In the business world in Washington state, you sometimes need to collaborate with others to achieve specific goals. Two of these circumstances include the formation of a business partnership and that of a joint venture. However, these two things are not always synonymous. They are, in fact, quite often very distinct and come with different rules and regulations for their operation.
A joint venture, in most circumstances, can be thought of as a collaborative action taken between two distinct businesses for their combined benefit. Their resources are combined to accomplish a specific task that would be difficult or impossible without the other business’s help. Examples of a joint venture:
Alternatively, a business partnership is quite different even if a partnership can be thought of as a joint venture in a way. Instead, a partnership is not simply two business entities coming together for a joint project for shared benefit. Instead, it is a formal arrangement between two or more parties to run a business together and share directly in its profits or losses.
The largest legal difference that separates the two is the fact that the two parties in a joint venture are typically separate business entities while the parties in a partnership are conceptualized as the same business entity. The parties in a joint venture have no responsibility to each other beyond the terms of a specific contract. Partners, however, are legally responsible for things like business losses or liabilities even if one partner is more responsible than the others. After all, they are considered a single business much like a sole proprietorship. While disputes between partners may arise, they are still considered the same legal entity until the partnership is dissolved through a buy-out or other means.
Both joint ventures and partnerships do include business collaboration among parties. However, the similarities usually end there.