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

A joint venture and a limited liability company (LLC) are two distinct business structures that have different characteristics in terms of liability, taxation, ownership, and operational flexibility. A joint venture is a contractual agreement between two or more people to work together to achieve a common business purpose, usually for a limited time period. It does not create a separate legal entity and does not provide the same level of liability protection as an LLC. In a joint venture, the parties can structure the relationship to share profits and losses and dictate how control is shared. An LLC is a separate legal entity created by filing Articles of Organization with the state of Virginia. An LLC limits the liability of its owners, who are called “members,” thereby protecting them from personal responsibility for debts or liabilities of the LLC. Profits and losses of an LLC are shared among its members in accordance with the operating agreement which each party signs. Members can also define how control will be shared in the operating agreement. In sum, while a joint venture and an LLC have some similarities, they are distinct business structures with important differences. In a joint venture, the parties share profits and losses but do not acquire the same level of liability protection as an LLC. An LLC, on the other hand, provides members with liability protection but requires the filing of Articles of Organization with the state of Virginia.

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

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