Artists often want to form a business organization to sell their products. Lawyer often suggest a cooperative as a business entity. There are advantages of a cooperative over the usual methods of doing business such as sole proprietorship, partnership, or incorporation, and you need to know a bit about why.

Most cooperatives (co-ops) end up incorporating for the same reasons people form ordinary corporations, reasons such as liability limitation and autonomy. Co-ops have a policy-making board of directors, they write bylaws, and have all the legal and financial trappings of ordinary corporations. The differences are in the way the profits are divided, the purpose of the co-op, and how it is owned and controlled. Here are some ideas:

PURPOSE
There are three broad categories of co-ops: Purchasing, Servicing, and Marketing.

1. Purchasing co-ops are designed to purchase goods for the benefit of the members. An example would be a food co-op where the members purchase groceries at substantial savings from regular supermarket prices.
2. Servicing co-ops are developed to deliver services such as: electricity, gas, water, or some other communal service to members.
3. Marketing co-ops usually market and sell the member's products or services to others. This is the most used type contemplated by artists.

OWNERSHIP AND CONTROL
Co-ops are owned by the members, usually one share to each member with one vote per share. An elected board of directors hires a manager to make day to day decisions with ultimate control by vote of the membership.

Members are often required to share operating costs or perform in-lieu services such as spending a specified number of hours per week performing tasks of cleaning, decorating, stocking, and selling.

DIVISION OF PROFITS (AND SHARING OF LOSSES)
The point of a co-op is to not generate profits, but to serve the interests of the members. Money generated over that needed to operate the co-op is returned to the members. This serves the additional purpose of keeping the cost of entry into the co-op low. If there is a loss due to operations, members share the burden.

MAOR BENEFITS
Members gain because they receive lower cost of service from a service co-op, less expensive goods from a purchase co-op, and they receive their price from sales through a marketing co-op. If you are looking for a vehicle to sell your art, music, sculpture, or whatevers, a co-op may be the best thing for you.