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 South Dakota, a joint venture is recognized as a business arrangement where parties come together to pursue a specific business goal. This type of partnership can be structured as a separate legal entity, such as a corporation or a limited liability company (LLC), which is governed by the state's laws pertaining to those entities. For tax purposes, joint ventures are typically treated as partnerships unless they elect to be recognized as a corporation. This means the joint venture itself does not pay income taxes, but profits and losses are passed through to the members or partners. Regarding liability, unless the joint venture is formed as an LLC or corporation, which provides limited liability protection, each member may be personally liable for the debts and obligations of the venture. Additionally, members of a joint venture owe fiduciary duties to one another, which requires them to act in the best interest of the joint venture. It is advisable for parties entering into a joint venture to have a written agreement outlining the terms of the venture, including contributions, management, profit sharing, and dissolution procedures. An attorney can provide crucial guidance on these matters to ensure compliance with South Dakota laws and to protect the interests of all parties involved.