Can my management company charge a fee if it has no employees?
Review what services the company actually provides, who performs them and how the fee is supported.
By AE Tax Advisors Team · Updated October 28, 2026
Review what services the company actually provides, who performs them and how the fee is supported. Outsourcing does not automatically prevent a real service business, but a company with no work or resources needs more than an invoice label.
A business-owner scenario
An owner creates a management company that contracts with independent marketing and accounting vendors. It wants to charge the operating company a percentage of profits. The analysis should distinguish vendor administration and actual management from a payment designed only to shift income.
Illustrative scenario, not a client result.
Work through the transaction
- Identify services, deliverables and responsible people.
- Reconcile vendor costs and management activity.
- Support the charge from the work rather than the payer's desired deduction.
The mistake that changes the result
A fee expressed as a percentage can conceal the absence of a service-based pricing method.
Records that resolve the question
- Service agreement.
- Vendor contracts.
- Work product.
- Fee calculation and payment evidence.
The decision to document
Ask for a scope and pricing memo that an unrelated payer could understand. Have the tax advisor consider related-party treatment and counsel review the agreement before the first recurring payment.
Which fact changes the answer?
A company that selects vendors, supervises work and supplies documented deliverables differs from an empty entity forwarding invoices. Identify the actual functions. A management agreement cannot establish services that nobody performed or resources the company did not control.
Explore multiple-business coordination advisory · Discuss your situation with AE Tax Advisors
Related owner questions
- Company A bought equipment that Company B uses. Who depreciates it?
- I sold one company but kept the shared employees. How should costs change?
Sources and scope
General educational information prepared with AI assistance. No individual professional review is represented. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.