Draw an accounting fence around the 100% employee-owned coop. Any losses could only come from capital invested or retained earnings (losses to the employees) or from bad credit extended to the coop. It’s true that the latter represents an opportunity for there to be losses that don’t hit the employee owners, but that’s typically only after the company is wiped out, so it’s a “good news, bad news, but mostly bad news” situation if being an LLC is coming into play.
For an on-going operating company, 100% of the gains and losses accrue to the owners (employees in the case of a 100% employee-owned entity). That’s working as intended/designed/desired.
I mean, the point is that the difference between working for a company and being part owner of a co-op is the difference between you still earning the same salary or you earning nothing and owing creditors.
When a company is healthy it is able to pay salaries to employees and profit to owners. When it's bankrupt is paying 0 salaries and 0 dividends.
When it's in trouble, a company will have to choose who to sacrifice: firing employees or cutting dividends. The priority of privately owned companies is to maximize value for the shareholders. They are more important than employees, by design.
In a coop workers and owners are the same people so they are the first priority, that's all.
Statistics show very clearly that coops have a higher survival rate.
> you earning nothing and owing creditors
Once again, no, as an owner of a limited company going bankrupt you don't owe to creditors.
Oh, you can owe money you personally guaranteed. You're also jointly and severally liable in a general partnership. LLCs are nice in that you can have the tax benefits of a partnership and the liability protection of a corporation if set up correctly. This 'corporate veil's only puts the value of the money that you put into the corporation at risk i.e. the value of your investment. However, certain actions could 'pierce' the corporate veil if the LLC is setup incorrectly or if certain conditions are met.
From an accounting standpoint, GAAP doesn't much care if you're a private company with shareholders or if you're a private company with employee-owners. There are tax nuances and accounting for equity differences, but the books are mostly the same animal.
The only difference is in who the owners are. Pretty simple.
Just like any other companies they can be profitable or unprofitable or even go bankrupt and shut down.
If a limited liability company goes bankrupt nobody is going to take your house. That's the whole point.
That means you would lose your invested capital (as it should be), but you are not being hit by 100% of the losses.