ContractsCounsel Logo
Home Blog Joint Ventures Explained

Jump to Section

ContractsCounsel has assisted 91 clients with joint venture agreements and maintains a network of 99 business lawyers available daily. These lawyers collectively have 15 reviews to help you choose the best lawyer for your needs.

What Is a Joint Venture?

A joint venture, or JV, is a cooperative agreement that two or more business entities enter together. Frequently, the purpose of a joint venture is to begin a new business activity or accomplish a specific task. Each entity that is part of a joint venture must contribute assets to it and agree on how to divide expenses and income.

The joint venture often acts as its own entity, so it keeps a separate legal status from the participants and their other business interests. Entities in a joint venture may include:

  • Companies
  • Corporations
  • Individuals
  • Groups of individuals

A contract sets up a joint venture by outlining how the participants will manage the joint venture, divide control, and divide profits and losses. The contract must also outline the resources each entity will bring to the venture, including:

  • Money
  • Properties
  • Other assets

Some joint ventures involve two companies with different areas of expertise coming together to provide a new service or create a new product. Other joint ventures involve a company that wants to break into a foreign market forming a venture with another company that already has an established presence in that region.

Advantages of a Joint Venture

Some advantages of forming a joint venture include:

  • Gain expertise and insights: Each party can build on the other's knowledge of their market and processes.
  • Better resources: Parties can gain access to specialized technology and staff as well as capital and equipment for a project.
  • It can be temporary: Depending on the parties' needs, the agreement can be formed as a temporary venture.
  • Shared costs and risks: Should a project fail, the parties will share the costs.
  • Flexibility: Parties can create a joint venture with a limited lifespan. Additionally, agreements can be created to cover just a fraction of what each party does, limiting commitment and business exposure when necessary.
  • Selling potential: Many joint ventures end in sales from one party to another.
  • Increased chance of success: When partnerships involve well-established brands or companies, the project's chances for success increase.
  • Building networks: Even if a joint venture works toward one set goal, it's possible to create long-lasting relationships and networks.

Types of Joint Ventures

Two main types of joint ventures exist. Two or more companies can participate in either type of joint venture, and either type can affect one specific product or a full product or service line.

Personnel-Based Joint Venture

A personnel-based joint venture is a partnership that covers the people participating in the agreement and the experience these individuals bring to the project. Staff members for each participating company are placed to work on a project. Examples of this type of joint venture include architects from different firms working together to refurbish an outdated building or programmers from different companies working together to upgrade or design an app.

Equipment-Based Joint Venture

An equipment-based joint venture is a partnership that involves machinery or technology. For example, two furniture companies could form an equipment-based joint venture if one company does not have the correct manufacturing technology to produce a new furniture line and another company does not have designers to complete the project. The collaboration would allow the first company to develop its desired product without a large outlay of capital, while the second company gains a portion of the profits without taking on development costs.

How Does a Joint Venture Work?

If a joint venture operates based on an agreement between the existing companies and does not involve forming a new legal entity, it is called an unincorporated joint venture. A joint venture can also create a new and separate business entity. In the latter case, the new entity can be structured as:

  • A corporation
  • A limited liability company
  • A partnership

Businesses and individuals create joint ventures for a variety of reasons , including:

  • To combine expertise: If one business has a key patent, another has great marketing acumen, and another has a great team of designers, for example, these companies may come together to form a joint venture.
  • To leverage resources: A joint venture entity may offer more resources or more industry clout to bolster the venture's success than either business would have on its own.
  • To save money: Smaller companies may come together to share costs for advertising and marketing, perhaps for a trade publication or show. Likewise, companies involved in expensive endeavors such as mining for precious metals could form a joint venture to expand into a new area.
  • To enter global markets: A business that wants to expand its distribution to a new country can partner with a local business from that location. Additionally, some countries put restrictions on overseas entities entering their market, so a joint venture with a local business can provide a much easier way to do business in that region.

Joint Venture Agreements

Theoretically, a joint venture could be arranged by a simple handshake, but most business entities that form a joint venture outline the venture's terms in a signed contract created with legal assistance.

Most joint venture agreements will include the following information:

  • Parties involved in the agreement
  • Management members and management structure
  • Each party's percentage of ownership
  • Bank account the joint venture uses
  • Distributive share (or the percentage of loss or profit) each party is allocated
  • Employers and/or independent contractors working on the joint venture
  • List of resources
  • How the parties will produce and retain financial statements and administrative records
  • Which state laws apply to the joint venture

Taxation for Joint Ventures

Taxation will vary depending on the type of joint venture created. If the venture is an unincorporated joint venture, the entities who sign the joint venture agreement will need to account for any profits made when it comes to taxes.

The most common scenario for a joint venture is that the parties entering an agreement create a new entity. If the joint venture is created as its own separate business entity, the venture will pay its own income taxes based on its specific form of business, such as a partnership. A joint venture itself is not recognized by the IRS (Internal Revenue Service), so its business form helps the participants determine how to pay taxes.

The joint venture agreement may detail how profits and losses are taxed. However, if the agreement created is just a contractual relationship between the parties, then the agreement will need to specify how taxes are divided.

