Could my consulting corporation be a personal services business?
Could Your Corporation Be a Personal Services Business?. Understand the Canadian tax rules, records to gather and practical next steps before preparing your return.
Request a quote →Arsen Accounting Services · Prepared October 29, 2026
Corporate filing and ownership: 10 T2 questions · Browse the 100-article collection
The direct answer
Possibly. One important question is whether you would be an employee of the client if your corporation did not exist, alongside the other statutory conditions. A personal services business faces restricted deductions and is not eligible for the usual small business deduction. Having a corporation or several invoices does not alone resolve the risk.
Review the working relationship behind the contract
A corporation providing services mainly through one individual should consider the actual arrangement with its customer. Explain supervision, control, tools, financial risk and the ability to hire help. A contract calling the corporation independent is relevant, but it does not settle the analysis. The preparer needs the facts of how the services are performed.
Do not assume incorporation guarantees small-business treatment
Personal services business rules can materially change tax treatment and available deductions. Identify the issue early instead of discovering it after using a standard small-business calculation. Provide all relevant customer relationships and worker arrangements. The review should distinguish a genuine business assessment from a promise that a particular contract phrase will solve the classification.
What to gather before the review
- Customer contracts and description of actual duties
- Control, tools and staffing information
- Revenue concentration and relevant ownership details
Does having a corporation automatically make me an independent business for tax?
No. The personal services business rules look beyond the corporate form. A fact-specific assessment is needed where the relationship could resemble employment without the corporation.
Your next step
Bring your main contracts and explain control, staffing, tools, substitution rights and business risk.
Related reading
Official sources
Fact sheet – Personal Services Business
Sources checked for this collection on October 28–29, 2026. Annual forms may refer to a specific tax year. Use the rules and limits for the year being filed. General information; eligibility, elections and deadlines depend on the facts. No deduction or tax saving is guaranteed.
Let's discuss your tax needs.
Tell us the tax years, province and filing needs. Prepare a short quote inquiry or contact us directly to discuss availability and scope.
Email: elena@arsenaccounting.com
Phone: (647) 297-4126
Before you send
Please provide a brief description of the assistance you need. Do not email SINs, passwords, banking details or sensitive tax documents in your initial inquiry. We'll discuss an appropriate secure method of sharing documents if we proceed.
Information on this website is general and is not individualized tax advice. Engagements are subject to acceptance, agreed scope and applicable terms.