In contrast, they may need to combine their abilities for only a limited period, or only for carrying out a specific project. Because of the relatively short duration of such an association, a permanent arrangement such as a partnership would be unsuitable and unnecessary. In such cases, parties often enter into a more informal type of association known as a joint venture. A joint venture is an association similar to a partnership, but which is entered into for a limited and specific object. These days they are frequently used in large construction projects.
As a result of this latter development, large companies have become involved in 'long-term' joint ventures and suitable accounting accountability of their interests in such ventures has become essential.
There are two possible methods of accounting that can be used for such joint ventures: (1) a separate set of accounting books is provided, in the same way as a partnership. In this case no particular accounting problem exists. All transactions are recorded according to the double entry system and an income statement and balance sheet are prepared in the usual manner, (2) a separate set of accounting books is not provided. Because of the relatively short duration of many types of joint venture, separate accounting books are often not provided.
In a joint venture each party, by mutual agreement, assumes responsibility for certain specific tasks in order that the objectives of the joint venture may be achieved. For example, one party may purchase certain goods on behalf of the joint venture and send them to another party who is responsible for sales. At specific times (e.g. when the venture has been concluded or at other specific times) each entrepreneur must provide the other parties with a complete financial accounting report of all his transactions on behalf of the joint venture.
In order to do this, each entrepreneur records the transactions that he concludes on behalf of the joint venture in his own accounting books, in a special account in the ledger, 'Joint venture with X'. The accounting report that a joint venturer provides the other joint venturer will be a summary of the transactions recorded in this account. When all parties have submitted their accounting reports to each other, a joint accounting statement is prepared from this information to determine the result of the venture. This joint statement is also known as a memorandum statement and is prepared separately from the relevant accounting reports. It does not form part of the double entry accounting system in any particular set of accounting books.
The profit and loss of the venture as determined from the memorandum statement will be divided in the statement between the entrepreneurs, according to the mutual agreement.
Each entrepreneur will record his portion of the profit and loss from the venture, as determined in the memorandum statement, in the joint venture account in his own accounting books. The debit or credit balance on the account at this stage will represent the amount due by (if a debit balance) or due to (if a credit balance) the other parties in the venture.
Since each entrepreneur records only those transactions that he concluded on behalf of the joint venture and his portion of the profit (loss) in the joint venture account in his accounting books, these accounts in the separate sets of books will have the same balance but on opposite sides. This indicates that the entrepreneur owes the other that amount.
Sample Joint Venture Agreement
Today I want to talk about why they work so well, and how you can make the most of them to explode your online income.
Traditionally, JVs are most common between two people who have created a product and are selling it online. But that needn't be the case and I will tell you shortly of a way in which you can get all the benefits, traffic and sales of a JV without even having a product of your own.
But first let's look at the principals of it:
What actually happens in a JV cross-promotion?
Websites promote other websites for two main reasons:
1. to earn income from commission sales.
2. To pay, or earn, favors.
The first of these you might expect, the second is more intricate.
You see, when you're running an online business, your options and your growth are restricted if you try doing it all on your own.
Sure, there's pay-per-click advertising, article marketing, traffic exchangers, and a variety of ways you can draw traffic to your site by paying for it.
But nothing beats personal suggestion.
Its human nature: We all prefer to buy through personal recommendation than by enticing advertisements.
And JV's, or cross-promotions are all about personal reference.
The only thing is - as every super-affiliate knows - even if you're offering attractive commission rates, the site that's getting promoted always gets more out of the deal than the JV partner who's doing the promoting. Look at this comparison:
The JV partner doing the promotion gets:
1. A 'notional' favour from the site it
promotes.
2. Payment Expenditure hopefully paid in good
time but always at the discretion of the site
owner.
The site being promoted gets:
1. Lots of new list members
2. Lots of Sales
3. Lots of recognition
Which would you rather?
Can you see now why the benefit isn't split evenly in a JV deal?
This is one of the reasons why it is more difficult than many people think to get JV partners promoting for you.
No matter how attractive your payment percentages are, you will always be getting more out of the deal than your JV partner. Especially if you're landing page is a list-building squeeze page.
But there is an option available. Especially if your aim is to build a list.
You could use a new and lusciously different kind of site, using a webserver script that gives you a complete solution for building a list and a business online.
One of its features is that it turns the above JV example on its head to provide more of a win-win for both parties. Here's what you can do with it:
As a list builder, you can offer a squeeze page for your JV partner to promote. He then sends his list to the squeeze page, where they sign up to your list. Then, this is when it gets interesting:
Your JV partner can decide which offer page his signups are directed to after signup.
Gone is the traditional method whereby once his leads have signed up to you they're yours, to direct wherever you like. With MVS, your JV partner can choose what to show them *after* they've joined your list...
It might be to his own product, or an affiliate link somewhere else - or he may choose to use his affiliate link for your product (in keeping with the normal method).
The point is, your JV partner has more say about who benefits from his promotion and how. And that kind of power makes all the difference when it comes to getting others to promote for you, and build your list.
This is one of many personality of a system that makes it well worth a good look if you want to start building JV relationships. You can find out more about this viral list building system by visiting the author's resources listed below. Whether you are looking to build a list or promote a particular product or service, the power of this kind of marketing is undeniable.
Both Harjinder Kaur & Ravii Kumarr are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.