Legal Organizational Structure

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:

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, limited liability companies (LLCs), partnership and sole proprietorship.

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 a limited liability company (LLC).
  • Sole Proprietorship– -- The sole proprietorship is the simplest and most common form of business, conducted by a single individual owner (the sole proprietor).


  • Partnerships - NOLO Law for All -- Running your co-owned small business as a partnership is often simpler and less expensive than incorporating or forming a limited liability company (LLC).
  • Partnerships and Joint Ventures – -- 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 - 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.
  • Checklist: Corporate Formalities – -- 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 – -- A limited liability company (LLC) is as a legal entity that is a hybrid between a partnership and a corporation.


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.

Strategic Alliances

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 – NOLO Law for All -- The term “nonprofit” broadly refers to any organization where income and revenues aren’t shared on the basis of ownership. Learn about your state's nonprofit corporation laws.
  • Limited Liability Partnership – -- 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 – – 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

Links checked January 2018.