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Question

Distinguish between the following.

Joint Hindu family firm and Sole Trading concern

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Solution

Difference between Joint Hindu Family Firm and Sole Trading Concern

Basis of Difference

Joint Hindu Family Firm

Sole Trading Concern

Members

No limit on the maximum number of members in a family business.

Has only one member (owner).

Continuity

It continues even after the death of the Karta. The next eldest member of the family becomes the Karta.

It comes to an end after the death, lunacy or insolvency of the owner.

Sharing of profits

Profits and losses are shared by the coparceners.

Profits or losses belong to the owner and are not shared with anyone.

Governance

It is governed by the Hindu laws & the Hindu Succession Act 1956.

There is no regulating act.

Liability

Liability of all members is limited, but Karta has unlimited liability.

Liability of the sole proprietor is unlimited.

Decision making

All decisions are taken by the Karta.

All decisions are taken by the sole proprietor.


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