Examples of Joint Ventures

Examples of joint ventures between well-known companies can help shed light on the possibilities that joint ventures provide. Here are some examples:

  • Sony and Ericsson formed a joint venture in the early 2000s to become a leader in mobile phones. Eventually, Sony acquired Ericsson.
  • NBC Universal and News Corp formed a joint venture in 2007 to create Hulu, a video streaming application. Disney is now the majority owner, while NBC Universal (now owned by Comcast) is an equity stakeholder.
  • Uber and Volvo formed a joint venture in 2016 with the goal of creating driverless cars.

A successful joint venture starts with an agreement that clearly details each party's role and responsibilities in the new entity, so it's important to work with an experienced contract lawyer to create a strong agreement.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Need help with a Joint Venture Agreement?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,328 reviews

Meet some of our Lawyers

JOSEPH L. on ContractsCounsel
4.8 (16)
Member Since:
July 26, 2021


Free Consultation
Stratford, CT
41 Yrs Experience
Licensed in CT
Southwestern University School of Law

Mr. LaRocco's focus is business law, corporate structuring, and contracts. He has a depth of experience working with entrepreneurs and startups, including some small public companies. As a result of his business background, he has not only acted as general counsel to companies, but has also been on the board of directors of several and been a business advisor and strategist. Some clients and projects I have recently done work for include hospitality consulting companies, web development/marketing agency, a governmental contractor, e-commerce consumer goods companies, an online apps, a music file-sharing company, a company that licenses its photos and graphic images, a video editing company, several SaaS companies, a merchant processing/services company, a financial services software company that earned a licensing and marketing contract with Thomson Reuters, manufacturing companies, and a real estate software company.

Jimmy V. on ContractsCounsel
View Jimmy
5.0 (15)
Member Since:
February 10, 2023

Jimmy V.

Free Consultation
Dallas, Texas
43 Yrs Experience
Licensed in TX
University os San Diego

I’m a semi-retired, long-time US attorney with substantial experience in business and corporate law. I counsel startups and small businesses, help them set up corporations or LLCs across the country and draft a variety of contracts and corporate documents.

Daniel R. on ContractsCounsel
View Daniel
5.0 (80)
Member Since:
January 2, 2023

Daniel R.

Business and Real Estate Atttorney
Free Consultation
New York
28 Yrs Experience
Licensed in NY
New York Law School

NY Admitted Lawyer 20+ years of experience. Focused on Startups , Entrepreneurs, Entertainers, Producers, Athletes and SMB Companies. I have been a part of numerous startups as Founder, CEO, General Counsel and Deal Executive. I have been through the full life cycle from boot strap to seed investors to large funds-public companies to successful exit. Let me use my experiences help you as you grow your business through these various stages. We saw a market for an on-line platform dedicated to Virtual General Counsel Services to Start Ups and Private Companies.

Linda M. on ContractsCounsel
View Linda
5.0 (1)
Member Since:
August 5, 2021

Linda M.

Corporate Attorney
Free Consultation
Los Angeles, CA
28 Yrs Experience
Licensed in CA
Marquette University Law School

I am a seasoned corporate transactional attorney with over 20 years of combined outside and inside General Counsel experience. My experience includes helping companies of all sizes, including start-ups with general corporate matters and commercial transactions.

Keidi C. on ContractsCounsel
View Keidi
5.0 (12)
Member Since:
August 25, 2021

Keidi C.

Principal Attorney
Free Consultation
Boston, MA
26 Yrs Experience
Licensed in MA, NY
New England Law | Boston

Keidi S. Carrington brings a wealth of legal knowledge and business experience in the financial services area with a particular focus on investment management. She is a former securities examiner at the United States Securities & Exchange Commission (SEC) and Associate Counsel at State Street Bank & Trust and has consulted for various investment houses and private investment entities. Her work has included developing a mutual fund that invested in equity securities of listed real estate investment trusts (REITs) and other listed real estate companies; establishing private equity and hedge funds that help clients raise capital by preparing offering materials, negotiating with prospective investors, preparing partnership and LLC operating agreements and advising on and documenting management arrangements; advising on the establishment of Initial Coin Offerings (ICOs/Token Offerings) and counseling SEC registered and state investment advisers regarding organizational structure and compliance. Ms. Carrington is a graduate of Johns Hopkins University with a B.A. in International Relations. She earned her Juris Doctorate from New England Law | Boston and her LL.M. in Banking and Financial Law from Boston University School of Law. She is admitted to practice in Massachusetts and New York. Currently, her practice focuses on assisting investors, start-ups, small and mid-size businesses with their legal needs in the areas of corporate and securities law.

Simon C. on ContractsCounsel
View Simon
Member Since:
August 5, 2021

Simon C.

Corporate Attorney
Free Consultation
20 Yrs Experience
Licensed in UT
Brigham Young University Law School

Corporate counsel with years of in-house experience working with and reporting to board / executive-level and upper management, along with extensive regional / national law firm background in commercial transactions and contracts, complex commercial litigation, and employment matters. Skilled at executing corporate priorities, driving profitability by implementing goal-oriented processes to achieve revenue and productivity targets, and managing company litigation and outside counsel. Recognized for creating policies and practices to address ethical dilemmas and resolving misconduct.

Find the best lawyer for your project

Browse Lawyers Now

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Need help with a Joint Venture Agreement?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,328 reviews
See All Business Lawyers
See All Joint Ventures Explained Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

Need help with a Joint Venture Agreement?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,328 reviews

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city