Ebook Sample Content Preview:
As we said earlier, a joint venture is not an entity, but the reason for the entity. A joint venture can be individuals, corporations, LLCs or even limited partnerships. There are tax advantages to all of these types of holdings. How you should hold your joint venture depends upon the size of the project and how long you plan to be involved in the project.
A corporation is a separate entity. It can open a bank account, pay taxes and go bankrupt. Because a corporation is its own entity, it is the safest way to start a business. By funneling everything into the corporation, you limit the liability of the other parties.
Two corporations or other types of business can form another corporation. A corporation will need people, however, to be officers of the entity. You also need a registered agent. The registered agent is usually the attorney who fills out the articles of incorporation and will keep up with the annual reports.
There are two types of corporations - a C corporation and an S corporation. You will most likely charter your joint venture under an S charter in that you will not be selling stocks. An S corporation, or a Sub S, as it is often called, is limited to the number of shares of stock it can issue. An S corporation can only issue 100 shares of stock.
The stockholders are the real power in the corporation. The stockholders do not have to be the same people who are officers of the corporation. They can be businesses or individuals. Their ownership of the corporation is not made public - the officers and registered agent are public information.