A joint venture is a type of business entity that is similar to a partnership except that it does not have a legal existence under taxation laws. Each owner records his share of the assets, liabilities, equity, revenue and expenses. The owners are natural persons or other legal entities.
- Losses incurred can be applied against the owner’s other income which will reduce the owners income taxes.
- Separate tax returns are not required.
- Complicated legal agreements to set up.
- The tax rate of the business is the same as that of the owners. Any income earned by the business is taxed at the marginal rate of the owners based on their share of the income.