FAQ
Frequently Asked Questions
What is a coop?
A cooperative is a business controlled by the people who use it. It is a democratic organization whose earnings and assets belong to its members. By patronizing and becoming an active member of a co-op, you invest yourself with the power to shape that business. You control the politics and economics of what is truly your organization. This localized member control allows co-ops to be as varied as the people they serve. Thus, there are different types of co-ops including: food co-ops, housing co-ops, arts and crafts co-ops, book co-ops, bakery co-ops, bike co-ops, farm co-ops, rural electric co-ops, financial co-ops (credit unions), and insurance co-ops. And each of these has a flavor of its own, reflective of the desires of its individual memberships. Despite the diversity in type and tradition of co-ops, most have several things in common, particularly the ideals and principles from which they emerge.
What are the benefits of joining the Laban Johnson Group?
Co-op members benefit from a truly unlimited growth opportunity, receiving and sharing in a full range of support on the personal, professional, and enterprise levels. Our members have access to our collective expertise, experience, great mentors and great advice! We are people in business helping people in business succeed, grass-roots globalization. Each member can make more money and be more successful by doing more of what they enjoy, and less of what they don’t enjoy, with less risk, and unlimited guidance and collective experience.
Who can be a member?
Any individual, partnership or corporation with a business or a useful idea, product or service, talent or skill can participate as a member. Our Member Services Committee will match your talents and skills to the needs of other members in the Cooperative.
Is there a cost to join? There is currently no sign-up or start-up cost to become a member of this cooperative. Only when members make money do they pay, based on the money earned through the cooperative, an administrative fee of 10% of gross sales receipts for the expenses of the cooperative. Unused revenues are refunded to the members based on participation. There is absolutely nothing to lose, and much to gain!
Can I work part time or full time?
“Part time” and “full time” are terms generally reserved for employees of a company. Since the cooperative encourages member-ownership, full time and part time commitments are discouraged, in favor of leveraging one’s time efficiently to achieve the results you want in your own life and have the time to do the things which make life worth living. We are taking the term “socially-responsible business” to new heights. We hope you aren’t afraid of heights!
How do Cooperatives Help the Economy?
As community-based organizations, cooperatives play an active role in encouraging economic development. They help attract and retain businesses that provide employment opportunities for the community, as well as, provide well-paid, stable jobs and advancement opportunities. They support local community service organizations and causes.
How are Cooperatives different from other companies?
Cooperatives are a living example of democracy in action. The members actually own the company and elect a board of directors that sets policy to represent members’ interests and ensure the company’s success. To do that, board members must be knowledgeable about the cooperative and the industries in which it is active, business management, state and federal regulation, the competitive environment, and the company’s long-range plans and future prospects. Equally important, directors must communicate that understanding to management and Members, and develop the relationships essential to succeed in an indispensable, multibillion-dollar business.
The Cooperative Philosophy
The concept of the cooperative as a business is an American creation. Founding Father Benjamin Franklin, in 1752, helped to establish an insurance cooperative in Philadelphia. The Philadelphia Contributionship for the Insurance of Homes from Loss by Fire still operates today, along with 47,000 other cooperatives that provide credit and financial services, telephone and electric service, insurance, housing, child care, health care, food, farm marketing supply, and news distribution services. Familiar cooperative enterprises include: Associated Press, Ocean Spray, Nationwide Insurance, Land O’Lakes, Ace Hardware, and Sunkist. The basic cooperative principles, however, open membership, one member one vote, surplus profit returned to members, etc. were actually not established until almost a century later in Rochdale, England. Desperate over low pay and high living costs, 28 local weavers formed a grocery store there in 1844, calling themselves the Rochdale Society of Equitable Pioneers. From that small group emerged what have become known as the “Rochdale Principles,” a set of practices and procedures that have served as guideposts for cooperatives around the world. In essence, the Rochdale Principles Establish:
- Open membership – anyone who can use a cooperative’s services and is willing to accept the responsibilities of membership is eligible to join.
- One member, one vote – power is shared equally among all members, rather than concentrated in the hands of a few. Cooperatives are based on democratic principles. Members elect a board of directors and, when necessary, vote on specific issues.
- Limited return on investment – the purpose of a cooperative is to provide a service to its members, not to make a profit.
- Surplus is returned to the members – margins above and beyond the costs required to cover operating expenses are returned to the members in proportion to their patronage. The more business a member does with the co-op in a given year, the greater the amount of the patronage refund for that year.
