Many people use joint ventures (JVs) and partnerships interchangeably although they are legally and commercially different. If used wisely, JVs can be an excellent ways for small businesses to realise greater profits as well as bigger opportunities. An example of a joint venture is something as simple as five families coming together and organising a big garage sale. By pooling their resources together, they can reach more people and attract a bigger crowd than if they did it alone. Therefore a joint venture (from now on, it will be referred to as a JV) can be described as
“A contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking. All parties agree to share in the profits and losses of the enterprise.”
(http://www.investorwords.com/2671/joint_venture.html)
Although it sound like a partnership, it is not. There is one fundamental difference. That is, those involved in a partnership are agreeing to run a business in common (together) whilst those in a JV are together for a particular enterprise/project. Those involved in a JV are not signing over any ownership rights to others, they retain their own property and rights pertaining to that property.
Taxwise, there are advantages to having a JV. If you are part of a JV, you will get a share of the profits whic will be taxed according to the structure of your business and not the others. So if you are a sole trader, you will be taxed as per your country’s/area’s tax codes and regulations and will not be governed by how the others’ businesses are run and taxed.
Well how do I started forming a joint venture?
The first thing that you need to do is to decide what you what you want to achieve by forming a JV. Be as specific as possible.
After you have done this, research and find out likeminded people and companies. Look in your family, your collegues, your friends and business associates. Make sure you seek any legal help when doing this to reduce any problems later on. Who knows? Whilst doing so, you may come across another idea that could benefit from a joint venture. Go for it and always be thinking outside the box.
For a sample Joint Venture Agreement, see http://www.scopulus.co.uk/legaldocs/Joint%20Venture%20Agreement.pdf or http://www.lawdepot.co.uk/contracts/joint-venture-agreement/?pid=googleppc-gjtvtr_gb-content_a-c-ggkey_joint%20venture%20partnership&&s_kwcid=ContentNetwork|645658163 in which you could enter the details and it will write it for you!
Take care and God Bless readers…
