6 Merits of Joint Hindu Family Business

Define Joint Hindu Family Business

Joint Hindu family business is a type of business organization which is found only in India. It is not practised or followed elsewhere in the world. Joint Hindu family business is fully operated & managed by Hindu law. These businesses are managed by all members of a joint Hindu family. The eldest member of the family is considered the head & controls the whole business.

Head of the business is called Karta” & looks after all the finances of business. It is one of the unique types of business organisation. Joint Hindu family Businesses are carried from generation to generation. Here the liability of Karta is unlimited & rest all have liability as per their share in the business. Membership in business is acquired either by birth in family or marriage to a male member of the family.

There are basically 2 types of joint Hindu family business: Mitakshara & Dayabhagha. In Mitakshara only male members can become a member of the business. But in Dayabhagha both male & female persons of the family can become a member of the business.

Merits of Joint Hindu Family Business

Merits of Joint Hindu Family Business
Merits of Joint Hindu Family Business

Stability

Joint Hindu Family Business is more stable than other business. As it is a family business. So it is running forever even when the Karta is dead. new Karta will take the position of decided Karta.

Effective control

Joint Hindu Family Business have Effective control. it is run by a family so there are fewer chances of conflict and disagreements. Karta of the family. take all the decision but the whole family agree with Karta.

Management

Joint Hindu Family Business, management and control of the business by Karta of the family. every member of the family follows the decision of the Karta. so the management is very effective.

Loyalty and Co-operation

all the member in the Joint Hindu Family Business of a family or relative. So, loyalty and cooperation between all member. They all trust each other.

Liability

All member’s of the family have limited liabilities to the extent of their share in the ancestral property. Only Karta have unlimited liability. So Liability is not an issue for the member of Joint Hindu Family Business

Membership

There is no limit on the members. Any number of people in a family becomes a member of Joint Hindu Family Business. Members are the one who manages the business.

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