When starting a business, you must Choose a Legal Structure. Traditionally, farm businesses have been sole proprietorships. However, when starting a value-added business, there is usually more than one owner. Cooperatives have been a popular form for value-added businesses, especially what has become known as the New Generation Cooperative. More recently Limited Liability Companies have been used. You must navigate through the maze of characteristics of these forms of organizational structure to find the one best for you.

The cooperative has been a common method of legal organization when farmers band together to start a business. Below are a series of articles on cooperative issues:

• Legal Framework of Cooperative Development
• Do Cooperatives Create Value?
• Renewable Energy: Trends in Finance and Business Structure
• Conversions and Restructurings of Cooperatives
  
• A Question of Value Proposition and Capital Structure in Search of a More Satisfying Approach
• The Changing Boardroom for Cooperatives

For more information on this topic, see the links listed below of articles posted on related Web sites

Types of Legal Organization

• Business Entity Planning – Texas A & M University Extension -- Help for choosing the property business structure for your situation.
  
• Important Farm Business Terms Defined – Business Structures – Kansas State University Extension -- Describes sole proprietorship, general and limited partnerships, corporations and limited liability companies as structures
  
• Types of Ownership Structure - NOLO Law for All -- Learn about the various types of legal structures available for your business: corporation, LLC, partnership and sole proprietorship.
  
• Business Enterprises FAQ – Lawyers.com -- questions and answers about business structures.
  

Sole Proprietorship

• Sole Proprietorships - NOLO Law for All -- If you're starting and running a business by yourself, you'll be a sole proprietor unless you form a corporation or an LLC.
  
• Sole Proprietorship– Lawyers.com -- The sole proprietorship is the simplest and most common form of business, conducted by a single individual owner (the “sole proprietor”).

Partnerships

• Partnerships - NOLO Law for All -- Running your co-owned small business as a partnership is often simpler and less expensive than incorporating or forming an LLC.
  
• Partnerships and Joint Ventures – Lawyers.com -- A partnership is an arrangement involving two or more persons who have agreed to undertake a business venture as co-owners, with the intent to make a profit.

Corporations

• Corporations - NOLO Law for All -- If you're looking for protection from personal liability for business debts and a more formal legal structure for your business, you might want to form a corporation.
  
• Corporations – Lawyers.com -- A corporation is a legal entity wholly separate and apart from its owners (the shareholders or "stockholders").
  
• Checklist: Corporate Formalities – Lawyers.com -- To protect corporate representatives and shareholders, directors and officers should be aware of the following obligations.

Limited Liability Companies

• Limited Liability Company - NOLO Law for All --  A recent addition to the world of business legal structures, limited liability companies (LLCs) combine some of the best attributes of corporations and partnerships, including limited personal liability and one-level of taxation.
  
• Limited Liability Company – Lawyers.com -- A limited liability company ("LLC") is as a legal entity that is a hybrid between a partnership and a corporation.

Cooperatives

• New Generation Cooperatives: What, Why, Where, and How – Purdue University Extension -- As producers respond to the changing environment, a common organizational form they are using is the new generation cooperative.
  
• Keys to Success for Rural Grocery Cooperatives – University of Wisconsin -- What factors contribute to the success or failure of a rural grocery cooperative?
  
• How to Organize a Cooperative, Cooperatives Principles and Legal Foundations - USDA -- This guide outlines the process of organizing and financing a cooperative business.
  
• Legal and Policy Considerations of Investor-Friendly Cooperatives - The National Agricultural Law Center -- Farmers and rural communities have looked to the cooperative model for over 150 years as an organizing principle for decision making, profit sharing and education.
  
• What is a New Generation Cooperative (NGC)? - Missouri Agriculture Innovation Center -- A new generation cooperatives is a type of cooperative used primarily in the processing of agricultural commodities.
  
• A Cooperative Without Corporate Tax Restrictions: The Wyoming Processing Cooperative Law -Lindquist & Vennum P.L.L.P., Minneapolis, Minnesota -- While most cooperatives have incorporated as "corporate" cooperatives, Wyoming has enacted the Wyoming processing cooperative law, which allows cooperatives to be organized on a pass-through basis similar to a limited liability company.
  
• Differences Between New Generation Cooperatives and Traditional Cooperatives - Arthur Capper Cooperative Center, Kansas State University -- Both traditional cooperatives and new generation cooperatives are a form of vertical integration with similar objectives. However, they are very different in the way they manage the marketing and finance business functions.
  
