OBF Marketing

A management services agreement is typically prepared by the management company. It will include provisions common to all business contracts, such as the names of the parties, the effective date and duration of the contract, choice of law, arbitration of disputes, remedies for breach of the agreement, liability for attorney fees, prohibiting oral modification of the agreement, etc. It also may contain provisions covering various other matters

Independent Contractor vs. Employee Status
An important issue that arises with hiring any outside party is assuring the status of the outside party as an independent contractor. The Internal Revenue Service (IRS) has complex rules for determining whether someone will be classified as an employee or as an independent contractor. This also can be an issue under state law.

Many businesses hire an outside company to perform various management and administrative functions. The hired manager may be a corporation, limited liability company (LLC), partnership, or other type of business entity, or an individual operating as a sole proprietorship.

Compared with using in-house employees for management functions, contracting with an outside manager has the potential to reduce costs and increase efficiency. In addition to saving the costs associated with employees, your company also may be able to avoid the costs of equipment and office space associated with such employees.