How Formed? These are "C" corporations and are formed in the same manner. This is a tax concept, rather than a different form of doing business (as is also true for "S" corporations and personal holding companies). A personal service corporation is one that has as its principal business the performance of personal services, and these services are substantially performed by employee-owners. For this purpose, "personal services" are those rendered in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, and consulting.

Taxation: Personal service corporations are subject to the passive loss rules, are not entitled to use the graduated tax rate schedules (they are taxed at the flat rate of 35% of taxable income), and are restricted in their ability to select a taxable year. Personal service corporations may use the cash method of accounting.

Convert to LLC? Note that while some may wish to convert their personal service corporations to limited liability companies, California law prohibits a limited liability company from rendering services for which a license, certification, or registration is required under the Business and Professions Code or the Chiropractic Act (unless the specific licensing body permits it - as with talent agencies).