A joint venture is a business arrangement in which two or more persons or entities agree to jointly pursue a specific business objective—often more limited in scope and duration than a typical business or company. A joint venture may be organized as its own corporation or limited liability company. In addition to the risks of the business venture, a person or entity considering a joint venture should understand the tax issues, liability issues, and fiduciary duty issues involved.

In Alabama, a joint venture is recognized as a business arrangement where two or more parties come together to undertake a specific business project or goal. This type of partnership can be structured in various forms, including as a corporation or a limited liability company (LLC), depending on the needs of the venture and the preferences of the parties involved. When forming a joint venture, parties must consider various legal implications such as tax consequences, which can vary based on the structure chosen. For instance, an LLC may offer pass-through taxation, while a corporation might be subject to corporate taxes. Liability is another critical consideration; an LLC structure may provide members with limited liability protection, whereas in a general partnership, each partner may be personally liable for the debts of the venture. Additionally, parties in a joint venture have fiduciary duties to one another, which require them to act in the best interests of the joint venture. It is advisable for parties considering a joint venture to consult with an attorney to ensure that they understand the specific regulations that apply to their venture and to structure their agreement in a way that aligns with their objectives while mitigating risks.