Employees vs Management Company taxes?

I have decided on two people to help operate the park, a onsite manager and a maintenance person. I was going to have them both classified as employees and give both free lot rent and the manager was going to receive a salary. They stated they want to start a management company and for me to pay the management company.

I have no issue doing that from my perspective. I do not have to carry workers comp or pay employment taxes that way. What type of reporting and I am required to do on my end if they form a management company and I pay the company directly.

I still plan on all rents being deposited into my operating account and the management fee will be paid out of that account.

Anyone experience a similar situation or have any advice. Would I still need to 1099 the management company or how would that work exactly?


I currently operate a management company but do not own any properties. I believe you just need to 1099 the new company and expense it out. Hopefully others will comment also.