It's Owned by Service Providers
PSCs are partially owned by the key employees who work in the firm. Employee-owners must own at least 10% of the personal service corporation’s outstanding stock.
Form a Personal Service Corporation and Get An EIN
Are you looking for a fast, easy, and affordable way to get an EIN for your personal service corporation? This guide can help you with that.
You’ll learn all about why an EIN is essential, how to apply, and our top recommendation for a service provider.
Get Started
What is a Personal Service Corporation?
A personal service corporation (PSC) is a type of corporation that provides personal services in specific professional fields. Such services must be performed by qualified professionals who either own or are employed by the corporation.
This business structure is commonly chosen by professionals, such as doctors, lawyers, accountants, consultants, engineers, and artists who wish to incorporate their services while benefiting from limited liability protection and business continuity.
Want to form your personal service corporation and apply for EIN yourself? Follow our step-by-step guide.
I Want the Guide
Ready to skip the tedious task and outsource to professionals? We recommend EIN-Tax-ID-Form.com.
Use the Expert Service
Why We Chose EIN-Tax-ID-Form.com
- 01 Fast and Efficient
- 02 Customer-Focused
- 03 Reliable and Trustworthy
Who Can Form a Personal Service Corporation (PSC)?
To qualify as a personal service corporation, your business must meet specific IRS criteria.
It can be classified as a personal service corporation in the following cases.
Its Employees Actively Participate
The owners need to actively participate in the company’s day-to-day operations. The employee-owners must spend at least 95% of their time delivering personal services.
Its Main Activity is Service-Based
A PSC’s main purpose is to provide professional services. At least 20% of the corporation’s income must come from the personal services performed by employee-owners.
It Operates in Qualified Service Fields
Your business must offer personal services in one or more of the designated service industries. A personal service corporation can’t be formed if it operates in ineligible service fields.
It’s in One of the Qualified Industries
Your personal service corporation must provide personal services in health, law, accounting, actuarial science, consulting, engineering, architecture, and performing arts.
It Passed the Testing Period
The corporation must meet ownership requirements for the entire tax year to be classified as a PSC by the IRS. This is an important eligibility requirement for forming a PSC.
Once you qualify and form a personal service corporation use the services of EIN-Tax-ID-Form.com to get an EIN for your PSC.
Get Your PSC Tax ID NowWhy Should You Form a Personal Service Corporation?
Not sure if a personal service corporation is the right choice for you? Here are several benefits of forming a PSC to help you decide.
Limited Liability Protection
Forming a personal service corporation separates your assets (such as your house, car, and personal savings) from your business liabilities.
If the corporation faces legal action, you’re not personally liable. This means your personal assets are shielded from business obligations and debts.
Tax Advantages and Deductions
Although PSCs are taxed at a flat corporate tax rate, you can deduct business expenses like office rent, equipment, and employee salaries.
Additionally, personal service corporation employees can receive tax-free medical benefits, life insurance, and retirement plan contributions.
Professionalism and Credibility
Operating as a corporation can enhance your professional image. Some industries require companies to be incorporated before bidding on projects.
Clients, investors, and business partners also deem corporations as more trustworthy compared to sole proprietorships or partnerships.
Easy Access to Capital
A personal service corporation can access business financing more easily than other business entities like partnerships or sole proprietorships.
PSCs can easily qualify for business loans and credit lines at more favorable rates and issue stock to raise capital for growth and expansion.
Smooth Ownership Transfer
If a personal service corporation owner wants to sell their shares, they can easily transfer ownership without disrupting business operations.
If the owner or primary professional retires, is incapacitated, or passes away, the corporation continues to exist independently from its owners.
Compensation Flexibility
A personal service corporation allows you to create a structured and flexible compensation plan that benefits both employees and shareholders.
You can split compensation between salary and dividends to reduce tax burdens. You can also offer stock options or bonuses to employees.
Need Expert Assistance Getting an EIN for Your PSC?
Ready to start enjoying the benefits of a personal service corporation but don’t know how to get an EIN?
Applying for an EIN via EIN-Tax-ID-Form.com is a great starting point. It simplifies the process by handling the complex paperwork on your behalf.
Apply Now and Get Your EIN FastWhy Choose a Personal Service Corporation Over a C-Corporation
Want to form a personal service corporation but you’re still wondering if a C-corp would be a better choice?
We’ve compared the two to help you make the right decision.
