Concept of Joint Hindu Family Business : Meaning, Features, Merits and Demerits

Business refers to an organization in which goods and services are manufactured and helps in sale and exchange of goods and services. Whenever we have to start a business, we will discuss about what kind of business is profitable whether it is . So in this article we will discuss the Concept of Joint Hindu Family Business. Also we’ll study its meaning , Features, merits and Demerits.

Concept of Joint Hindu Family Business

Joint Hindu family business is business popular in India but somehow it is different from sole business because sole business is controlled and managed by single person and Joint business is controlled and managed by many people i.e. family members.

It is operated or created by Hindu law and head of joint Hindu business is known as Karta. Karta has right to take decision and Karta hold business. It doesn’t have distinct legal from its members.

Characteristics of Joint Hindu Family Business

  1. Formation of company

In joint Hindu Family business the main role in formation of business of Karta and they take decision of all family members.

  1. Liabilities of members

In joint Hindu family business the liabilities of head of the business who is Karta is unlimited . All other members of the family have limited liabilities.

  1. Continuity

In case of death of head of the family Karta, the responsibility of the business is transferred to another family person.

  1. Control

Karta who is the head of  the family controls business and manages all the activities of their family business.

Merits of Joint Hindu Business:

  1. Effective management

The management of joint Hindu Family Business is effectively managed by Karta.  Karta takes all decisions and implementing them by decision of all members.

  1. Maintenance of secrecy

Secrecy is well maintained in joint Hindu family business because whole power is on Karta hand and he will manage business.

  1. Secrecy

Secrecy is maintained by its owner who is Karta because he has right to take decisions in business and doesn’t share their decisions with outsiders.

DEMERITS of Joint Hindu Business:

  1. Limited source of capital

The capital is limited only to the resources of one family. This is not sufficient to meet the business requirements for expansion according to the size of business. Karta doesn’t take advantage due to limited capital.

  1. Unlimited liabilities

There is unlimited liability of Karta reason being Karta is not only liable to the extent of his share in the business but his separate property is equally attachable and amount of debt can be recovered from his separate property

So we have discussed about the Concept of Joint Hindu Family Business and if you have any query please let us know in the comments section below:

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