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 New Mexico, a joint venture is recognized as a collaborative business arrangement where two or more parties come together to undertake a specific business project or venture. 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 New Mexico's statutes and regulations that govern business entities, including the New Mexico Business Corporation Act and the New Mexico Limited Liability Company Act, if the venture is to be organized as a corporation or LLC, respectively. Tax implications are also a critical aspect of a joint venture, as the entity type chosen will affect how the venture is taxed at both the state and federal levels. Additionally, parties must be aware of the potential liabilities that may arise from the venture, including joint and several liabilities for the actions of the venture. Lastly, the parties in a joint venture owe 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 fully understand the legal implications, including tax, liability, and fiduciary responsibilities, and to assist in drafting the joint venture agreement.