State any four limitations of HUF.

1.	State any four limitations of HUF.
Answer» (1) Limited resources – The capital of the business is limited to the ancestral property. This limits the scope for expansion of the business. (2) Unlimited Liability of Karta – The Karta is bound not only with the responsibility of decision making and management of the business, but also suffers from the risk of unlimited liability. His personal property can be used to meet business obligations (3) The dominance of Karta – The Karta individually manages the business, which may, at times, not be acceptable to other members, resulting in conflicts among them. This may lead to a breakdown of the family unit. (4) Limited managerial skills – Since Karta may not be able to manage every aspect of business with equal efficiency, this may result in poor profits or even loss for the organisation.

Answer»

(1) Limited resources – The capital of the business is limited to the ancestral property. This limits the scope for expansion of the business.

(2) Unlimited Liability of Karta – The Karta is bound not only with the responsibility of decision making and management of the business, but also suffers from the risk of unlimited liability. His personal property can be used to meet business obligations

(3) The dominance of Karta – The Karta individually manages the business, which may, at times, not be acceptable to other members, resulting in conflicts among them. This may lead to a breakdown of the family unit.

(4) Limited managerial skills – Since Karta may not be able to manage every aspect of business with equal efficiency, this may result in poor profits or even loss for the organisation.

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