Whether you’re preparing to launch a business or have been in operation for a while, you may have considered the benefits of joining forces with other entrepreneurs. If so, you will have the option of entering into a joint venture or a partnership. Many people make the mistake of believing these terms are interchangeable; however, while they share several similar attributes, they fall under two separate categories of business law that will impact your company in varying ways. The guide below helps explain their differences so you can decide which is right for your situation. 

What Are the Key Differences Between a Joint Venture & Partnership? 

Formation

In joint ventures, two or more business owners or organizations come together to work on a specific project or idea. Under this kind of agreement, all parties continue to run their operations independently of one another aside from the project they are pursuing jointly. In contrast, partnerships are an agreement between two individuals who are developing a permanent business relationship in which daily operations are not run separately. 

Taxes 

The IRS expects each party in a partnership to pay taxes on their profits, but business expenses may be deducted first. This helps to reduce each partner’s tax obligations. Joint ventures can either be taxed in the same manner or as a corporation. When taxed as a corporation, they become subject to double taxation under business law. 

Liability 

Those involved in a partnership are generally equally liable for their own actions, the actions of other partners, and the actions of employees. On the other hand, when a joint venture is treated as a corporation or LLC, business laws typically only hold the members liable to the extent of their investment or interest. 

If you are thinking about forming a joint venture or partnership, it’s in your best interest to consult a business law attorney. Having served the community of Wahoo, NE, for more than a century, the team at The Law Offices of Bromm, Lindahl, Freeman-Caddy & Lausterer has been entrusted to counsel numerous entrepreneurs on big decisions such as this. Their experts can explore your options and offer advice about which alliance will help you to reach your goals. Call (402) 443-3225 to schedule a consultation or visit them online for more information on the services they provide.