FLASH SALE! - "FINANCIAL MODELING COURSE BUNDLE AT 60% OFF" Enroll Now

Difference Between Joint Venture and Partnership

Updated on May 17, 2024
Article byRishabh Chaddha
Edited byAaron Crowe
Reviewed byDheeraj Vaidya, CFA, FRM

Joint Venture vs Partnership Differences

When two or more entities come together to understand a specific action or purpose, it is known as the joint venture. When that purpose is completed, the said joint venture shall end temporarily. In contrast, a partnership is an understanding amongst its partners for a common goal and has a different status which is more permanent.

What is a Joint Venture?

A joint venture is a type of business corporation where two or more firms come together for a specific purpose to attain a certain activity or task and complete a specific project. The venture formed is non-permanent or temporary (temporary partnership), and when the project is completed, the joint venture concludes.

Examples

  • An apt illustration of an Indian joint venture with a foreign company is the airline, Vistara, the brand identity of Tata SIA Airlines Ltd, a joint venture between India’s corporate giant Tata Sons and Singapore Airlines (SIA).
  • Bharti AXA General Insurance Co Limited is a joint venture between Paramount Trade Group, Bharti Enterprises, and a France-based insurance major known as AXA. It offers a massive variety of insurance products starting from health, home, vehicle, travel, and education.
  • Network18, a famous electronic media organization, has two successful joint ventures known as Network18-CNN and Network18- Viacom.
  • India’s private banking major player, ICICI Bank, has two victorious joint ventures known as ICICI Prudential Life Insurance Company Limited, a joint venture between ICICI Bank and Prudential Corporation Holdings Ltd. (UK Based), and ICICI Lombard, a joint venture between ICICI Bank and Fairfax Financial Holdings Limited (Canada based) offering insurance policy and investment solutions and products to individuals and corporations.
Difference Between Joint Venture and Partnership

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Difference Between Joint Venture and Partnership (wallstreetmojo.com)

–>> If you want to learn Financial Modeling & Valuation professionally , then do check this ​Financial Modeling & Valuation Course Bundle​ (25+ hours of video tutorials with step by step McDonald’s Financial Model). Unlock the art of financial modeling and valuation with a comprehensive course covering McDonald’s forecast methodologies, advanced valuation techniques, and financial statements.

What is Partnership?

The partnership pursuit is commenced either by all the partners or by a single partner acting as a spokesperson.

The features of the partnerships firm are mentioned as follows:-

  • An alliance or consortium of two or more than two.
  • Trade and commerce to be sustained by all or any one partner acting as a spokesperson or on behalf of all the partnership members.
  • The partners must divide or split the net profit margin and net loss depending upon the market scenario or circumstance in a mutually pre-decided ratio, i.e., all the partners must hold equal proportionate shares of the company or firm while running the business.
  • The accountability and responsibility of the partners are bottomless and measureless/unbounded.
  • There can be a minimum of 2 members in a partnership organization. The maximum partners’ cap is 10 for the banking industry or trade and 20 for other businesses.

Joint Venture vs Partnership Infographics

Joint Venture vs Partnership Infographics

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Difference Between Joint Venture and Partnership (wallstreetmojo.com)

Key Differences

  1. A joint venture is a type of business disposition or setup established for attaining a specific project, task, and activity. On the other hand, the contractual agreement between two or more individuals of sound mind for running the business and sharing the triple bottom line is known as the partnership
  2. The Indian Partnership Act administers the partnership, 1932, while there is no such activity in the case of the joint venture.
  3. The parties associated or concerned with the joint venture are called co-venturers, while on the other hand, the essential members or elements of the partnership are called partners. 
  4. A minor can never become an association or party to a joint venture. On the other hand, a minor can become a partner to the welfare and best interest or benefits of the partnership organization/company.
  5. In partnership, there is a particular business name, which is not in the prototype of a joint venture.
  6. A joint venture is established for a short duration, so going concern accounting concepts do not register to it. On the other hand, the partnership trade is built on ongoing accounting concepts.
  7. In joint ventures, there is no particular precondition to sustain or look after the books of accounts, but on the other hand, in partnership with the perpetuation or sustenance of books of accounts is mandatory.

Comparative Table

Basis of ComparisonJoint VenturePartnership
DefinitionJoint Venture is a trade formed by two or more than two individuals for a particular motive and for a shorter time period.A contractual business agreement where two or more individuals agree to start a business and have equally proportionate shares in the event of both Profit, as well as Loss, is known as the partnership.
Exercising ActNo particular act.The partnership is administered by the Indian Partnership Act, 1932.
Trade sustained byCo-venturePartners
Repute of MinorMinor can never become a co-venturer.Minor can become a partner for the welfare and best interest of the organization.
Principles of AccountingLiquidationGoing Concern
Name of BusinessNoYes
Determination of Triple Bottom Line If the firm is established for a shorter time period- At the resolution of the venture or if the firm is formed for a longer time period then on an interim basis.Yearly basis
Sustentation of the distinct set of booksNot mandatoryCompulsory

Conclusion

Joint ventures and partnerships are well-known and prominent business and trade manifestations. The company collaborates to capture market share or fill the gap in the market by forming strategic alliances for particular reasons.

Moreover, when that reason is resolved or the purpose is fulfilled, the alliances/ firm/organization cease to exist. However, partnerships, on the other hand, have a longer period than joint ventures as they are not established to fulfill an organization’s primary and secondary objectives. Instead, they have an intention to complete a specific function. Still, the primary aim of the partnership is to split business and share the triple bottom line or net profit margin and losses mutually. However, when we mention profits, the profits are estimated at the end of the resolution of the firm/venture. In contrast, the net profit of partnerships is estimated every year for joint ventures.

Recommended Articles

This has been a guide to Joint Venture vs Partnership. Here we discuss the top differences between them along with infographics and comparison table. You may also have a look at the following articles –