While membership equity fees comprise the initial foundation of a cooperative’s equity capital, additional funds are provided by the patrons contributing their patronage refunds back to the cooperative for a period of years in the form of credits in the cooperative. (See the section on capital credits for more details.) If a member wishes to discontinue membership, many co-ops refund the equity fee. Each year, America’s cooperatives generate more than $100 billion in economic activity. Cooperatives serve more than 120 million people in cities, towns, suburbs, and throughout rural America. Cooperatives embody the best traditions of American self-reliance and independence. Co-ops are successful because they provide non-profit services to their communities that may not be readily available otherwise. The cooperative movement will continue to thrive because it is based on the most powerful force in the world—a good idea.
What are 
Capital Credits and How do they work?
As a cooperative, the Laban Johnson Group is here to provide services, not to make a profit or margin. There is no stock to be purchased or sold; our members are the owners of the company. One of the cooperative principles is the allocation of any margins earned by the co-op to its members. Any revenue collected by the co-op that is not needed to cover the cost of providing service is accounted for and allocated back to the members based on the amount of business they did with the cooperative during the year.
In Cooperatives, revenues earned above operating expenses are called margins (in a commercial business, these funds are called net income, or profits). The end of each fiscal year, the co-op allocates a percentage of the margins to each patron on a pro-rated basis, according to the total amount paid or produced from business activities. These allocations to patrons are known as capital credits. Upon approval of the board of directors, these allocations are refunded to co-op patrons. Capital credits are typically paid in cycles specified in the bylaws. The exact formulas used to retire patrons’ capital credits are determined by the board based on policy expressed in the bylaws. Patronage allocation and the retirement of capital credits represent the proportional allocation of cooperative margins based on patrons’ individual use of the cooperative’s services. Capital credits “should be based on the total dollar volume of business done with the cooperative, or on a fair and reasonable variation of this method where it will be more equitable to the consumers…” Thus, co-ops generally base patronage on revenues from services. Income from nonrecurring or one-time service charges, membership fees, and aid to construction is usually not included because they do not constitute a continuing revenue stream for the cooperative. The retirement of capital credits enables the board of directors to reinforce the members’ inherent ownership rights. Since the cooperative has “used” more member dollars than necessary to operate the Cooperative, it has “borrowed” funds from the patrons, the cooperative owners. The retirement of capital credits also constitutes an essential part of the cooperative’s public relations effort. With an actual stake in the co-op’s business operations—evidence in its margins – members participate actively and share in the Coop’s success. Each time the directors declare a capital-credit retirement, they demonstrate to the members/owners that the co-op cares about its current members, who see cooperative principles at work, and its former patrons, whose equity has helped the system, succeed. Capital credits are retired on a percentage method which allows all members to receive a retirement, but provides the lion’s share of the retirement to the long-term member who has the most invested in the Cooperative. If a cooperative member discontinues membership, the member still receives the capital credit allocation for the year or years he or she was a member. Capital credits may also be paid to a deceased member’s estate upon request.
Are there tax advantages for joining a cooperative?
Yes! Cooperatives are one of several forms of doing business recognized by the Internal Revenue Code. Like sole proprietorships, partnerships, limited liability companies, LLC’s, and Subchapter S corporations, single tax treatment is available to cooperatives and their member-owners, on business conducted on a cooperative basis. Earnings on non-cooperative operations, like those of investor-general corporations, are subject to taxation at both the firm and ownership levels.
Cooperative tax rules are a logical combination of the unique attributes of a cooperative and the income tax scheme in the Internal Revenue Code. The single tax principle is applied to earnings from business conducted on a cooperative basis in recognition of the special relationship between the members and their cooperative associations. Cooperatives have been granted a certain degree of flexibility in their financial and tax planning and should exercise their options effectively to maximize benefits for members.” – source: USDA. For more information see USDA Circular 441 – Income Tax Treatment of Cooperatives, and US Code Title 26 subchapter T .
I need a job – is the Laban Johnson Group hiring?
Although we cater first to the Member-Owner who is building a business or businesses, as our members’ businesses grow there will be plenty of job openings which we will advertise first on our website to hire first from within our members’ own personal networks, prior to publicizing the position in other places, such as the help wanted section of newspapers.
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FAQ Disclaimer: While this Frequently Asked Questions document is intended to be both accurate and informative it does not supercede the terms of the Membership agreement and by-laws of the cooperative.
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