Advantages of Cooperative Society

Advantages of Cooperative Society: A co-operative form of business organization is different from other forms of organizations. It is a voluntary association of people with collectively owned fund, organized on the democratic principle of equality, who join together to supply for their requirements through mutual action, and in which the objective is service rather than profit.

The primary objective of forming a co-operative is to protect the economically weaker sections of the society from the oppression of the economically organized strong segment of the society.

The principle underlying a co-operative organization is mutual help, i.e., “each for all and all for each”.

“It is an association of the weak who gather together for a common economic need and try to lift themselves from weakness into strength through business organization.” -TALMAKI 

The cooperative form of organization offers the following advantages:

1. Easy to Form- A cooperative society is a voluntary association and may be formed with a minimum of ten adult members. Its registration is very simple and can be done without much legal formalities.
2. Open Membership- Membership in a cooperative organization is open to all people having a common interest. A person can become a member at any time he likes and can leave the society at any time by returning his shares, without affecting its continuity.
3. Democratic Management- A cooperative society is managed in a democratic manner. It is based on the principle of ‘one man one vote’. All members have equal rights and can have a voice in its management.
4. Limited Liability- The liability of the members of a co-operative society is limited to the extent of capital contributed by them. They do not have to bear personal liability for the debts of the society.
5. Stability- A co-operative society has a separate legal existence. It is not affected by the death, insolvency, lunacy or permanent incapacity of any of its members. It has a fairly stable life and continues to exist for a long period.
6. Economical Operations- The operation of a cooperative society is quite economical due to elimination of middlemen and the voluntary services provided by its members.
7. Government Patronage- Government gives all kinds of help to co-operatives, such as loans at lower rates of interest and relief in taxation.
8. Low Management Cost- Some of the expenses of the management are saved by the voluntary services rendered by the members. They take active interest in the working of the society. So, the society is not required to spend large amount on managerial personnel.
9. Mutual Co-Operation- Cooperative societies promote the spirit of mutual understanding, self-help and self-government. They save weaker sections of the society from exploitation by the rich. The underlying principle of co-operation is “self-help through mutual help.”
10. No Speculation- The share is always open to new members. The shares of co­operative society are not sold at the rates higher than their par values. Hence, it is free from evils of speculation in share values.
11. Economic Advantages- Cooperative societies provide loans for productive purposes and financial assistance to farmers and other lower income earning people.
12. Reduced Taxes- While in any other traditional corporation will be taxed twice on their net earnings as well as individual dividends. In a business co-op, the members are not taxed on the individual dividends and are only taxed once. This reduced the burden of taxes compared to other business structures.
13. Stable Structure- A co-operative has a separate legal existence which is not affected by any activities such as death, insolvency, lunacy or permanent incapacity of any of its members. It continues to exist and grow for a long period.
14. Free from Speculation- Since the shares of the business are always open to new members, they cannot be sold at higher or lower rates than the par values. Therefore, it leads the business co-operative to be free from the speculation in share values.
15. Low Cost of Operations- Since the employees are the owners of the business, they are motivated to keep the cost of products, services, manufacturing, packaging, delivering or any other operation as low as possible. By leveraging their large size, they are able to obtain the products at an overall lower cost from suppliers.