Swipe horizontally to view the full table
| Feature | Personal Service Corporation | C-Corporation |
|---|---|---|
| Industries Allowed | Restricted to professional services like consulting, law, healthcare, accounting, etc. | No restrictions on fields—can operate in any industry like retail, tech, finance, etc. |
| Ownership Restrictions | At least 10% of the corporation’s stock must be owned by employees providing the services. | No restrictions—can be owned by individuals, other corporations, or even foreign entities. |
| Tax Rate | Subject to a flat 21% corporate tax rate, but profits must mainly come from personal services. | Also taxed at 21%, but offers more tax flexibility. Profits can be distributed as dividends. |
| Tax Deductions | Can deduct salaries, benefits, and business expenses but with fewer deductions than C Corps. | More flexibility in deducting benefits, business expenses, and reinvestments. |
| Liability Protection | Offers limited liability protection, shielding your assets from business debts. | Provides limited liability, protecting shareholders' assets from corporate liabilities. |
| Salary Requirements | Owners must actively participate in the business and be paid reasonable salaries. | Owners do not need to be employees; they can take profits as dividends instead. |
| Best For | Small professional firms where owners are also service providers (e.g., doctors, lawyers). | Larger businesses of any kind or those planning to scale and attract investors. |
Decided to Form a Personal Service Corporation?
If you’ve decided to form a personal service corporation instead of a C-corp, EIN-Tax-ID-Form.com can help you get an EIN.
Whether you're a lawyer, doctor, consultant, or accountant, the platform streamlines EIN registration and makes it simpler.
Start Your EIN Application TodayWhy Choose a Personal Service Corporation Over an S-Corporation
Most business owners get torn between forming a personal service corporation and an S-corp. Here are the key differences and similarities to help you decide.
Swipe horizontally to view the full table
| Feature | Personal Service Corporation | S-Corporation |
|---|---|---|
| Eligibility | Must be service-based with employees providing services in fields like law, healthcare, etc. | Must have 100 shareholders, and cannot include non-residents or other corporations. |
| Taxation | Subject to corporate tax rates on income, but may qualify for deductions tied to employees’ benefits. | Pass-through taxation, where income is taxed at the shareholder level, not at the corporate level. |
| Income Distribution | Profits can be distributed as salaries, dividends, or bonuses to company shareholders. | Shareholders receive income through wages and dividends based on ownership percentages. |
| Liability Protection | Provides limited liability protection for employee-owners from business debts. | Offers limited liability, shielding shareholders’ personal assets from business obligations. |
| Scrutiny & Compliance | Highly scrutinized—must ensure reasonable salaries and avoid excessive tax deductions. | Must meet IRS rules to maintain S-corp status, but generally less scrutiny than a PSC. |
| Ideal For | Professional service firms seeking corporate liability protection with a structured salary system. | Small to mid-sized businesses looking for pass-through taxation and simpler operations. |
Ready To Start Your Personal Service Corporation?
EIN-Tax-ID-Form.com makes the EIN application process a breeze, with quick and hassle-free registration.
Its team ensures you have the necessary documents and filings to meet compliance requirements and get your business up and running smoothly.
Apply For Your PSC EIN TodayTax Implications of a Personal Service Corporation
A personal service corporation is subject to specific tax regulations that differ from those of LLCs, sole proprietorships, and partnerships. Here are the key aspects that stand out.
Flat Corporate Tax Rate
A personal service corporation is taxed at a flat federal income rate of 21%. This flat tax rate can be beneficial for PSCs with higher earnings
However, it may not favor lower-income PSCs, which miss out on lower tax brackets available to regular C-corporations.
Tax Deductions
PSCs can take advantage of certain corporate tax deductions that can help reduce the taxable income of the corporation.
Eligible deductions include rent and office expenses, employee benefits (health insurance, retirement plans), and capital expenditures.
Taxation on Dividends
Like C corporations, a personal service corporation pays corporate tax on its net earnings and personal income tax on dividends given to shareholders.
To avoid this, you can minimize dividend distributions and take higher, but reasonable salaries to reduce double taxation.
Reasonable Compensation Rule
Since a personal service corporation has owner-employees, it’s subject to reasonable compensation rules to prevent tax avoidance.
To stay compliant and avoid scrutiny, you should benchmark salaries against industry standards and avoid excessive profit retention.
Calendar Year Selection
Unlike C corporations that can choose a fiscal tax year, PSCs are required to follow a calendar tax year (January 1 – December 31).
However, your personal service corporation can request approval for a fiscal year, but this requires strong justification
Passive Activity Regulations
Your personal service corporation may be subject to specific regulations, which restrict PSCs from deducting losses from passive activities.
You can limit passive investments for your PSC by focusing on active revenue sources instead of accumulating passive income streams.
Want to Enjoy the Tax Benefits of a personal service corporation?
Filing for a Tax ID has never been easier with EIN-Tax-ID-Form.com.
Its team of professionals will help you obtain your EIN in minutes, ensuring full compliance with all relevant regulations.
Start Your EIN Application HereHow to Form a Personal Service Corporation Step-By-Step
Confirm Eligibility
- Before forming a PSC, make sure your business meets the required IRS criteria.
