Facts

• A joint venture agreement is a contract that joins two business entities to create a single company. For example, the owner of a small printing company might establish a joint venture with the owner of another small printing company to create a larger company under a new name. An independent contractor agreement, on the other hand, creates a business relationship between one entity and a designated contractor, and the latter performs a specific job for the former. For instance, a government agency might contract an office chair distributor to supply the agency with chairs for employee offices. The office chair distributor represents an independent contractor in this case.
  
  

Significance

• Within a joint venture agreement, the financial relationship between the parties is typically one of shared interest in the new company's profits. The agreement establishes the percentage that each party receives and the amount of the new business that each party owns. Within an independent contract agreement, however, the contractor is simply supplying the other party with a specified service and is thus more in the role of employee. The independent contractor agreement designates the exact payment to go to the contractor, but the contractor does not have any share in the business.
  
  

Time Frame

• Because the joint venture agreement essentially creates a new business, the only time frame established is one of a starting date for the new company. An independent contractor agreement, though, generally establishes a time frame for the relationship between the contract originator and the contractor. To return to the example of the government agency and the office chair distributor, the contract might state that the distributor will supply a specific number of office chairs to the agency for two years. Once the two years have passed, the agency must renew the contract or seek another contractor. Unless stated, the contract does not renew automatically.
  
  

Benefits

• For small business owners looking to expand, a joint venture agreement can be an excellent option. In particular, one small business owner might have expertise in one side of the market while another possesses expertise in a different area. By combining forces, they can establish a larger and more profitable business.
  
  An independent contractor agreement is a better option for companies that plan to expand business without changing their own business structure. What is more, the contractor is guaranteed payment as long as the contract is fulfilled.
  
  

Considerations

• Both a joint venture agreement and an independent contractor agreement are subject to termination. In the case of the former, however, termination can be more difficult, because of the business structure. The agreement cannot simply be cancelled if one party decides to leave. An independent contractor agreement can be simpler to terminate if the two parties decide that the relationship no longer works. Once payment has been established, the contractor can walk away with no further business obligation.