A joint venture agreement is a partnership between two or more companies to undertake a business venture together. It forms its own corporation, limited liability company or partnership specifically for the joint venture. This allows the companies to have separate legal status while working together. Each Venturer receives the profits and is responsible for the losses of the joint venture.
Joint venture agreements can be short term or long term depending on the nature of the agreement. While similar to a partnership, joint ventures are not partnerships because they involve companies instead of individuals.
You need a joint venture agreement (see below) so that the terms are legally documented and your legal interests are protected throughout the partnership.
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Why Form a Joint Venture?
There are multiple reasons companies would want to form a joint venture. Many times it has to do with either company having something the other desires to advance their business. One person may have a large customer list and another person may want to market a product to that list. Drug companies (i.e. Pfizer) commonly form joint ventures.
Another common joint venture is in real estate. Two or more companies may form a joint venture to handle the building of a new section of property. One may specialize in financing and the legal side of the property, while the others focus on the contractor work itself and managing the construction site. This allows all of the companies to make best use of their expertise while coming out ahead together.
Combing resources and entering new markets are other common reasons to enter a joint venture.
Joint Venture Form Template
Below is an excerpt of a Joint Venture Template. If this is what you are looking for, checkout is below. All transactions go through PayPal, I never have access to your credit card information.
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JOINT VENTURE AGREEMENT
| DATE: | XX/XX/XXXX |
| PARTIES: | Company 1, a corporation organized under the laws of the state of STATE (“Company 1”) |
| Company 2, a corporation organized under the laws of the state of STATE (“Company 2”) |
SECTION 1. FORMATION OF JOINT VENTURE
1. Organization. Company 1 and Company 2 (the “Joint Venturers”) agree to form a joint venture (the “Joint Venture”) on the terms and conditions set forth in this agreement.
2. Name. The name of the Joint Venture will be NAME.
3. Place of Business. The principal office of the Joint Venture will be at ADDRESS.
4. Term. The term of the Joint Venture will commence on the date of this agreement and will terminate on xx/xx/xxxx unless terminated earlier under the provisions of this agreement.
5. Purpose. The purpose of the Joint Venture is to (STATE PURPOSE.)
6. Assets. Title to assets of the Joint Venture will be held in the name of the Joint Venture and, except as otherwise provided in this agreement, no Joint Venturer has any right to those assets or any ownership interest in them except indirectly as a result of the Joint Venturer’s ownership of an interest in the Joint Venture. Assets of the Joint Venture may not be commingled with those of a Joint Venturer or any other person. Assets belonging to a Joint Venturer that have not been transferred to the Joint Venture will remain the assets of the Joint Venturer and will not be considered assets of the Joint Venture despite the fact the Joint Venturer uses the assets in performing its obligations under this agreement.
7. Capital Contributions and Percentage of Interests. Each of the Joint Venturers agrees to contribute $XXto the Joint Venture. Company 1 will contribute this amount in (cash, transferred property, etc.) Company 2 will (same format.) (See Note below if transferred assets and insert here.) The contributions of both Joint Venturers must be made promptly following the signing of this agreement.
Tax Preparation
If you need taxes prepared next year for your new venture or personally, email me (ValdostaCPA at Yahoo dot Com) for a specific quote. A Joint Venture will most likely be on a Form 1065 or 1120. My cost starts at $750 for those forms, but most businesses will be less than $1,600.
