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A cooperative-owned business offers a distinct advantage over sole proprietorships in terms of liability. In a cooperative, liability is typically limited to the amount each member has invested in the business. This means that if the cooperative faces financial difficulties and incurs debts, the individual members are shielded from personal responsibility beyond their initial investment. Unlike sole traders who risk personal bankruptcy and may need to sell personal assets to settle business debts, cooperative members enjoy a level of legal protection that ensures their personal assets remain separate from the cooperative's financial obligations. Cooperative ownership is commonly found in various sectors, from agriculture and housing to retail and worker cooperatives, offering a collaborative approach to business that mitigates individual financial risk.

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