What is a Personal Service Corporation?

A personal service corporation (PSC) is a qualifying C-Corporation that provides its clients with personal services, such as consulting, accounting, medical care, and legal assistance. If you meet the requirements, you may benefit from the advantages of limited liability, various tax breaks, and perpetuity that come with forming a PSC business structure.

Personal Services Corporation Requirements

The basis for a PSC business entity is its commitment to personal service offerings, but there are various other eligibility requirements. In regards to employee-owner business activities:

  • The owner must personally carry out at least 20% 
of all company services
  • At least 95% of all service provisions must be within 
the employee-owners’ authorized industries

As far as the corporation’s financial holdings are concerned:

  • Employee-owners must possess at least 10% of the company’s stock value
  • At least 95% of company stock must be retained by other partnerships, S-Corporations, and personal service corporations
If you check all the requisite boxes, let’s get to work!

Why Do You Need an EIN for a PSC?

An Employer Identification Number (EIN) is the business equivalent of your personal SSN—without it, you’ll be hindering your own access and progress. An employer ID number 
is necessary to complete the following basic functions for this type of business entity:

Applying for business bank accounts and loans

You’ll need your EIN number to fill out bank account records and loan applications, which can elevate your business’ reach and financial success.

Federal tax purposes

All C-Corporations—PSCs included—must file U.S. Corporation Income Tax Returns each year, which requires an EIN.

Hiring employees

An EIN number is a prerequisite for employee payroll and the paperwork necessary to work with foreign independent contractors.

Applying for business bank accounts and loans

You’ll need your EIN number to fill out bank account records and loan applications, which can elevate your business’ reach and financial success.

Federal tax purposes

All C-Corporations—PSCs included—must file U.S. Corporation Income Tax Returns each year, which requires an EIN.

Hiring employees

An EIN number is a prerequisite for employee payroll and the paperwork necessary to work with foreign independent contractors.

Benefits of an EIN for a PSC

Securing an EIN for your PSC is more than a necessary business move — it provides unique benefits to your organization:

Increased available tax deductions

As a PSC, your company has access to increased business deductions. These can apply to standard and fringe benefits such as health, life, and disability insurance, and dependent care.

Tax shielding for employee-owners

PSCs pay a flat corporate tax rate of 21%, enabling employee-owners to use their business as a shield against higher tax rates on their personal income.

Tax-free benefits

With PSC status, your company can secure tax-free healthcare benefits and life insurance for its employees.

Flexibility in employee retirement plans

You’ll have greater freedom in designing your employee’s retirement funds, including increased contribution limits.

Increased available tax deductions

As a PSC, your company has access to increased business deductions. These can apply to standard and fringe benefits such as health, life, and disability insurance, and dependent care.

Tax shielding for employee-owners

PSCs pay a flat corporate tax rate of 21%, enabling employee-owners to use their business as a shield against higher tax rates on their personal income.

Tax-free benefits

With PSC status, your company can secure tax-free healthcare benefits and life insurance for its employees.

Flexibility in employee retirement plans

You’ll have greater freedom in designing your employee’s retirement funds, including increased contribution limits.

An employer ID number creates separation between business and personal finances—this limits your liability in the event of corporate bankruptcy and provides several federal tax advantages for a business owner.

Why GOV+

It’s easy to understand the benefits of an EIN—it’s not quite as easy to go through the process of securing one for your personal service organization.

But with GOV+, it can be.

With a combination of cloud-based technology and quick customer service, we’ve streamlined the process. You file one simple form; 
we handle everything that comes after. When you apply for personal service organization tax IDs, GOV+ handles your needs with efficiency, attention to detail, and ultimately, success.

Ultra-quick customer service

Get fast, accurate answers to all of your questions at every step. With average 30 second hold times and efficient conversations, you’ll be on your way in no time.

Real-time status updates

No more waiting and wondering about your form’s status. GOV+ offers instant updates and customizable alerts, from the moment of filing to final outcome.

Tailored Transactions

GOV+ technology eliminates needless busywork with forms and applications that adapt to you. Your situation is unique, and you deserve a simple, personalized experience.

Ultra-quick customer service

Get fast, accurate answers to all of your questions at every step. With average 30 second hold times and efficient conversations, you’ll be on your way in no time.

Real-time status updates

No more waiting and wondering about your form’s status. GOV+ offers instant updates and customizable alerts, from the moment of filing to final outcome.

Tailored Transactions

GOV+ technology eliminates needless busywork with forms and applications that adapt to you. Your situation is unique, and you deserve a simple, personalized experience.

Employer ID Number Made Easy

Get Your EIN for your Personal Service Corporation Today!

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