Page 103: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/103.jpg)
![Page 104: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/104.jpg)
Moving On…
All of this is nice but…
…can we talk about the money now?
![Page 105: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/105.jpg)
GETTING THE GREEN I: BANK
LOANS AND MEMBER
CONTRIBUTIONS
![Page 106: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/106.jpg)
Show Me The MONEY!!
Businesses need money to operate, how
do we get some?
Overview
Traditional Businesses and Worker-
Cooperatives
Best Practices
Alternative Sources of Funding
Securities Law
![Page 107: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/107.jpg)
Traditional Businesses
A Traditional Business (non-cooperatively run)
Typically, the owner would use person savings.
Over time, the business owner may approach a
bank or venture capitalist for additional funding.
Personal Savings
Loan
Alternatives
Venture Capital
Successful Business
![Page 108: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/108.jpg)
Financing A Worker Co-op
Generally….
Member contributions/Outside Investors = Equity
Financing
Loans = Debt Financing
Member Contributions/Outside
Investors
Loans
Alternative Financing
Successful Worker Cooperative
![Page 109: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/109.jpg)
Raising Money
LOANS – Traditional Lenders Banks want to see that you have enough money to
cover your debt.
Trend of Profitability
Personal Guarantee
Business Plan
Size of the Loan
![Page 110: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/110.jpg)
Best Practices
Preparation
Understanding their Perspective
Attention to Detail
Research
Follow-up/Keep at it!
![Page 111: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/111.jpg)
Alternative Ways to Raise $$$
Membership Capital
Donations
Micro Loans
Pre-Selling
Bartering
![Page 112: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/112.jpg)
QUICK COMPARISON
Traditional Sources (Banks and Credit
Unions)
Alternative Financing (microloans, for
example)
Greater Funding
Potentially higher interest rates
May require 2 to 3 years of profitability
May require good credit, collateral, or
equity
Less Funding
Potentially lower interest rates
May invest in startups
Credit, collateral, and equity
requirements vary by lender
![Page 113: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/113.jpg)
Getting the Green II: Securities
Law
![Page 114: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/114.jpg)
Things
to Know
![Page 115: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/115.jpg)
The
definition
of security
You
cannot
offer or
sell a
security
without
registering
… unless
you have
an
exemption
.
![Page 116: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/116.jpg)
![Page 117: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/117.jpg)
Basic Definition:
Security
You create a
security when
you ask people
to put money
into your
business or
venture, and
you offer them
a return. Walt Disney Stock Certificate
(a security!)
![Page 118: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/118.jpg)
![Page 119: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/119.jpg)
Why does Securities Law
Matter
Offering or selling securities
must be registered with the
proper authorities
Even ASKING people to
invest in your business
could be illegal, unless you
register that security.
![Page 120: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/120.jpg)
![Page 121: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/121.jpg)
So what are YOU doing that is
creating securities?
Selling Stock
Asking people to invest money in your business
Offering a share of your business’s profits
Member capital buy-in
![Page 122: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/122.jpg)
![Page 123: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/123.jpg)
![Page 124: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/124.jpg)
Here Are a Few
Exemptions to
Help You Out!Follow along the “Think Outside the Boss”
Manual for more in depth details
![Page 125: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/125.jpg)
CA Limited Offering Exemption §
25102(f)
In California
Up to 35 lenders or
investors
People with whom you
have a pre-existing
No Advertising
Simple online filing with
the CA Department of
Business Oversight
![Page 126: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/126.jpg)
Unlimited # of Accredited
Investors
Really rich people Directors and
Officers
![Page 127: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/127.jpg)
CA Cooperative Equity Exemption
§25100(r)
A California cooperative can raise up to $300 from each member without that qualifying as a security
Each person must be a member and have voting rights
Can’t use a promoter
![Page 128: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/128.jpg)
CROWDFUNDI
NG
![Page 129: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/129.jpg)
Crowdfunding
![Page 130: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/130.jpg)
![Page 131: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/131.jpg)
The CROWDFUND Act
PROPOSED EXEMPTION
You can raise up to $1,000,000
You can invest the larger of $2,000 or 5% of
annual income/net worth
![Page 132: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/132.jpg)
Direct Public Offerings
Can publically advertiseinvestment opportunities to the public
Can DIRECTLY sell
securities without a
3rd party
intermediary
![Page 133: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/133.jpg)
TO REVIEW!
