Partnership vs Joint Hindu Family Firm
The following are the top 10 differences between a Partnership business and HUF business.
A partnership is a contractual relationship arising out of an agreement among the partners. A Joint Hindu Family Firm on the other hand, is a creation of law. It arises out of status and not out of an agreement.
2. Admission of Members
In a partnership firm, new partner can be admitted into firm only with the consent of all the existing partners, whereas a person becomes a member of the business by birth in the case of a Joint Hindu Jamily firm.
3. Maximum Membership
The maximum number of partners is restricted to 10 in the case of banking business and 20 in other cases in a partnership. There is no such restriction as to the maximum number of members in the case of a Joint Hindu Family Firm.
4. Female Member
In a partnership firm, women are allowed to become the members, whereas woman cannot be a member of a Joint Hindu Family Firm by birth.
5. Minor Member
A minor can be admitted into the firm only for the benefits of the firm i.e. he is not liable for losses of the partnership, whereas a minor can become a member of the Joint Hindu Family Firm by virtue of his birth.
6. Liability of the Members
In a partnership form of organization the liability of the partner is unlimited, whereas in a Joint Hindu Family Firm, the liability of the karta is unlimited and all the other members are liable only to the extent of their share in the business.
7. Management of the Business
In a partnership firm, every partner has a right to take part in the conduct and management of the firm’s business, whereas in a Joint Hindu Family Firm, the members have no such rights. The head of the family exercises full control over the affairs of the business. The other members cannot interfere into the affairs of the business.
8. Inspection of Books of Accounts
In a partnership firm, a partner can demand the accounts of the partnership, whereas a member of Joint Hindu Family Firm has no right to call for the accounts
9. Death of a Member
A partnership comes to an end with the death, retirement, insolvency and incapacity of a partner. But a Joint Hindu Family Firm will be continued in spite of the death or insolvency of a member.
10. Governing Body
The Partnership Act governs the activities of the partners and their rights and liabilities, whereas the provisions of the Hindu Law govern a Joint Hindu Family Firm.