How to Start a Co-operative
Starting a co-op takes time and careful planning — but the process itself is a demonstration of the democratic values your organisation will carry forward.
Research & Form Your Group
Start by building a founding group of people who share your vision. Research existing co-ops in your sector, understand the market gap you will fill, and start drafting a clear purpose. Use this phase to build relationships and agreement on your core values.
Choose Your Legal Structure
The legal structure you choose affects everything from how you register, to tax treatment, to governance. The most common for new co-ops is an Industrial and Provident Society (IPS). Other options include Company Limited by Guarantee (CLG), Community Interest Company (CIC), or Scottish Charitable Incorporated Organisation (SCIO) for Scottish groups.
Draft Your Rules
Your rules are your constitution — they define how the co-op is governed, who can be a member, how decisions are made, and how surplus is distributed. You can use FCA model rules or draft bespoke rules with legal advice. The rules must comply with the Co-operative Principles.
Register Your Co-operative
Register your co-op with the appropriate body: the FCA's Mutuals Register for IPS societies (including credit unions), Companies House for companies, or the Scottish Charity Regulator (OSCR) for SCIOs. Registration formally establishes your co-operative with legal personality.
Raise Finance
Co-ops can raise money from members (share capital or membership fees), from community share offers, from ethical lenders like the Co-op Bank or Unity Trust Bank, or from grant-giving bodies like Power to Change, Plunkett Foundation, or local authorities.
Set Up Governance & Operations
With your co-op registered, hold your first members meeting to elect a board, adopt policies, and appoint a manager if needed. Establish your bank account, agree your service or product offering, and prepare to open your doors.
Launch & Grow
Launch to your first members, start trading, and begin the rhythm of democratic governance — regular board meetings, member AGMs, and ongoing communication. The first year is about proving your model and building membership.
Choosing Your Structure
Your legal structure affects registration, tax, governance, and the ability to raise finance. Choose carefully.
Industrial & Provident Society (IPS)
The classic co-operative structure. Registered with FCA. Members have equal voting rights. Surplus can be distributed to members.
Best for: Most types of co-op — the default co-op legal form.
Company Limited by Guarantee (CLG)
A company structure used by some co-ops, especially those with non-trading purposes. Members act as guarantors rather than shareholders.
Best for: Charitable co-ops and some social enterprises.
Community Interest Company (CIC)
A company designed for social enterprises. Has an "asset lock" preventing profits being extracted. Not strictly a co-operative but often used for social co-ops.
Best for: Social enterprises wanting an asset lock and community focus.
Scottish Charitable Incorporated Organisation (SCIO)
Scotland-only charity structure with co-operative governance built in. Registered with OSCR.
Best for: Charitable co-ops operating in Scotland.
Ready to add your co-op to the directory?
Once your co-operative is registered, add it to coops.uk so others can find and connect with you.