1. Raising money from friends and family? Use a limited offering.
2. Raising money from directors, officers, managing members, or Mitt Romney? Think accredited investors.
3. Raising $300 from all your voting co-op members? Try the cooperative exemption.
4. Using the internet to raise little bits of money from lots of people? Might use crowdfunding in the future.
5. Don’t fit into an exemption? Don’t
![Page 134: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/134.jpg)
Outside Investing vs. Cooperative
Principles
![Page 135: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/135.jpg)
![Page 136: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/136.jpg)
CASE STUDY: Equal Exchange
CD
Certificate of Deposits pooled together to guarantee loans to buy coffee, tea, and cocoa from farmer cooperatives at fair prices
Control preservedProfit returns limited to
the interest rate of CD
![Page 137: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/137.jpg)
SECURITIES LAW REVIEW!
1. A security is created when you offer a return when you ask people for money for your business
2. When offering or selling securities, you must registerthe security unless…
3. There are several exemptions that worker-owned cooperatives can take advantage of to avoid registration of securities.
USE THEM!!
![Page 138: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/138.jpg)
![Page 139: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/139.jpg)
How Money Moves Through a Cooperative
(It’s AMAZING!)Presented by Janelle Orsi
Executive Director of the Sustainable Economies Law Center (TheSELC.org)
Featuring:Money
![Page 140: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/140.jpg)
A B
My Capital Account:
$10,000
My Capital Account:
$10,000
IN
OUT
(Business expenses)C
$5
,00
0
I just work here.
![Page 141: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/141.jpg)
A B
IN
OUT
C
(Net
income)
Worked1200 hours
Worked
1800 hours
Worked
1500 hours
Wag
es:
$30,0
00
![Page 142: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/142.jpg)
A B
IN
OUT
C
(Net
income)
Worked1200 hours
Worked
1800 hours
Worked
1500 hours
Wag
es:
$30,0
00
Not!
![Page 143: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/143.jpg)
In a typicalbusiness, workers work very hard to generate value…
Ideally, dollars are a reward for
generating value.
![Page 144: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/144.jpg)
B
C
A
You
made
me!
![Page 145: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/145.jpg)
But the money doesn’t get to reward those
workers for the full value they
generate…
![Page 146: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/146.jpg)
And if a dollar could show us
how it feels about that…
![Page 147: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/147.jpg)
![Page 148: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/148.jpg)
![Page 149: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/149.jpg)
![Page 150: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/150.jpg)
![Page 151: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/151.jpg)
![Page 152: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/152.jpg)
![Page 153: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/153.jpg)
![Page 154: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/154.jpg)
![Page 155: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/155.jpg)
AB
C
wages
profits
![Page 156: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/156.jpg)
A B
IN
C
(Net
income)
Worked1200 hours
Worked
1800 hours
Worked
1500 hours
How much is “surplus?”
How much is “profit?”
OUT
![Page 157: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/157.jpg)
A B
IN
C
(Net
income)
Worked1200 hours
Worked
1800 hours
Worked
1500 hours
How much is “surplus?”Member hours = 3000
How much is “profit?”Non-member hours = 1500
OUT
![Page 158: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/158.jpg)
A B
IN
C
(Net
income)
Worked1200 hours
Worked
1800 hours
Worked
1500 hours
How much is “surplus?”Member hours = 3000 (2/3 of total hours)
How much is “profit?”Non-member hours = 1500(1/3 of total hours)
OUT
![Page 159: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/159.jpg)
A B
IN
C
(Net
income)
Worked1200 hours
Worked
1800 hours
Worked
1500 hours
surplus = 2/3
profit = 1/3
OUT
![Page 160: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/160.jpg)
A B
IN
C
(Net
income)
surplus
profit
OUT
![Page 161: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/161.jpg)
A B
IN
C
(Net
income)
surplus
profit
The Collective
Account
OUT
![Page 162: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/162.jpg)
Cooperatives have a special tax status!Thanks to Subchapter T of Internal Revenue Code!
• “Dividends” don’t get taxed twice: Net profits distributed to members are tax deductible to the cooperative
• Only if you are operating on a “cooperative basis,” which means: distributions of net profits are based on the "quantity or value of business done with or for such patron." Distributions to patrons not made in proportion to business done with the cooperative cannot qualify as patronage refunds.
RurDev.USDA.Gov has lots of resources explaining all this.
