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What is Hindu Undivided Family Business | Advantages and Disadvantages

Hindu Undivided Family is a unique type of business entity. It is governed and guided by Hindu law, one of the many religious laws practiced in India. In this article, we will know what is Hindu Undivided Family business and what are the Advantages and Disadvantages of Hindu Undivided Family bussiness.

What is Hindu Undivided Family Business | Advantages and Disadvantages

What is Hindu Undivided Family Business

Hindu Undivided Family Business is an exact type of business structure found only in India. It is one of the classical methods of professional design in the nation. It is governed by Hindu law. The source of membership in the company is the family born and can be a member of the company for 3 generations in a row. The business manages the head of the family and is called ‘Karta’. However, all members have equal ownership of the ancestral property and are called co-partners.

Advantages of Hindu Undivided Family Bussiness

(1) Exemption from statutory etiquette for starting and ending

There is no legal impediment to setting up a Hindu Undivided Family business. Businesses can be started whenever and wherever you want. Unlike other business entities, this type of business does not require you to fill out a variety of forms when starting or ending a business.

(2) Freedom of decision

In Hindu Undivided Family business, the ‘doer’ is the head or manager of the business. So he doesn’t have to wait for any kind of advice. He can act quickly by making independent decisions in any business case.

(2) Monopoly on all profits

In the case of a joint Hindu family, the family members are entitled to all the benefits. The feeling that all the benefits will remain at home motivates the work. Gives maximum satisfaction. So he gets a lot of permanent customers.

(4) Direct contact with customers

In Hindu Undivided Family business, the ‘doer’ himself gives maximum satisfaction to his customers by establishing close association with them. So he gets a lot of permanent customers.

(5) Close relationship with the worker

Karta has close ties with all his workers. He is well acquainted with their preferences. In this way, he promotes the business by assigning tasks to them.

(6) Privacy

Doers can keep their merchandise secret. In today’s age of competition, privacy is essential to commercial success. It can be easily kept in Hindu Undivided Family style business.

(7) Thrift

Hindu Undivided Family Business does not involve substance abuse. As the family has capital and resources, Karta tries to make the best use of them. He knows that if the account is misused, he will have to bear the loss.

(8) Loan facility

The ‘Karta’ of a Samyukta Hindu Parivar business can get a loan at a discounted rate and condition on his personal suffix. There are special benefits to getting a loan for personal relationships and unlimited liability.

(9) Confidence

Hindu Undivided Family The tent of business is linked to one of the pillars of the doer. The doer does all the work himself. It gives him a sense of responsibility, patience and confidence.

(10) Caution

The doer is always aware of the feeling that the entire burden will fall on his family in case of loss of business. Such personal caution is not found in any other organization.

Disadvantages of Hindu Undivided Family Bussiness

(1) Limited capital

The capital of privately owned organizations depends on the strength of that particular person. Often the effect of capital is limited to the owner’s private capital and the loans he can get. It takes a huge amount of money to open a huge factory. So large scale businesses are beyond the reach of Hindu families.

(2) Limited management tact

Hindu Undivided Family Business and management skills are also limited. An individual has limited judgment, discretion and management ability. This hinders the success of the growing trade. It is useless to expect salaried employees to work with enthusiasm and enthusiasm even if they try to sell the work by hiring employees. They only hope for a salary.

Second, when employees have an organization, controlling them properly also becomes a problem. So a joint family business is only useful for small businesses.

(3) The possibility of making a hasty decision

The doer can make quick decisions about the business. He does not need anyone’s permission. But over-confidence and over-enthusiasm can lead to hasty and erroneous business decisions.

(4) Suspicion breeds confidentiality

In a united Hindu family, sometimes secrecy is an obstacle to the progress of the organization. The lender may not have full knowledge of the financial position of the lender. They understand that the financial capacity of each individual is limited. Therefore, the borrower can never get a loan beyond a certain limit.

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