Deciding the best structure for your business or professional project will dictate how the government looks at your work. Different structures come with different financial and tax benefits, incentives, and costs.
In working with Florida businesses, we see some professionals often get partnerships and joint ventures mixed up. There are distinct differences that set the two apart. Knowing these differences will not only ensure you get the most out of this opportunity but also avoid any legal challenges down the line.
Defining Partnerships & Joint Ventures
Before we look at key differences, it’s important to have a basic understanding of what each of these is.
A “partnership” is a formal business agreement between two or more parties to oversee, manage, and operate a business for a share of its profits. A “joint venture” is a business agreement that brings together two or more parties for a specific goal or project while maintaining the independence of each party.
Goals Are Often Different
When we look at the goals each group has, we immediately recognize a distinct difference. Partnerships are often formed to fulfill long-term tasks and operations that produce long-term profits. Joint ventures, on the other hand, generally have short-term goals with the end goal not always being profits.
In a joint venture, the goal may be to develop a specific product or service that brings together the tools and skills of each party. A partnership will generally have an end goal of long-term profits which may not have a predetermined length of time. Partnerships often exist indefinitely as opposed to a specific period of time that joint ventures adhere to in some cases.
People vs. Entities
One of the key differences between partnerships and joint ventures is the actual makeup of the group. Partnerships are often legally recognized as individuals coming together to form a business entity. Joint ventures, on the other hand, can be individuals OR entities coming together – meaning two partnerships may come together for a joint venture just the same as two or more individuals may come together for one.
Sharing Profits, Losses, and Liabilities
As noted above, partnerships share profits – generally by percentage ownership in the partnership itself. Joint ventures, because they sometimes do not directly generate profits, may not have any profits to share or may lay out different rules to share profits and losses from the project itself.
Partnerships also come with liability protections when properly structured. Joint ventures, because they often lack actual contracts to establish the venture, do not frequently benefit from liability protection. This means the parties who entered the joint venture together share more risk.
Both Should Work with a Florida Business Attorney
At Bryant Taylor Law, we help businesses and professionals navigate complex matters such as this every day. We can help you determine the proper structure for your business or venture, draft contracts to secure your work, and help you navigate any growth or legal challenges along the way. You can schedule a consultation right on our website.
Bryant Taylor
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