The professional corporation as a C Corporation

Thinking about incorporating your personal service business?

If you do, the IRS will likely consider your new corporation to be a “qualified personal service corporation” for tax purposes. In that case, tax brackets don’t matter and the hefty 35% flat-tax rate applies from the first dollar of taxable income.

If you want to learn how to avoid paying taxes at this steep rate, read my new, article titled Tax Tips: Professional Corporation as a C Corporation Is a Personal Service Corporation.

Three ways our fact-filled article can help you:

1. We’ll explain the “Function Test” and “Ownership Test.” For your corporation to be classified as a qualified personal service corporation, two tests must be met. We’ll explain them both when you read the full article.
2. We’ll tell you what the IRS considers to be “personal services.” The IRS and case law don’t provide much guidance as to what constitutes personal services. IRS temporary regulations list eight broad categories that you should know about. You’ll find all eight of them listed when you read the full article.
3. We’ll show you how to avoid paying the 35% personal service corporation rate. There are a variety of ways to do this. There’s not enough space here to explain everything but we’ll let you in on these techniques when you read the full article.