A joint venture is a temporary business alliance between two parties that come together to take advantage of the other's abilities to do something productive and earn profits from the business collectively. The cumbersome process of making the alliance official is unnecessary and avoidable. In recent times a lot of construction work projects accomplished with the help of long term joint ventures which take relatively more time to complete than the usual joint ventures.
Two ways to maintain accounts in Joint Venture:
Similar set of books of account- Both parties involved in the joint venture record their transactions in the same set of books of accounts. This is not very convenient.
Separate set of books of accounts- Both parties maintain complete books of accounts based on their transactions which are compared at the end of the Joint Venture alliance to conclude the profits or losses between them.
Joint venture is implicative enough to involve specific task in the business which make things more convenient and prompt. Therefore, if one of the participating sides lives near transportation area, party assumes the responsibility of sending the products to other party. Other party receives the goods and takes responsibility to sell it since it has an advantage over the market access. The Joint venture created is just for the sake of convenience to make the final accounts. It cannot be categorized under any specific books of accounts or accounting treatment. Starting a joint venture to make your business more successful is not hard.
Starting a joint venture is based on the principle of small hinges can move large doors. If your partner is another startup company, you can combine resources to make more money and lower expenses. Other than finding the right partner, it is a matter of agreeing on the joint venture structure and putting it on paper. Be sure that you have chosen the correct business partner because a bad choice can hurt your company. Once you have sold the idea and documented the agreement that is all there is to starting a joint venture partnership besides making the massive profits.