Although similar, joint ventures aren’t the same as partnerships. Partnerships are long-term, whereas joint ventures are temporary relationships between two or more parties in the pursuit of completing a single project. It’s important to note that The Treasury and IRS have regulations for classifying business arrangements for federal tax purposes and defines the term “partnership” in greater detail. Whenever you are dealing with business legalities, it is crucial you understand the laws that govern them.
If you’re interested in forming a joint venture with another construction company you should know the different types of joint ventures in the industry. You should also contact a construction attorney in Orlando who will review and discuss your legal rights and duties. Listed below are some of the typical joint ventures construction companies enter:
1. Integrated Joint Venture
This joint venture involves non-linear, complex projects split between two or more partners who combine resources and employees as well as share profits and losses according to their percentage of interest in the venture. Obstacles members may face are related to structuring the management of the project.
2. Non-Integrated Joint Venture
This joint venture is a restricted, non-partnership where every party is assigned a range of work and is responsible for the profit, loss, and resources related to that work. The obstacles members of the partnership may experience can relate to internal conflicts and is best for projects that can be easily divided or distributed.
3. Combination Joint Venture
A combination of both integrated and non-integrated joint ventures used for more complex projects. Every party is assigned a portion of work and is responsible for their own profits and losses, but members act as partners and may share portions of the work.
4. Equity Joint Ventures
Two or more parties create a another legal company to carry out a project. The parties establish equity capital and agree on objectives such as staff, profit sharing, the furnishing of bonds, as well as other resources.
5. Contractual Joint Ventures
With a contractual joint venture, two or more parties form a partnership to achieve a short-term construction project. The drawback of this agreement is that members have no equity; and rights and liabilities involving 3rd parties are bound by contract.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.