What is a Joint Venture?

When starting your business, it is extremely easy to feel utterly overwhelmed at the sight of all of the legal documents and options that are available to you. Instead of getting confused and frustrated, allow the professionals to help you make the best decisions you can make for your company by explaining the options with no-nonsense language and drafting the contracts to allow these deals to stay that way. Here is one example of a business option, it is called a joint venture and here is what it does.

A joint venture is a legal organization that takes the form of a short term partnership in which the persons jointly undertake a transaction for mutual profit. Generally each person contributes assets and share risks. Like a partnership, joint ventures can involve any type of business transaction and the “persons” involved can be individuals, groups of individuals, companies, or corporations.

Joint ventures are also widely used by companies to gain entrance into foreign markets. Foreign companies form joint ventures with domestic companies already present in markets the foreign companies would like to enter. The foreign companies generally bring new technologies and business practices into the joint venture, while the domestic companies already have the relationships and requisite governmental documents within the country along with being entrenched in the domestic industry.

In the United States, joint ventures are governed bystate PartnershipContracts, and Commercial Transactions law. A joint venture is also treated like a partnership for Federal Income Tax purposes. A joint venture corporation involves the same type of activity as above but within a corporate framework. Foreign joint ventures are subject to the international trade laws and the laws within the foreign countries.

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