- Your business must provide personal services in the designated fields.
- The fields include health, law, consulting, engineering, accounting, actuarial science, etc.
- Employee-owners must hold at least 10% of the corporation’s outstanding stock.
Choose a Business Name
- Pick a unique name that’s not already being used by another business in your state.
- You can check the name’s availability on your state's Secretary of State website.
- Your chosen business name should comply with your state’s corporate naming rules.
- If you plan to have an online presence, ensure the domain name is available as well.
Appoint a Registered Agent
- Hire a registered agent to receive legal documents and tax notices on behalf of your corporation.
- They must have a physical address in the state where the corporation is registered.
- The agent must also be available during business hours to receive official documents.
- An agent can be a business owner, an employee, or a registered agent service.
File Articles of Incorporation
- It’s the legal document that officially registers your PSC with the state.
- Includes corporation’s name and purpose, registered agent details, stock structure, etc.
- Submit the Articles of Incorporation to your state’s office and pay the required fees.
- Once approved, you’ll get a Certificate of Incorporation for your PSC.
Draft Corporate Bylaws
- Corporate bylaws are internal rules governing how your PSC will operate.
- They are not filed with the state but are crucial for legal and operational clarity.
- Banks and investors may request a copy of your bylaws before working with your corporation.
- Include directors' and officers’ roles, voting policies, shareholder rights, etc.
Get Licenses and Permits
- Your PSC may need various licenses and permits based on industry and location.
- These include local permits and professional, state business, and employer licenses.
- Failure to obtain the necessary licenses can result in fines and business shutdowns.
- Confirm licenses and permits with your state’s department and local government offices.
Obtain an EIN
- Your EIN or tax ID number functions like a Social Security number for your business.
- You’ll need an EIN to file taxes, hire employees, and open a business bank account.
- You can apply for an EIN online via our recommended ein-tax-id-form.com website.
- Applying for an EIN online is quick and once it is approved you’ll get it instantly.
Open a Business Bank Account
- A business bank account separates your personal and corporate finances.
- This helps protect your assets, simplify tax preparation, and establish business credit.
- You’ll need an EIN, Articles of Incorporation, corporate bylaws, and business licenses.
- Choose a bank that offers features like low fees, online banking, and merchant services.
Hold an Organizational Meeting
- Board meetings allow you to discuss and document important business decisions.
- After incorporation, hold your first board of directors meeting to set up the corporation's operations.
- You should elect officers, adopt bylaws, approve initial contracts, set a financial structure, etc.
- Maintain accurate meeting minutes to ensure compliance and prevent any legal disputes.
Why Choose EIN-Tax-ID-Form.com for EIN Application
- 24/7 Availability
- Lightning-Fast Processing
- Guaranteed IRS Approval
- Priority Customer Support
Why You Need an EIN for a Personal Service Corporation
If you want to start a personal service corporation, you’ll need an EIN for compliance, tax reporting, banking, and operational purposes.
We’ve explained why you require a tax ID in more detail below.
File Taxes
You’ll need an EIN to report your corporation’s income, deductions, and credits. If your personal service corporation will have employees, you must file payroll tax returns.
Hire Employees
If you plan to hire employees for your personal service corporation, getting an EIN is mandatory. You’ll need it to file employment taxes, report wages, and withhold federal and state income taxes.
Open a Bank Account
To keep your corporate finances separate from personal funds, you’ll need a bank account. Most financial institutions will ask for an EIN to open an account under your personal service corporation.
Raise Capital
Getting an EIN makes your personal service corporation legitimate which is crucial for securing funding. Investors, lenders, and banks require your EIN to assess credibility before approving funds.
Get License and Permit Approval
Most government agencies and licensing boards ask for your EIN before approving permits and licenses. Failing to get an EIN could delay necessary approvals and put your company at risk of non-compliance.
Stay Compliant
Your personal service corporation must follow various federal, state, and local regulations to maintain its standing. With an EIN, your PSC can meet tax, employment, and legal requirements, and remain compliant.
Avoid operational hurdles, legal complications, and financial risks by obtaining a tax ID. All you need to do is fill out the simple form on EIN-Tax-ID-Form.com and the company experts will handle the rest.
Get Compliant With a PSC EIN TodayChallenges of Applying for a PSC EIN via IRS
While the IRS provides a free EIN application service, many business owners find it frustrating and time-consuming.
Here are the difficulties of applying for a PSC EIN directly through the IRS.
Complicated Application Process
To apply for your personal service corporation EIN, you’ll need to fill out Form SS-4.
Many PSC owners struggle with its complex sections and a minor mistake can lead to application rejection.
Long Processing Times
Even though the IRS offers a free online EIN application, the process can still take longer than expected.
