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What is a Joint Venture or JV?

What is a Joint Venture in Texas?

A joint venture is an organization formed to act as an artificial entity or artificial person to carry on or conduct business. A joint venture is a general partnership and is composed of at least two general partners (persons or organizations).  Each partner may direct and manage the business (unless limited by agreement) and each partner carries full liability for all debts and financial obligations of the business, as well as full responsibility for all errors, omissions, and negligence of the business.

Joint Venture vs. a General Partnership?

A joint venture is distinguished from a general partnership by a limited, narrowly focused business purpose and/or by a limited period of duration of operation.  The joint venture will normally be terminated upon completion of the business purpose, or upon reaching the agreed operation termination date.  A joint venture is often characterized by the type of its partners. For example, existing corporations and limited liability companies may desire to combine together to accomplish a limited goal which will benefit both organizations.  Because sophisticated parties are involved in this type  of entity, joint venture agreements can be very complex.

Ask your CPA about a Joint Venture.

Input from your certified public accountant on the choice of entity is an absolute must before the entity is organized.  Your CPA knows your tax situation, and his or her counsel more often than not dictates their preference for the choice of your entity.  I regularly assist clients in the organization of their Texas joint ventures.  The counsel of a Texas attorney is especially critical prior to forming the entity because two or more partners will own the joint venture and because of the likelihood for complexity when sophisticated parties are involved.

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