When choosing between a partnership and a joint venture it can be hard to know which one is best for your organization. While both offer unique opportunities there are some key distinctions that make them preferable in certain circumstances over others.
One commonality they share is that they must be formalized by way of contract as each has its own set of responsibilities and requirements on how things should work moving forward based on their agreed-upon terms.
Partnership
A partnership is an agreement where two or more parties agree to share ownership of a business. In this type of arrangement, one party provides capital and labor while the other party offers expertise and management skills.
Joint Venture
A joint venture can be defined as a project undertaken by several individuals with shared responsibility for its outcome. Therefore, they both have a stake in the end result which makes them different from partnerships that divide profits between partners based on their contributions.
Difference between partnership and joint venture
- 1. Partnership is a continuing profit-seeking enterprise while joint venture example of partnership. But if two persons want to underwrite one or two issues underwriters continuously engaged in the business of underwriting It is a profit-seeking terminable venture.
For example, there may be a firm of and
share the gains or losses without any intention to continue in the business,
civil works, buy and sell local or imported goods and underwrite issue of it
is an instance of joint venture. Joint ventures are generally formed to
undertake securities, name,.
- 2. The business of partnership is carried on under the style of a firm's name whereas there is no such common name for joint venture
- 3. In the case of partnership the persons carrying on the business are called partners whereas in joint ventures they are called co-ventures.
- 4. Partners have joint and several liabilities. In joint venture, it depends on the mode of contracting. Certain liabilities may be joint and several while others may be contracted in the individual capacity of each co-venture.
- 5. For a partnership, accounts are prepared annually. One set of accounts till the closure of venture will suffice in the case of joint venture. However, where the venture is for a longer period of, say, 3 or 4 years, interim accounts may be prepared on annual basis.
- 6. Firms usually follow accrual system of accounting. Whereas cash system is followed in the case of joint ventures.
- 7. The doctrine of implied authority is applicable to partners , whereas co - ventures have no such implied authority.
- 8. In case of Joint Ventures Profit is ascertained for each venture, whereas in the case of partnership profit is ascertained annually.