The IRS EIN application system is only available during specific hours and is inconvenient.
Unresponsive Customer Support
If you encounter issues during the EIN application process, you may need to contact IRS customer service.
Getting in touch with a representative can be extremely difficult due to a lot of traffic on the available support lines.
Application Rejections
Many PSC owners unknowingly make mistakes when applying for an EIN due to complex fields.
If the information provided does not match IRS records, your EIN request may be denied.
Security and Privacy Concerns
The IRS EIN application process requires you to submit sensitive personal and business information.
You must enter this information directly into a government system, which may not provide the highest level of security.
Delayed Confirmations
While the online system provides instant EINs, some PSC applications may need manual review, causing delays.
The IRS does not send email confirmation. You must wait for a letter or check the website manually.
Want to Avoid Hassle?
Applying for your personal service corporation EIN via EIN-Tax-ID-Form.com is easy, quick, and stress-free compared to the IRS.
You’ll get personalized assistance, data privacy and security, and receive instant confirmation via email. So what are you waiting for?
Apply for your PSC EIN Today!Why We Recommend EIN-Tax-ID-Form.com for EIN Application
There are countless EIN application services you can use, but with ein-tax-id-form.com, you get a smoother, faster, and more reliable experience.
Here are more reasons to choose this platform.
Affordable Pricing
If you want a hassle-free and affordable EIN application process, ein-tax-id-form.com offers great value for your money. The platform charges a transparent, one-time fee of $339, without any hidden costs.
Expedited Filing
Unlike other companies that charge premium rates for expedited service, ein-tax-id-form.com processes your personal service corporation EIN promptly at no extra cost, minimizing wait times.
Excellent Customer Service
If you have questions, encounter problems, or need assistance during the application process, ein-tax-id-form.com provides helpful and responsive support. You can reach out via email or phone for application guidance.
Secure and Confidential
Customer security and privacy is a top priority for ein-tax-id-form.com. The website uses advanced encryption protocols to safeguard your data and does not sell or share your information with third parties.
Instant Confirmation
Waiting for an EIN confirmation can take time, but ein-tax-id-form.com speeds up the process by providing instant EIN confirmation via email. As soon as the IRS issues the EIN, you receive an email confirmation immediately.
Simplified Application Form
The IRS EIN application form can be confusing, especially for first-time users. ein-tax-id-form.com provides a user-friendly application form that removes unnecessary complexity., with an easy-to-follow process.
Want to Get Your PSC EIN Quickly?
Leave it to the team of experts at EIN-Tax-ID-Form.com.
Its team has helped over 100k businesses across the country successfully obtain their EINs quickly and easily at an affordable rate.
Obtain Your Tax ID Now!FAQ
-
1. Which personal services qualify for a personal service corporation?
To qualify for a personal service corporation, you must provide personal services in the following industries:
- Healthcare (including veterinary services)
- Law
- Accounting
- Consulting (excluding financial services)
- Engineering and Architecture
- Actuarial Science
- Performing Arts
-
2. Why do I need an EIN for my personal service corporation?
You’ll need a personal service corporation EIN (a unique tax identification number assigned by the IRS) for the following reasons:
- Tax filing and reporting
- Hiring employees
- Opening a business bank account
- License and permit approval
- Compliance with state and federal laws
- Acquiring business funds
-
3. What are the benefits of forming a personal service corporation?
Starting a personal service corporation offers several advantages, including:
- Limited liability protection: A PSC separates personal and business assets, protecting owners from personal liability for business debts and lawsuits.
- Tax Advantages: A PSC is taxed at a flat corporate rate of (21% which may result in lower overall tax liability than sole proprietorships.
- Business Credibility and Professional Image: Operating as a personal service corporation enhances credibility with clients, investors, and lenders.
- Easy Ownership Transfer and Perpetual Existence: Owners can easily sell their shares and the business continues to exist even if an owner leaves.
- Quick Capital Access: A PSC can raise funds more easily than sole proprietorships or partnerships due to their corporation status.
-
4. How long does it take to get a personal service corporation EIN?
The time frame for obtaining an EIN for a PSC depends on how you apply. If you apply online via EIN-Tax-ID-Form.com, you’ll get your EIN on the same day. However, if you apply using the IRS form, it may take four to five business days to get your EIN.
-
5. How is a personal service corporation taxed?
A personal service corporation is taxed at a flat corporate rate of 21%. This rate applies to all taxable income, regardless of the amount. If the corporation distributes profits as dividends, shareholders must pay individual income tax on those dividends.
Ready to Apply For Your Personal Service Corporation EIN?
Don't let complicated paperwork slow you down. Skip the hassle and get your PSC EIN quickly and conveniently with EIN-Tax-ID-Form.com.
Start your business the right way today!
Get Your EIN in less than 24hrs Now
