Dinn, Hochman & Potter, LLC

The difference between a partnership and joint venture

Ohio residents who are planning a new business venture may want to consider whether a partnership agreement or a joint venture agreement is appropriate. The main difference between the two types of partnerships is the length of time the partners expect to be engaged in business with one another. This is something that is usually determined during the business planning stage.

In other words, a joint venture is the appropriate choice for short-term ventures and partnerships are the best choice for long-term business ventures. In most cases, the lifespan of a joint venture is between five and seven years. Once the project is completed, the joint venture is dissolved. However, the joint venture is structured, the partners share the costs, risks and profits equally. A partnership is the appropriate choice for an enduring venture that is not expected to end.

Whether a new venture is structured as a joint venture or a partnership, it is important to create a partnership or joint venture agreement. A joint venture agreement spells out the responsibilities of each partner, what each partner will be contributing to the venture and other important details. In a similar fashion, a partnership agreement details how much capital each partner will contribute to the business, how decisions will be made and how the business should be dissolved.

If there is ever a serious disagreement between the partners, the original partnership agreement or joint venture agreement might provide guidance for the dissolution of the partnership. A lawyer might evaluate a new business partnership or joint venture to determine how the agreement should be written. In addition, a lawyer might review and existing agreement to make certain that a partner's interests are being protected.

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