• Agricultural Cooperatives as Effective Marketers of Value-Added Products – Center for Cooperatives, University of California -- Capital requirements and funding, strategic planning, reorientation of corporate culture and managerial requirements.
  
• The Role of Bargaining Cooperatives in a Global Market Economy – Center for Cooperatives, University of California -- The forces of globalization, industrialization, consumerism, environmentalism and technology have resulted in an internationalization of the food and fiber economy and markets.
  
• Co-ops: What Farmers Think! – Center for Cooperatives, University of California -- A survey of producers' attitudes and expectations about cooperatives as they compete in a rapidly changing environment.

New Generation Cooperatives

• What is a New Generation Cooperative (NGC)? - Missouri Agriculture Innovation Center -- A new generation cooperatives is a type of cooperative used primarily in the processing of agricultural commodities.
  
• New Generation Cooperatives: What, Why, Where, and How – Purdue University Extension -- As producers respond to the changing environment, a common organizational form they are using is the new generation cooperative.
  
• New Generation Cooperatives - 10 Things You Need to Know – Ropin’ the Web, Alberta Government -- A New Generation Co-op (NGC) is a form of business arrangement that encourages agricultural producers and processors to expand the scope of their businesses.
  
• Differences Between New Generation Cooperatives and Traditional Cooperatives - Arthur Capper Cooperative Center, Kansas State University -- Both traditional cooperatives and new generation cooperatives are a form of vertical integration with similar objectives. However, they are very different in the way they manage the marketing and finance business functions.

Strategic Alliances

• Strategic Business Alliances FAQs - Lawyers.com -- A strategic alliance can be defined generally as an arrangement between two or more companies to pursue a common business objective.
  
• Strategic Alliances – Small Business Notes -- One of the fastest growing trends for business today is the increasing number of strategic alliances.
  
• How to Set Up a Strategic Alliance – Small Business Notes -- Once you have made the decision to form an alliance, you need to establish what the factors are that you are looking for in that alliance.
  
• Do You Really have an Alliance Strategy? – AllianceStrategy.com -- An alliance without a coherent strategy behind it is doomed to fail.

Other Structures

• The Farmer’s Legal Guide to Producer Marketing Associations – National Ag Law Center -- Business Fundamentals and Marketing, Joint Producer Marketing Enterprises, Legal Business Organizations, Financing, Risk Management, Contract Law, Federal Laws Regulating Agricultural Sales.
  
• Nonprofit Corporations – Lawyers.com -- The term “nonprofit” broadly refers to any organization where income and revenues aren’t shared on the basis of ownership.
  
• Nonprofit Organizations - NOLO Law for All -- A nonprofit corporation is a group of people who join together to do some activity that benefits the public, such as running a homeless shelter, an artists' performance group or a low-cost medical clinic.
  
• Limited Liability Partnership – Lawyers.com -- A limited liability partnership (“LLP”) is essentially the same thing as a limited liability company (“LLC”), except that an LLP is specifically designed for use by certain professions (for example, accountants, lawyers or architects).
  
• Franchises – Lawyers.com – A franchise is an agreement by which the franchise business (the franchisor) licenses the business operator (the franchisee) to operate a business under the name of the franchisor.

Legal Structure Comparisons

• Alternative Financial/Organizational Structures for Farm and Agribusiness Firms – Purdue University Extension -- The purpose is to provide a comprehensive listing of organizational and financing options for farm and agribusiness firms, and to explain the circumstances under which these various options are likely to be most useful.
  
• An Overview of Organizational and Ownership Options Available to Agricultural Enterprises, Parts I & II – The National Agricultural Law Center -- This two-part article provides an overview of most of the organizational choices available to persons interested in owning and operating an agricultural enterprise.
  
• Choosing the Best Ownership Structure for Your Business - NOLO Law for All -- The right structure -- corporation, LLC, partnership or sole proprietorship -- has a lot to do with who will own your business and what its activities will be.
  
• Partnerships and Joint Ventures - Lawyers.com -- A joint venture is another type of partnership, formed either for a specific, limited purpose or for a limited period of time.

Legal Structure Conversions

• The Bottom Line on the Conversion of Diamond Walnut – University of California -- Diamond Walnut voted to approve the conversion of the cooperative to stock-owner company, by merging it into a wholly owned subsidiary.