Entering into a joint venture with another company on a project can bring many benefits—sharing of costs, spreading the risk, pooling equipment, increasing labor, among other advantages. Like most other business arrangements, however, there are issues that may complicate a joint venture. Two Management Methods Bulletins bring these to light.
Basic information that you should know when you consider a joint venture arrangement is laid out in Joint Ventures. Along with the many pluses that come with a joint venture are some suggestions about how to approach the arrangement, when and how to organize and finalize the agreement and the protections that are necessary to ensure a productive and profitable relationship.
Becoming involved in a business arrangement with another company that’s not in the state where your company is incorporated can be complicated. State laws consider out-of-state companies to be “foreign corporations” and therefore must meet certain qualifications to legally transact business. Failure to do so will bring severe penalties to your company as well as the other company in your joint venture. Failure of One Corporate Member of a Joint Venture to Qualify as a Foreign Corporation May Penalize All Venturers alerts you to the issues that you may face when you embark on an out-of-state joint venture.
Joint ventures can be very beneficial business arrangements for all parties involved, but make sure you are fully aware of all the issues involved in such agreements before making a commitment.
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