![Page 163: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/163.jpg)
A B
IN
C
(Net
income)
surplus
profit
The Collective
Account
OUT
X
![Page 164: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/164.jpg)
A B
IN
OUT
C
(Net
income)
surplus
profit
The Collective
Account
Worked1200 hours
Worked
1800 hours
I should get a
bonus…
$12,000A’s share
B’s share
![Page 165: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/165.jpg)
A B
IN
OUT
(Net
income)
surplus
profit
The Collective
Account
$12,000A’s share
B’s share
They decided to pay 1/3 in cash and 2/3 in a “Written Notice of Allocation.”
![Page 166: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/166.jpg)
A B
IN
OUT
(Net
income)
surplus
profit
The Collective
Account
$12,000A’s share
B’s share
They decided to pay 1/3 in cash and 2/3 in a “Written Notice of
Allocation.”
![Page 167: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/167.jpg)
A B
IN
OUT
(Net
income)
surplus
profit
The Collective
Account
$12,000A’s share
B’s share
![Page 168: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/168.jpg)
A B
IN
OUT
(Net
income)
surplus
profit
The Collective
Account
$12,000
My Capital Account:
$10,000 + $12,000
My Capital Account:
$10,000 + $8,000
![Page 169: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/169.jpg)
A B
IN
OUT
(Net
income)
surplus
profit
The Collective
Account
$12,000
My Capital Account:
$10,000 + $12,000
My Capital Account:
$10,000 + $8,000
![Page 170: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/170.jpg)
A B
IN
OUT
(Net
income)
surplus
profit
The Collective
Account
$12,000
My Capital Account:
$10,000 + $12,000
My Capital Account:
$10,000 + $8,000
What on earth is this???
Self-employment income? (15% extra in taxes)
orRegular income??
![Page 171: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/171.jpg)
A B
IN
OUT
(Net
income)
surplus
profit
The Collective
Account
$12,000
My Capital Account:
$10,000 + $12,000
My Capital Account:
$10,000 + $8,000
![Page 172: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/172.jpg)
B
My Capital Account:
$10,000 + $12,000
My Capital Account:
$10,000 + $8,000
A
OUT
![Page 173: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/173.jpg)
B
My Capital Account:
$10,000 + $12,000
My Capital Account:
$10,000 + $8,000
A
OUT
IN
![Page 174: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/174.jpg)
B
My Capital Account:
$10,000 +
$12,000
My Capital Account:
$10,000 +
$8,000
A
OUT
IN
$6,00
0
$9,00
0
Free money! You already paid taxes
on it!
![Page 175: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/175.jpg)
B
My Capital
Account:
$10,000 +
$6,000 +
$8,000 =
$24,000
My Capital
Account:
$10,000 +
$4,000 +
$6,000 =
$20,000
A
![Page 176: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/176.jpg)
B
My Capital
Account:
$10,000 +
$6,000 +
$8,000 =
$24,000
My Capital
Account:
$10,000 +
$4,000 +
$6,000 =
$20,000
A
It’s time for something new.
I’m leaving.
![Page 177: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/177.jpg)
B
My Capital
Account:
$10,000 +
$6,000 +
$8,000 =
$24,000
My Capital
Account:
$10,000 +
$4,000 +
$6,000 =
$20,000
A
I’ll sell my share and get RICH!
Me:
Not really.
![Page 178: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/178.jpg)
B
My Capital
Account:
$10,000 +
$6,000 +
$8,000 =
$24,000
A
$500$500$500
![Page 179: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/179.jpg)
B DC
Member
hours
worked over
the years =
20,000
Member
hours
worked over
the years =
15,000
Member
hours
worked over
the years =
10,000
Let’s sell this business for $1,000,000 and retire!
![Page 180: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/180.jpg)
B DC
Member
hours
worked over
the years =
20,000
Member
hours
worked over
the years =
15,000
Member
hours
worked over
the years =
10,000
We’re gonnaget RICH!
Us:
![Page 181: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/181.jpg)
B DC
Member
hours
worked over
the years =
20,000
Member
hours
worked over
the years =
15,000
Member
hours
worked over
the years =
10,000
Hey! ‘Member
me?
