A joint venture (JV) is a partnership formed by two or more persons or business entities (such as corporations or limited liability companies) for the purpose of completing a single project. JV partners share profits and losses and each partner has some control in how the project is accomplished.
Joint ventures benefit partners when each adds an important piece to the project puzzle. Before you invite someone to become a JV partner, consider if something of value is really being brought to the table that can’t be obtained by less expensive means such as outsourcing to third parties.
You should also consider the potential legal liabilities that can be incurred by the actions of your JV partners on behalf of the joint venture. This is particularly important if you are a partner as an individual (personal liability) instead of having your corporation or limited liability company serve as JV partner.
Weigh the business pros and cons (risk versus reward) and run the proposed JV by your lawyer before agreeing to form the venture.