Personal Service Company - Woman using laptop - Crunch
Picture of crunch software on mobile

Professional Bio Templates & Examples

Create a compelling professional narrative for a proper, attention-grabbing introduction.
Website bios
Speaker intros
Professional Profile

When people talk about a Personal Service Company or ‘PSC’, they’re usually referring to a limited company which has been set up to provide the services of a single contractor, who is usually the sole shareholder and company director of the business.

The term ‘Personal Service Company’ also features heavily in the context of the government’s rules to determine employment status – also known as IR35. These rules ensure workers are classified correctly as employed, or self-employed and pay the correct amount of employment tax.

Just to add to the confusion, it’s also worth noting that ‘PSC’ in the world of business can also stand for ‘Person of Significant Control’ – someone who has the right to exercise significant influence over a company. This is something completely different – you can find out more about those kinds of PSC’s in our article "What you need to know about the PSC register".

Read on to find out more about Personal Service Companies.

Why should I set up a Personal Service Company?

When working as a contractor, you may find that some clients and recruitment agencies prefer to work with limited companies rather than unincorporated sole traders. This is usually the case when contracting for larger organisations and those in the financial sector.

There are other reasons why an individual will work on contracts via a limited company, including limited liability (the separation of your business finances from your own personal finances) and the potential to reduce the amount of tax paid. There’s plenty of advice relating to this in our article, "Sole trader vs limited company, or umbrella: what’s best for you?".

What are the tax implications?

Working through a Personal Service Company can mean that you pay less tax. This is because the PSC will get paid without any tax or NI taken. The PSC will pay Corporation Tax (and possibly other small business taxes) on any profits and the PSC director can pay themselves tax-efficiently with a combination of salary and dividends. Usually this combination results in a lower tax bill and higher take-home pay for the company director when compared to direct employment or sole trade.

HMRC are not particularly keen on this state of affairs, especially where they believe that the contract between the end-client and the PSC is effectively one of employment. HMRC has introduced rules, known as IR35, or ‘off-payroll working’ rules. The rules are intended to make sure that workers, who would have been an employee if they were providing their services directly to the client, pay the same tax and National Insurance contributions as employees. For more detail on the background to IR35 see our IR35 content hub.

If you’re thinking of becoming a contractor working through a Personal Service Company, you’ll need to make sure that:

  • you’re aware of IR35
  • any contracts you take on have been professionally reviewed in case they fall ‘inside’ IR35.

This could have a big impact on how you get paid, and how much tax and NI you have to pay.

How do I go about setting up a Personal Service Company?

You can register a limited company yourself for just £10, with Crunch Company Formations – we’ll even refund your fee if you sign up for limited company accounting with Crunch.

We’ll also refund your fee if you take out our Small Business Insurance, or open a Barclays business bank account through us.

We’ve got an article about the steps you need to consider when setting up a limited company.

If you’re thinking of setting up a Personal Service Company and you’d like to see how the experts at Crunch can help you with support and advice to set a limited company up for you as well as keeping on top of all your business finances and limited company accounts then why not speak to one of our friendly advisers for a free consultation.

guide cover for "8 great ways accountancy can help your ecommerce business"

Unlock your free ecommerce business guide!

Expert Insights
Actionable Tips
Strategic Advice

To receive our guide on valuable insights into the world of expenses for limited companies please submit your details below.

Please enjoy our guide on 8 Ways Great Accountancy Helps ecommerce Businesses Succeed.

Click below to download our PDF guide.
Oops! Something went wrong while submitting the form.

By submitting you are agreeing to be contacted by Crunch.

Speak to an accounting expert

If you're unsure what level of support you need, our friendly team are on hand to help you pick the right package for you.
Self Assessment tax returns done for you, from just £200 £130+VAT
Take the stress out of Sole Trader Accounting, for just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE
Get 25% Off Crunch Pro and Premium for the first 3 months!
Share this post
Tom West
Community and Social Manager
Updated on
April 9, 2021

Knowledge Hubs

Take control of your accounts, today

Crunch’s effective software package includes being able to talk to an expert client manager and a Chartered Certified Accountant. You can count on Crunch to make you productive and profitable.
Picture of crunch software on mobile

Professional Bio Templates & Examples

Create a compelling professional narrative for a proper, attention-grabbing introduction.
Website bios
Speaker intros
Professional Profile

Unlock Your Free Limited Company Expense Guide!

Expert Insights
Actionable Tips
Strategic Advice

Save your seat! Live e-commerce webinar

Register and soak in the wisdom from top industry leader! June 27, 2024 1:30 PM
Dive into e-commerce basics
Expert industry insights
Practical tips and savvy tricks
Pro Tip
Looking for a dedicated accountant?

Our Enterprise packages offer tailored support for you and your business. You can focus on your business, we'll crunch the numbers.

Pro Tip
Boost your business finances with our Ltd Company packages!

Award-winning software with support from expert accountants

Pro Tip
Take the stress out of Sole Trader Accounting

Just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE

Pro Tip
Get 50% off your Self Assessment

Get your tax return sorted by experts for only £130+VAT!

Pro Tip
Using cloud-based accountancy software to manage your finances gives any small business a big advantage!

At Crunch we provide affordable cutting-edge, easy-to-use software with real human support from expert chartered accountants. That’s probably why 81% of our clients would recommend Crunch.

Pro Tip
Did you know - you have access to a Chartered Certified accountant for free on our paid subscriptions?

Book a call with our one accountants and get your questions answered. Just £25.50 +VAT for Crunch Free users.

Pro Tip
Get 35% off your Tax Return!

Crunch’s Self Assessment service provides an expert accountant to complete, check, and file your Self Assessment for you for just £130 +VAT.

Pro Tip
Did you know - We have a free plan that is great for sole traders and limited companies?

Why not see for yourself? It’s simple and easy to use and 100% free.