Many existing businesses expand by starting a joint venture or business arrangement with another business or person. If the arrangement involves an ongoing activity, one of the best methods of creating a structured joint venture is by creating an LLC to house the venture and using the LLC governance processes to create the parameters and responsibilities of the joint venture parties.
Without an LLC, you need to rely on addressing all matters in a general contract. A limited liability company provides an automatic mechanism for handling ongoing business interactions and activities among several parties. Because an LLC is subjected to very little formalities and bureaucracy, you can tailor the governance and rules for your particular business transaction.
Also, because the taxes are pass through, you can accomplish the creation of a customized joint venture arrangement without having to worry about additional tax burden or complexity. You can form a limited liability company quickly and should do so prior to starting any joint venture activity.