A
![Page 182: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/182.jpg)
B DC
Member
hours
worked over
the years =
20,000
4/10
of all hours
Member
hours
worked over
the years =
15,000
3/10
of all hours
Member
hours
worked over
the years =
10,000
2/10
of all hours
A
Member
hours
worked over
the years =
5,000
1/10
of all hours
![Page 183: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/183.jpg)
B DC
Member
hours
worked over
the years =
20,000
4/10
of all hours
Member
hours
worked over
the years =
15,000
3/10
of all hours
Member
hours
worked over
the years =
10,000
2/10
of all hours
A
Member
hours
worked over
the years =
5,000
1/10
of all hours
![Page 184: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/184.jpg)
A B
My Capital Account:
$10,000
My Capital Account:
$10,000
IN
OUT
(Business expenses)
But let’s say that you don’t make much money in the first year or two….
![Page 185: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/185.jpg)
A B
My Capital Account:
$5,000
My Capital Account:
$5,000
IN
OUT
(Business expenses)
Should you share losses equally, even if one
person worked more?
![Page 186: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/186.jpg)
A B
My Capital Account:
$6,000
My Capital Account:
$4,000
IN
OUT
(Business expenses)
Should you divide losses based on patronage??
Well that doesn’t seem fair…
![Page 187: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/187.jpg)
A B
My Capital Account:
$5,000
My Capital Account:
$5,000
IN
OUT
(Business expenses)
If next year brings lots of surplus, should you divide it only based on next year’s patronage?
Well that doesn’t seem fair….
DC
My Capital Account:
$10,000My Capital Account:
$10,000
![Page 188: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/188.jpg)
A B
My Capital Account:
$5,000
My Capital Account:
$5,000
IN
OUT
(Business expenses)
If next year brings lots of surplus, should you divide it only based on next year’s patronage?
DC
My Capital Account:
$10,000My Capital Account:
$10,000
Surplus!
![Page 189: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/189.jpg)
A B
My Capital Account:
$15,000
My Capital Account:
$15,000
IN
OUT
(Business expenses)
If next year brings lots of surplus, should you divide it only based on next year’s patronage?
DC
My Capital Account:
$20,000My Capital Account:
$20,000
Surplus!
![Page 190: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/190.jpg)
A B
My Capital Account:
$18,500
My Capital Account:
$18,500
IN
OUT
(Business expenses)
Can you reward A and B for their risk taking and hard work in creating new jobs?? Probably.
DC
My Capital Account:
$16,500My Capital Account:
$16,500
Measure patronage with more than just hours:Give value to seniority.Give value to sticking with it through the lean years!Give value to measurable job creation.Give value to experience.
![Page 191: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/191.jpg)
A B
My Capital Account:
$10,000
My Capital Account:
$10,000
IN
OUT
(Business expenses)
You could also let the Collective Account go into the negative and require that next year’s earnings restore it.
The Collective
Account
![Page 192: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/192.jpg)
A B
My Capital Account:
$5,000
My Capital Account:
$5,000
IN
OUT
(Business expenses)
Ok, we took a loss. Can we use that on our taxes to offset other income?
In a cooperative corporation, that’s awkward.You can’t issue a negative 1099-PATR.
![Page 193: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/193.jpg)
A B
My Capital Account:
$5,000
My Capital Account:
$5,000
IN
OUT
(Business expenses)
Ok, we took a loss. Can we use that on our taxes to offset other income?
In a cooperative corporation, that’s awkward.You can’t issue a negative 1099-PATR.
There is no such thing as this:
![Page 194: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/194.jpg)
A B
My Capital Account:
$5,000
My Capital Account:
$5,000
IN
OUT
(Business expenses)
Ok, we took a loss. Can we use that on our taxes to offset other income?
You can show a capital loss when you cash out of the cooperative down the road.
![Page 195: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/195.jpg)
A B
My Capital Account:
$5,000
My Capital Account:
$5,000
IN
OUT
(Business expenses)
Ok, we took a loss. Can we use that on our taxes to offset other income?
If we were taxed like a partnership, then we can have a tax benefit from the loss!
LLCs and partnerships CAN do this:
![Page 196: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/196.jpg)
Cooperative finances will change our economy!
B DCA
Cooperatives are meant to PROVIDE stable jobs, to reward workers EQUITABLY, to
keep wealth LOCAL, and to create LASTING enterprises in our COMMUNITIES.
![Page 197: Think Outside the Boss (Fall 2015 edition): How to Start and Operate a Worker Owned Business](https://reader033.vdocuments.us/reader033/viewer/2022060203/559f05fa1a28ab6a108b460f/html5/thumbnails/197.jpg)