Personal-Service Corporation

AAA

DEFINITION of 'Personal-Service Corporation'

A corporation that is created for the purpose of providing personal services to individuals or groups. To be considered a personal-service corporation by the IRS, the employee-owners must perform at least 20% of the personal services themselves. The employee-owners must also own at least 10% of the outstanding stock of the personal-service corporation on the last day of the initial one-year testing period.

INVESTOPEDIA EXPLAINS 'Personal-Service Corporation'

If you function as the owner-employee of a personal-service corporation and your primary business is related to creative/fine arts or photography, any current expenses you incur pursuant to creative work are deductible for the corporation. However, either you or your family members must hold all or nearly all of the corporation's outstanding stock. This rule does not apply to other types of personal-service corporations.

RELATED TERMS
  1. Outstanding Shares

    A company's stock currently held by all its shareholders, including ...
  2. Corporation

    A legal entity that is separate and distinct from its owners. ...
  3. Personal-Service Activity

    Any business enterprise with the primary purpose of providing ...
  4. Protected Cell Company (PCC)

    A corporate structure in which a single legal entity is comprised ...
  5. Registered Holder

    Shareholders who hold their shares directly with a company.
  6. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...
Related Articles
  1. Six Steps To A Better Business Budget
    Entrepreneurship

    Six Steps To A Better Business Budget

  2. I am starting a limited liability company ...
    Entrepreneurship

    I am starting a limited liability company ...

  3. Tax Credit For Plan Expenses Incurred ...
    Entrepreneurship

    Tax Credit For Plan Expenses Incurred ...

  4. Start Your Own Small Business
    Entrepreneurship

    Start Your Own Small Business

Hot Definitions
  1. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
Trading Center