What is a Personal Services Business (PSB)?

A Personal Service Business has the following characteristics:

1. An individual provides services through an incorporated entity;
2. That individual also holds more than 10% of the shares in the same incorporated entity;
3. If it was not for the incorporation, the individual would have an employee-employer relationship;
4. The corporation does not employee 5 full-time employees apart from the shareholder; and
5. the services were not provided to an associated corporation.

1. The level of control the payer has over the service provider’s tasks (more control suggests an employment relationship).
2. If the payer provides tools for the service provider to use (this indicates an employment relationship).
3. Whether the service provider is required to complete the work personally or can hire subcontractors (inability to subcontract points to an employment relationship).
4. Whether the service provider has made a capital investment in their business.
5. Whether the service provider has the potential for profit and faces a risk of loss.
6. Offering similar services to other clients suggests self-employment.