A common and flexible solution is to form a separate limited company for the joint venture. Among other advantages, this allows you to insulate yourself from liability should the joint venture become insolvent. However, this is not always the best solution.
If you will be transferring significant assets into the joint venture, forming a separate company can have unwanted tax consequences (see 11). An alternative can be to form a partnership or a limited liability partnership. An appropriate partnership structure may minimise potential tax liabilities.
If you do not require management involvement in the joint venture, it may be best to use contractual arrangements rather than to create a separate joint venture entity. For example, an inventor could license his intellectual property to another business to exploit.
