Jv vs partnership what do I do

[Calvin Schmeling]

I've heard from a lot of people always test the waters through JVing with your future partner before going into an LLC first. I am really unfamiliar with JV and don't know how it works. Is it its own entity? And how do I even JV with the person I am trying to partner with? When the deal goes through does the JV have it's own bank account the money goes to?

[Jerry Puckett]

In my opinion, when it comes down to brass tacks, it comes down to teeth. A JV is basically an unenforceable agreement willingly entered into, that simply spells out the basics, assigns tasks, etc. Similar to an operating agreement, the purpose is to have everything in writing so that when something comes up, how to handle it is already spelled out.

JVs can just as easily be dissolved. If one party wants to walk away, the agreement is ended. 

An LLC on the other hand, is a legal entity with rules, obligations, costs, expenses, tax liability, etc. A good JV can become the basis of an operating agreement if it's written well. An LLC must be registered, a JV not.

I JVd with my current partner for two years on various deals. It was like a trial run to take each other's measure...to see if the other would willingly live up to the agreement. It went so well we formed an LLC, made capital contributions, and own property together. If you are just working on one deal at a time with multiple others, a JV is a great way to temporarily partner up. If there is going to be ongoing activity, if it's a Business rather than just a deal, an LLC keeps everything straight.

Hope that helps. Use case matters. I wouldn't jump into an LLC with someone I did not know well. A JV gives you time to learn.