Difference Between Joint Venture and Partnership

Joint Venture vs Partnership Differences

When two or more entities come together to an understanding for a specific action or purpose then it is known as the joint venture and when that purpose is completed the said joint venture shall come to an end as it is temporary in nature whereas partnership is an understanding amongst its partners for a common goal and has a separate status which is more permanent in nature.

What is a Joint Venture?

Joint Venture is defined as 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 in nature (temporary partnership) and description as when the project is completed the joint venture comes to a conclusion.

Examples

  • An apt illustration of an Indian Joint Venture with a foreign company is the airline, Vistara which is 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 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 investments solutions and products to individuals and corporates.

What is Partnership?

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

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

Joint Venture vs Partnership Infographics

Key Differences

  1. A Joint Venture is a type of business disposition or setup which is basically established for attaining a specific project, task, and activity. On the other hand, the contractual agreement between two or more than two individuals of sound mind for running the business and sharing the triple bottom lineTriple Bottom LineTriple Bottom Line (TBL) is a theory that states that companies should make efforts to capture social and environmental prospects in their primary objectives besides earning profits. John Elkington coined the framework for the long sustainability of the business run by the corporates.read more thence is known as the Partnership.
  2. The Indian Partnership Act administers the partnership, 1932 while in the case of the joint venture there is no such act.
  3. The parties associated or concerned with the joint venture are called as co-venturers while on the other hand the essential members or elements of the partnership are called
  4. A minor can never become an association or party to a Joint Venture while 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 Joint
  6. A Joint Venture is established for a short duration, and that is the reason why going concern accounting concepts does not register to it while on the other hand, the partnership trade is built ongoing concern accounting concepts.
  7. In Joint ventures, there is no particular precondition as such 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 Venture and Partnership is a very well known and prominent business and trade manifestation. The company collaborates to capture market share or fill the gap in the market by forming strategic alliances for particular reasons

And when that reason is resolved or purpose is fulfilled the alliances/ firm/organization then as well ceases to subsist. However, partnerships, on the other hand, have a longer time period than joint ventures as they are not established to mere fulfil primary and secondary objectives of an organization. They have an intention to complete a specific function, but the primary aim of the partnership is split business and share the triple bottom lineBottom LineThe bottom line refers to the net earnings or profit a company generates from its business operations in a particular accounting period that appears at the end of the income statement. A company adopts strategies to reduce costs or raise income to improve its bottom line. read more 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, whereas for Joint Ventures the net profit of partnerships is estimated on a yearly basis.

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