One of the ways to enter a joint venture is to agree to cooperate with another company in a specific and limited way. For example, if a company has a new product that it wants to sell, but needs a larger distribution network, they could work together on a contract to get there. First, finding a joint venture partner (or more than one partner for larger joint ventures) starts with a clear definition of your goal. For example, you may have developed a new product, but it lacks wide distribution channels to bring it to stores. You can ask other merchants which distributors they use and do independent market research. Then go to different distributors to measure their interest in a joint venture. The fastest, cheapest option is to start with a simple contractual agreement. In this case, the joint venture does not declare its own profits and does not pay taxes itself. Profits are taken into account in the tax returns of the parties concerned. In this guide, we explain how a joint venture works, discuss the benefits and risks – and we`ll check a joint venture against other types of businesses and how you can create one for your business. The only way to eliminate this common responsibility is to create a legally separate entity for the joint venture (which we will explain below). While a joint venture doesn`t require you to form a separate entity, many companies choose this path.
If the joint venture is a separate entity, it pays its own income taxes, depending on the form of the activity – for example. B of a partnership – when it has been created. In the case of an unregistered joint venture, all profits must be made indible by the companies that signed the JV agreement. As we have already explained, companies or business owners usually set up a joint venture to open up new markets, gain an advantage over their competitors or free up additional resources. In that case, could you consider starting a joint venture with that person or company? What is a joint venture and how does it work? What are the potential benefits (and risks) of this type of agreement? We`re here to help. Creating a separate legal entity for your joint venture is the most expensive and complex option. For example, if you create a business joint venture, the joint venture is responsible for filing and paying its own business taxes. However, a separate legal entity also offers greater legal protection in the event of a problem. The parties to one of the projects, the YEA, the CJV or the WFOE, carry out a feasibility study described above.
This is a non-binding document – the parties remain free not to pursue the project. The feasibility study must cover the fundamental technical and commercial aspects of the project before the parties can proceed with the formalisation of the required legal documentation. . . .