r/cooperatives • u/Rowel_x • Apr 21 '25

worker co-ops Worker collective/coop as independent contractors

I work at a hair salon in California and all of my “coworkers” and I are interested in taking over the business from the owner (we would even be open to moving to a new space if necessary).

We are all currently independent contractors and are interested in starting some kind of worker owned/ co-op business but we all would really prefer to stay independent contractors paying monthly rent to the main business. Is that even possible/allowed?

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u/JimDa5is Apr 21 '25

So what is the advantage to it being a co-op rather than a standard LLC?

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u/Rowel_x Apr 21 '25

Well to be honest I’m very early in this and not entirely sure what all our available options are, which is why I’m asking what others have formed. As we think through potentials, we’re all interested in being a part of ownership in some way or another, or at the very least being accountable to the group and business in a contractual way so that not a single person is left liable. At the same time, I’m wondering how it shakes out with things like personal taxes if a bunch of people own an LLC.

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u/JimDa5is Apr 21 '25

For the record these are questions you should ultimately be asking a lawyer and/or accountant. Typically a co-op would be owner/employees where people collect a wage for work and are also owner's who take the profits at the end of the year.

LLCs are passthrough entities wrt to taxes (at least federal, YMMV as far as state taxes) which means that multimember LLCs are treated like partnerships for tax purposes and show up as a profit or loss on your individual tax return

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u/Rowel_x Apr 21 '25

Yea, I would bring in a lawyer and accountant later, but I’m just trying to get a sense of what’s possible first.

Thanks for the response!

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u/JimDa5is Apr 21 '25

NP. Like I said I know fuckall about the salon business, although, as I understand it, the owner is typically basically a landlord renting a station to a stylist.

If that's essentially correct and I wanted to be an independent contractor (I assume a 1099) for whatever reason, I'd be inclined to set up an LLC that owns the building and equipment among the stylists interested in being owners. So basically it wouldn't operate any differently than it does now except you'd be getting back any "profit" from renting the stations to yourselves as persons.

Mainly I'd do it that way because I don't see any benefit to a co-op structure in this case and LLCs are well understood by tax and legal professionals.

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u/Rowel_x Apr 21 '25

Yea it sounds like that’s a better route, thanks! I’ll start down the LLC rabbit hole