Mention the limitations of Joint Hindu Family Business

cbse
formsofbusiness

#1

1.Limited resources : The main source of capital under this kind of business is the ancestral property. Therefore, the business suffers from the problem of limited capital.
2.Unlimited liability of Karta : The liability of the Karta is unlimited. In case of loss, the personal property of the Karta can be used for making payment to the creditors.
3.Dominance of Karta : The entire control and management of the business lies with the Karta. Sometimes, the members may not agree with the decisions taken by the Karta. This may create conflict among them and consequently operations of the business breaksdown.
4.Limited managerial skills : No man on this earth is perfect. In the case of Joint Hindu Family Business, the head of the family holds the position of Karta by virtue of the Hindu Succession Act, 1956. Hence, it is not possible for the Karta to be an expert in all areas of management.