What is an Employee Owned Cooperative?

Employee Owned Cooperatives are businesses directly owned and governed by its employees.  Small co-ops might operate as a direct democracy, while larger businesses generally operate as a representative democracy. Yearly profit is distributed to owners based on proportional hours or time invested.

SYSTEM INTEGRATORS, an employee owned cooperative

Who it’s for

Employee Owned Cooperatives are best for:

  • Small to mid-sized businesses with participatory culture

  • Yearly profit sharing with tax perks

  • Owners willing to sell 51% or more of the business to employees

How it works

  • Employees who meet eligibility requirements can buy a membership share

  • Yearly profits distributed based on proportional labor

  • Representative Board elected by worker-owners

The Benefits

OWNER Benefits

  • Capital gains can be indefinitely deferred

Employee Benefits

  • Employees receive annual dividends, based on proportional contributions

  • Execs manage day to day operations

  • Employees can vote on board elections and strategic questions

  • Affordable buy-in

Dive deeper into Employee Ownership

COST

  • $10k- $30k legal fee

  • Allows the selling owner to indefinitely defer capital gains taxes, if at least 30% of the company is sold to employees

  • Company can reduce/avoid paying federal corporate income tax on all income generated by owners

tax perks

mISCONCEPTIONS

  • The term “co-op” can scare people and implies a lack of traditional management.  However the vast majority of cooperatively owned companies have hierarchical management and executive oversight.

  • Not all employees need to be owners; the co-op can continue to have employees.

Interested in transitioning to Employee Ownership?

Fill out the form to get on the waitlist for our next cohort