PERSONAL SERVICE CORPORATION –

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Description

A Personal Service Corporation — also known as a Professional Service Corporation, or a PSC — is a corporate entity formed by successful professionals who provide personal services to their clients. Businesses of this type include:

• Doctors, including dentists and veterinarians
• Accounting offices
• Law firms
• Engineers
• Architects
• Business consultants
• Actuarial firms
• Performing arts businesses

REQUIREMENTS FOR PSC

For your business to qualify as a Personal Service Corporation in NYC, it must meet several requirements set in place by the IRS. These criteria must be satisfied during a “testing period,” which is often the previous year for tax purposes:

• You’re an employee-owner of your corporation, providing personal services for (or on behalf of) your corporation on the last day of the calendar year.
• During the calendar year, you and other employee-owners must perform a minimum of 20 percent of services in person.
• The principal activity of the corporation is providing “personal services” during the calendar year — all owner-employees must perform at least 20 percent of their business activities within the current tax year.
• The employee-owners must own more than 10 percent of the fair market value of any outstanding stock on the last day of the calendar year.
• You must conduct annual meetings and file annual reports — most states require annual meetings of shareholders and officers, with reports that must be filed with the Secretary of State’s office.
• Your company must file and pay annual franchise taxes — most states require payment of some corporate tax for the privilege of doing business in that state.
• You are required to maintain updated bylaws — the rules by which your corporation operates. They do not need to be filed, but must be kept by the officers of your corporation.

ADVANTAGES OF PSCS

When your business forms a NYC Personal Service Corporation, you enjoy a number of tax advantages. The law allows you, as an owner-employee, to provide tax-free life insurance and health insurance benefits to other employees. You can also offer fringe benefits, such as 401(k) retirement plans with higher limits on contributions than unincorporated businesses have. There are other benefits as well:

• Disability insurance is deductible
• Dependent care can be deducted
• Business travel is deductible
• Equipment purchases can be deductible
• Salaries and bonuses paid to owners and employees are deductible
• Profits from a closely held family business can be distributed to members of the family in the form of salary and fringe benefits

Through distribution to your shareholders, the profits of a PSC can be reduced to zero, thereby making the corporate tax liability zero. These advantages don’t exist for other types of business organizations, such as limited liability corporations (LLCs), partnerships or S corporations. If you have questions contact the best NYC accountant firm, Miller & Company LLP.

Read more at https://www.cpafirmnyc.com/personal-service-corporation

Working Hours: 

Monday - Friday: 9:00 am - 7:00 pm;

Saturday: 9:00 am - 4:00 pm,

Sunday: Closed

Payment: cash, check, credit cards.

CONTACT US

Miller & Company LLP: CPA of NYC

Midtown Manhattan, NY

274 Madison Ave, Suite 402,

New York, NY 10016

(646)-865-1444

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