A cooperative society is a voluntary association of persons who come together and pool their resources in order to increase their competitive advantage as well as protect their interests. Cooperatives, therefore, are a good fit for anyone who lacks sufficient resources to keep their business competitive.
Is joining a cooperative good for you? Read on to find out.
Benefits of Joining a Cooperative Society
1. Harnessing a Saving Culture
Cooperative societies aim to better the financial knowledge of members. One of the ways they achieve this is through fostering a saving culture among their members. This is based on the fundamental understanding that one cannot escape poverty if they do not have a savings habit. A person that consumes everything that they generate is always just one step away from poverty, regardless of how much they make. A saving culture, therefore, implies that irrespective of your needs and earnings, you must set something aside for the future, or invest it in supplementing your income.
Nonetheless, saving is especially challenging to low-income individuals as they tend to have more needs than their earnings can meet. Some of these individuals do attempt to save, however, since those savings are usually within their reach, it is difficult for them not to reach out for that money whenever they encounter a problem.
Cooperatives make saving easier and more effective for low-income earners as they expect these individuals to contribute a portion of their earnings each month. This is achieved through a plan where the individual’s contribution is cut from their salary before they even receive it. This way, the person gets to save regardless of their situation.
2. Facilitating Access to Loans
Cooperative societies are one of the best ways for individuals to get access to loans. These loams can either be in the form of cash or goods. This is especially relevant for low-income earners as they tend to be denied access to bank or other institutional loans due to lack of collateral. Additionally, even when they do meet the conditions for a loan, it may not be processed as promptly as they would wish.
Joining a cooperative society can help you get loans more quickly. This is because the contributions from all the members are what serve as collateral. Additionally, your fellow members are recognized as guarantors to your loan.
Another benefit of using a cooperative to access loans is that their interest rates and terms of repayment are not as suffocating as those of traditional banks. Thus, if you are looking for capital to funnel into your business, joining a cooperative society will make access to those funds a lot simpler.
3. Harnessing the Benefit of Corporate Power
There is only so much you can achieve as a sole individual. Corporate bodies are able to get a lot more done than a single person can. This is because cooperatives have more power and influence. This comes from the fact that multiple individuals pool their resources to achieve the same goal.
Additionally, cooperatives allow one to have access to that power due to their vote in the organisation. For example, if you identify a potentially lucrative opportunity, you can pitch the idea to the rest of the members and convince them of the potential advantages. You can then use the collective financial power of the cooperative to take advantage of the opportunity.
4. Tax Exemptions and Financial Grants
Cooperative societies exempt their members from income tax, up to a certain point. For example, in most cooperatives, members are usually taxed based on the earnings they receive from the cooperative society and not individually. This is typically the case for most cooperatives since they operate as non-profit organisations.
However, those that operate for profit are usually taxed like regular businesses. Nonetheless, they too can reduce their members’ exposure to taxation by paying them via patronage dividends such as refunds or discounts on services or products.
The government also regularly provides cooperatives with grants, loans, and other forms of financial assistance. If you have been thinking about joining a cooperative society, it is time to put that plan into action as it can be incredibly beneficial. Talk to us for more tips and advice.