Cooperative vs. Partnership: Know the Difference
By Shumaila Saeed || Updated on December 25, 2023
Cooperative is an organization owned and operated by a group of individuals for their mutual benefit. Partnership is a business entity in which two or more individuals share ownership and responsibilities.
Key Differences
A cooperative is a collectively owned and democratically managed organization. In contrast, a partnership involves individual partners who share ownership and management responsibilities, often based on their contribution.
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Profits in a cooperative are distributed among members based on usage or investment, emphasizing equality. In a partnership, profits are typically divided among partners according to their agreement or investment ratio.
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Decision-making in a cooperative is usually based on the principle of one member, one vote, promoting equal participation. However, in a partnership, decisions are often made based on the level of investment or agreement among partners.
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The purpose of a cooperative is to serve the mutual benefits of its members, often prioritizing community and member needs over profit. A partnership focuses more on achieving business goals and profitability.
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Cooperatives have a distinct legal structure that varies by region, often providing limited liability to members. Partnerships, especially general partnerships, can expose partners to more personal liability.
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Comparison Chart
Ownership Structure
Collectively owned by members
Owned by two or more individuals
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Profit Sharing
Based on usage or investment, emphasizes equality
Divided according to agreement or investment ratio
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Decision-Making
Democratic, often one member, one vote
Based on level of investment or mutual agreement
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Primary Objective
Serve member needs, community focus
Business profitability and goals
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Legal Liability
Often limited liability for members
Can involve personal liability for partners
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Cooperative and Partnership Definitions
Cooperative
A democratically governed entity emphasizing member participation.
The artist's cooperative jointly operates a gallery and studio space.
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Partnership
An alliance where partners contribute capital, skills, and labor.
The partnership thrived due to their complementary skills.
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Cooperative
An organization where members democratically control decisions.
The housing cooperative voted on new community guidelines.
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Partnership
A collaborative business venture with shared risks and profits.
They entered into a partnership to develop innovative technologies.
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Cooperative
A group enterprise focused on serving the needs of its members.
She joined a cooperative bank that offered better loan rates.
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Partnership
A legal arrangement between individuals to jointly conduct business.
Their law firm operates as a partnership.
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Cooperative
An enterprise where profits are distributed among members equitably.
Profits from the cooperative's sales are shared among all members.
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Partnership
A business entity in which two or more co-owners contribute resources, share in profits and losses, and are individually liable for the entity's actions.
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Cooperative
Marked by willingness to cooperate; compliant
A cooperative patient.
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Cooperative
Of, relating to, or formed as an enterprise or organization jointly owned or managed by those who use its facilities or services
A cooperative department store.
Cooperative apartment buildings.
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Partnership
A relationship between individuals or groups that is characterized by mutual cooperation and responsibility, as for the achievement of a specified goal
Neighborhood groups formed a partnership to fight crime.
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Cooperative
An enterprise or organization that is owned or managed jointly by those who use its facilities or services.
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Cooperative
A building or complex in which the residents buy shares of stock in a building corporation and are given a lease to a specific apartment.
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Partnership
An association of two or more people to conduct a business
Forge a partnership
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Partnership
(cricket) The period when two specific batsmen are batting, from the fall of one wicket until the fall of the next; the number of runs scored during this period,
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Cooperative
Ready to work with another person or in a team; ready to cooperate.
The patient was rarely cooperative, and tended to refuse treatment.
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Partnership
The state or condition of being a partner; as, to be in partnership with another; to have partnership in the fortunes of a family or a state.
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Cooperative
Involving cooperation between individuals or parties.
A cooperative game
A cooperative business enterprise
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Partnership
A division or sharing among partners; joint possession or interest.
Rome, that ne'er knew three lordly heads before,First fell by fatal partnership of power.
He does possession keep,And is too wise to hazard partnership.
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Partnership
An alliance or association of persons for the prosecution of an undertaking or a business on joint account; a company; a firm; a house; as, to form a partnership.
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Cooperative
A type of company that is owned partially or wholly by its employees, customers or tenants.
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Partnership
A contract between two or more competent persons for joining together their money, goods, labor, and skill, or any or all of them, under an understanding that there shall be a communion of profit between them, and for the purpose of carrying on a legal trade, business, or adventure.
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Cooperative
A jointly owned commercial enterprise (usually organized by farmers or consumers) that produces and distributes goods and services and is run for the benefit of its owners
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Partnership
A contract between two or more persons who agree to pool talent and money and share profits or losses
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Cooperative
An association formed and operated for the benefit of those using it
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Partnership
A business entity where two or more people share ownership and management.
They formed a partnership to open a new restaurant.
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Cooperative
Involving the joint activity of two or more;
The attack was met by the combined strength of two divisions
Concerted action
The conjunct influence of fire and strong dring
The conjunctive focus of political opposition
A cooperative effort
A united effort
Joint military activities
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Partnership
An agreement between parties to pursue shared business objectives.
The partnership agreement outlined their respective roles and responsibilities.
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Cooperative
Done with or working with others for a common purpose or benefit;
A cooperative effort
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Cooperative
A business owned and operated by its members for mutual benefit.
The local food cooperative sources produce from regional farmers.
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Repeatedly Asked Queries
What is the main purpose of a cooperative?
To serve the mutual benefits and needs of its members.
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Can anyone join a cooperative?
Membership in a cooperative is often open to those willing to accept the responsibilities of membership.
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How does a partnership divide profits?
Profits in a partnership are divided according to the partnership agreement or investment ratio.
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Who makes decisions in a cooperative?
Decisions in a cooperative are made democratically, often based on a one member, one vote principle.
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How are cooperatives funded?
Cooperatives are funded through member contributions, loans, or investments.
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What is a limited liability partnership (LLP)?
An LLP is a partnership where some or all partners have limited liabilities, protecting them from certain risks.
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Can partnerships have employees?
Yes, partnerships can hire employees to work in the business.
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Can a cooperative be for-profit?
Yes, a cooperative can be for-profit, but profits are distributed among members.
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What are the types of partnerships?
Common types include general partnerships, limited partnerships, and limited liability partnerships.
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What makes a cooperative different from a regular business?
Cooperatives prioritize member needs and democratic management, unlike profit-focused regular businesses.
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How are decisions made in a partnership?
Decisions are typically made based on the partnership agreement, often requiring mutual consent.
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What is the role of members in a cooperative?
Members participate in decision-making and can benefit from the cooperative's services.
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How is a partnership formed?
A partnership is formed through an agreement between two or more individuals to conduct business together.
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What is the liability for partners in a partnership?
Partners can face personal liability, depending on the type of partnership.
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Are cooperatives common in certain industries?
Yes, cooperatives are common in agriculture, retail, housing, and banking.
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What are the risks of joining a cooperative?
Risks include financial loss if the cooperative fails or underperforms.
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Can a cooperative convert into a different business structure?
Yes, a cooperative can convert into another business structure, but this process varies by jurisdiction.
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Do cooperatives pay taxes?
Tax treatment of cooperatives varies by region and type; some are tax-exempt, while others are not.
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What happens if a partner wants to leave the partnership?
The partnership agreement usually outlines the process for a partner's exit.
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Is it easier to get financing for a partnership or a cooperative?
It depends on the business plan and creditworthiness; partnerships might have more traditional financing routes.
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Nov 18, 2023
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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