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When we decide to start a business, we often think of the sole proprietorship or limited liability company, but there are many more types of legal entities. Considering that Spain is primarily supported by SMEs, this legal entity is often unknown, yet it can greatly aid entrepreneurship. Indeed, social economy enterprises do exist!

One lesser-known entity, often associated with the agricultural sector, is the cooperative. However, there are different types of cooperatives as well. We can find worker cooperatives, service cooperatives, educational cooperatives, purchasing cooperatives, and even housing cooperatives. But for now, let’s focus on the figure of WORKER COOPERATIVES.

Worker cooperatives are a form of business organization where employees are also members of the company, contributing their labor and making decisions democratically. It is the union of individuals with a common goal who join forces to achieve it. Their aim is to provide stable and quality employment to their members, promoting active participation and equal opportunities. Therefore, cooperatives are social economy enterprises, as they focus on generating employment and wealth in their environment, not just for one person.

What are worker cooperatives?

They are societies in which members contribute their personal and direct effort, either full-time or part-time, for the production of goods or services for third parties. The relationship of members with the cooperative is of a partnership nature, not employment.

What are they for?

They serve to generate self-managed employment, allowing workers to be their own bosses and have control over their work environment. Additionally, they promote local development and social economy since profits are reinvested in the community.

Key characteristics:

Democratic management: Each member has the right to vote on important decisions. One Member, One Vote.
Economic participation: Members contribute equitably and democratically control the cooperative’s capital. Each member’s responsibility is based on their capital contribution, but all must contribute to growth. With control bodies such as the Constituent Act and internal regulations.
Autonomy and independence: Cooperatives are autonomous organizations managed by their members.
Education, training, and information: Member training is promoted to contribute effectively to the development of their cooperative.
Tax benefits:

Worker cooperatives enjoy certain tax benefits such as:

Reduction in taxable base: In some cases, they can benefit from a reduction in the taxable base of the Corporate Income Tax.
Tax incentives: They can access tax incentives to encourage their creation and development.
Creation: They are easier to create. They have more advantages for subsidies and also have no constitution expenses. Registration and modification expenses are nil as they are covered by the cooperative registry, not the commercial registry.

Why are they created? They are created out of the need to:

Promote employment: Offer job positions to members through their personal effort.
Foster solidarity: Establish a system of mutual aid among members.
Promote social economy: Contribute to economic development in a fairer and more equitable manner.

Worker cooperatives represent an alternative to the traditional business model, placing emphasis on people, collaboration, and common welfare. They are an important pillar in the social economy and an example of how teamwork and shared management can lead to sustainable and ethical business success.

Myths and Legends:

Can they have employees? Yes, cooperatives can have employees, they just have to be a lower percentage than the members in terms of hours worked.
How many members should there be? It depends on each community. In Andalusia, for example, only two members are needed. It is one of the legal entities regulated by both state and regional law.
Can they grow as cooperatives? Of course! And they should. If a cooperative grows, its members improve, and they invest in their environment. That’s what it’s all about.
Can my activity be carried out in a cooperative? Almost all activities can be carried out in a cooperative, just like in a capitalist society.
How do I know it’s a cooperative? Very easy! Its name is followed by S.C.A., in Andalusia, for example (Andalusian Cooperative Society).

Want to know more? At Like it Consulting, we are experts in these types of societies, but we leave you these links from federations that help us in the growth and monitoring of companies to achieve an efficient and social economy.