What is the difference between a joint venture and a limited liability company?

A joint venture and a limited liability company (LLC) are both legal entities. However, a joint venture is a more flexible structure than an LLC. In a joint venture, two or more parties work together to accomplish a specific goal with a set timeframe. The parties typically share profits and losses, and establish how decisions will be made, how contributions will be made, and who will manage the venture. An LLC has an ongoing life and is a separate entity from its owners with its own procedures and rules. An LLC has the same pass-through taxation of a partnership, meaning that the profits and losses are reported on the owner’s tax returns, but the LLC also provides for limited liability of its owners from debts or liabilities of the business. An LLC must register with the Texas Secretary of State and have an operating agreement in place to determine how profits and losses should be shared and how decisions will be made. The LLC also requires compliance with certain regulations, including filing of annual reports and paying annual franchise taxes. In contrast, a joint venture does not require formal registration with the state or filing of annual reports. A joint venture is formed through an agreement between the parties, who contribute resources, share profits and losses, and dissolve after the venture is completed. Thus, a joint venture can provide some degree of flexibility and reduced administrative burden when compared to an LLC.

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What is the difference between a joint venture and a limited liability company?

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