Personal Service Business (PSB) Tax & Accounting Support

If you operate through a corporation but work primarily with a single client, your business may be classified by the CRA as a Personal Service Business (PSB).

This classification comes with strict tax rules and limitations — and if not handled properly, it can lead to higher taxes and compliance issues.

At E & E Professional Accountants, we help professionals understand their status, reduce risk, and structure their finances correctly.

What Is a Personal Service Business?

A Personal Service Business (PSB) typically applies when:

  • You are incorporated
  • You provide services to one main client
  • Your working relationship resembles employment
  • You would likely be considered an employee if not incorporated

In these cases, the CRA may restrict how your corporation is taxed.

Why This Matters

If classified as a PSB:

  • Many business expense deductions are not allowed
  • Income is taxed at a higher corporate tax rate
  • You may only be able to claim salary (payroll) as an expense
  • Your overall tax efficiency may be significantly reduced

Common Situations
We See

We regularly help clients who:

  • Work as IT contractors for a single company
  • Provide consulting services to one primary client
  • Recently incorporated but are unsure of their tax status
  • Found out about PSB rules after starting operations
  • Want to avoid issues with CRA audits or reassessments

How We Help

PSB Risk Assessment

We review your structure and working relationship to determine your exposure.

Tax Planning Strategy

We help you understand your options and reduce unnecessary tax burden.

Payroll Structuring

Ensure your income is handled correctly under CRA guidelines.

Compliance Support

Stay aligned with CRA requirements and avoid penalties.

Long-Term Structuring Advice

Plan ahead if your situation evolves (multiple clients, business expansion, etc.)

Already Operating This Way?

Many professionals come to us after realizing they may fall under PSB rules.

The earlier this is addressed, the more options you have to correct or optimize your structure.

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Not sure if your corporation qualifies as a PSB?

Let’s review your situation and give you clear, practical guidance.

Book a Consultation