What is the purpose of a joint venture?

A joint venture is specifically designed for two or more parties to pool their resources and expertise in order to achieve a common business objective. This collaboration allows each participant to contribute assets, knowledge, and skills that may be necessary to undertake a specific project or enter a new market, enabling them to share risks and costs associated with the venture.

Unlike a sole proprietorship, which is owned and operated by a single individual, a joint venture involves multiple parties working together towards a shared goal. The pooling of resources differentiates a joint venture from other business entities, as it emphasizes cooperation and collaboration rather than singular ownership.

While limiting liability for personal assets can be a benefit of forming certain types of entities, such as corporations or limited liability partnerships, the primary function of a joint venture is to combine efforts in pursuit of a mutual aim rather than to insulate personal assets from business liabilities. Though a joint venture can operate under a separate legal entity, this is not a defining characteristic, as many can be structured as informal partnerships or agreements without creating a new legal entity.

In summary, the fundamental purpose of a joint venture is to allow participants to leverage shared resources for a common business initiative, making option B the correct choice.