Disadvantages: As against the above advantages, the Joint Hindu Family firm suffers the following disadvantages:

  

1. There is no encouragement to work hard and earn more, because members who work hard are not properly rewarded and all the co-partners irrespective of the work turned out by them share the benefit of their hard work.

2. As “Karta” takes the responsibility to manage the firm, the other members of the family may become lazy and inactive.

3. The “Karta” exercises full control over the entire business, and other co-partners have no right to interfere in the management of business, so this hampers the initiative and enterprise of individuals.

4. Generally, the elder members of the family may not approve the views of the younger members of the family. This leads to conflict between old and young members of the family and may result in the partition of the business.

5. Karta may misuse his freedom for his personal benefits as other co-partners have no right to interfere in conducting business.

Evaluation:

This form of business organization is losing ground with the gradual end of the Joint Hindu Family system. It is being replaced either by sole proprietorship or partnership firm.