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Difference Between Joint venture and Partnership

book_businessJoint venture vs Partnership

It is quite normal to think of joint venture and partnership business as one. However, they are two entities, which have very clear-cut differences.

Joint venture involves two or more companies joining together in business. In partnership, it is individuals who join together for a combined venture. Two or more companies, which are listed in the stock market often, engage in a joint venture to overcome business competition. While engaging in partnership, the individuals involved become partners in an organisation for the sake of profit.

A Joint Venture can be termed as a contractual arrangement between two companies, which aims to undertake a specific task. Where as partnership involves an agreement between two parties wherein they agree to share the profits as well as take the burden of loss incurred.

In partnership, the persons involved are co-owners of a business venture, aimed at making profit. But in joint venture, it is not just profit that binds the parties together. Joint ventures can be formed for specific purposes. For example, companies may join together and fund for the development of a particular thing that could be of use to their respective business. Normally the companies engage in joint ventures, as sometimes it could be quite expensive for undertaking certain ventures like research and development individually.

While partnership can last for many years till the parties involved have no differences, companies involve in a joint venture for only a limited period till their goal has been achieved. In a joint venture, the members have come together for some specific purpose, while in a partnership the members have joined together for only business.

Another difference that the joint venture and partnership have is with regard to tax. One of the main differences is regarding the Capital Cost Allowance. The members in a partnership can claim CCA as per the partnership rules. Joint ventures on the other hand can use as much or as little of the CCA as they wish. There is no need to file returns in a joint venture but it has to be filed in partnership.

In Partnership, the members cannot act as per their wishes and they do not have any individual identity; they belong to a group. However, a member of the joint venture can retain the identity of his firm or property.

Summary
1. Joint venture involves two or more companies joining together in business. In partnership, it is individuals who join together for a combined venture.
2. A Joint Venture is a contractual arrangement between two companies, which aims to undertake a specific task. Partnership involves an agreement between two parties wherein they agree to share the profits and losses.
3. The members in a partnership can claim CCA as per the partnership rules. Joint ventures on the other hand can use as much or as little of the CCA as they wish.


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2 Comments

  1. This article is incorrect.

    Both partnerships and joint ventures can involve a mix of individuals and companies. There is no barrier to a company being a partner in a partnership, and no barrier to an individual engaging in a joint venture with other individuals and or companies.

    The main difference between a partnership and a joint venture is liability. Partners are liable for the business debts of their partners. Joint Venture parties are not responsible for the other party’s business debts.

    Tax is a side issue by comparison. Both Partnerships and Joint Ventures can be of any length. It all depends what is agreed in the Partnership Agreement / the Joint Venture Agreement.

  2. If a minor wants to join a partnership firm, then it can be possible? Give me your suggestion.

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