A joint venture is a form of business organization that is temporary in nature. It is established for a specific purpose or to accomplish a certain task or activity and when this purpose is completed the joint venture comes to an end. A joint venture is not exactly the same as a partnership, which is also a type of business entity, that comes into existence when two or more persons come together to share business profits. The partnership business is undertaken either by all the partners or by one partner acting on behalf of all the partners.
Difference Between Joint Venture and Partnership
Last updated on July 26, 2018, By Surbhi S
joint venture and partnership joint Venture is a form of business organization that is temporary in nature. It is established for a specific purpose or to accomplish a certain task or activity and when this purpose is completed the joint venture comes to an end. A joint venture is not exactly the same as a partnership, which is also a type of business entity, that comes into existence when two or more persons come together to share business profits. The partnership business is undertaken either by all the partners or by one partner acting on behalf of all the partners.
The main difference between a partnership and a joint venture is that a partnership is not limited to a particular venture, whereas a joint venture is limited to a particular venture. Similarly, there are other distinguishing points between the two terms, that you can learn in the given article.
Content: Joint Venture Vs Partnership
Comparison Chart
Definition
Key Differences
Conclusion
Definition of Joint Venture
A joint venture is defined as a business organization where two or more parties come together for completing a particular task, project or activity. The venture is formed for a limited period, also known as a name temporary partnership. Here the parties to the venture are considered Co-venturers who agree to run the venture jointly by combining their resources like capital, inventory, machinery, manpower, etc., and by sharing profits and losses in the specified ratio without the use of the firm name.
The determination of profit and losses of the joint venture can be done as follows:
If the Venture is formed for a short duration: At the end of the Venture
If the Venture is formed for a long duration: On an Interim Basis
Some popular example of Joint Venture business is:
Sony Ericsson is a joint venture to make mobile phones where Sony is a Japanese electronics company, and Ericsson is a Swedish telecommunication company.
Caradigm, is a joint venture between Microsoft Corporation and General Electric Healthcare.
Hero Honda, a joint venture between Hero Cycles India and Honda Motor Company Japan to manufacture two-wheeler vehicles.
Definition of Partnership
An agreement between two or more persons in which they agreed to carry on the business and to share the profits and losses mutually is known as the Partnership. The members are individually known as partners and collectively referred to as a firm. The following are the features of partnership:
An association of two or more two individuals.
Agreement between the partners for carrying on a business.
Business to be carried on by all or any one partner on behalf of all the partners.
The partners must share profits and losses in an agreed ratio.
The liabilities of the partners are unlimited.
There can be minimum of two members in a partnership firm, and the maximum limit of partners is 10 in the case of banking business and 20 for other businesses. Partners are held liable for the acts done in the name of the firm.
Conclusion
Joint Venture and Partnership are very famous business forms. Many big enterprises come together for specific purposes to form a joint venture and when that purpose is accomplished the venture also ceases to exist. Partnerships last longer because they are not formed with an intention to complete a particular purpose, but the sole objective of the partnership is to undertake business and share profits and losses mutually.
When we talk about profits, the profits are calculated at the end of the venture, for Joint Ventures but the profits of partnerships are determined annually.
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