Switching from Sole Proprietorship to Inc.

[Davidca]

What is the name of your state? California

I am starting a business which I can run by myself except I need to find someone to make a complicated website for me. Eventually I will incorporate but currently, the business is filed as a Sole Proprietorship. Do I have to incorporate if I can get a website coder to work for either 1) stock options or 2) 1099 cash?

 

[seniorjudge]

What is the name of your state? California

I am starting a business which I can run by myself except I need to find someone to make a complicated website for me. Eventually I will incorporate but currently, the business is filed as a Sole Proprietorship. Do I have to incorporate if I can get a website coder to work for either 1) stock options or 2) 1099 cash?

Obviously, number 1 above doesn't make sense if you are a sole proprietorship; you have no stock options to offer. If you can offer the hope of stock options in the future and get somebody to work for a promise of maybe something down the road, then you will certainly need to report it to the taxing authorities. But I couldn't tell you how to do this.

In other words, there are so many variables in your questions, that it may be difficult for our tax experts here to answer your questions.

 

[LdiJ]

What is the name of your state? California

I am starting a business which I can run by myself except I need to find someone to make a complicated website for me. Eventually I will incorporate but currently, the business is filed as a Sole Proprietorship. Do I have to incorporate if I can get a website coder to work for either 1) stock options or 2) 1099 cash?

As Senior Judge said you can't offer stock options unless you have stock to sell, therefore that won't work for you.

However, someone contracting to build a website for you wouldn't be your employee, they would be an independent contractor (assuming that building websites for clients is what they do for a living or as a side business) therefore paying via a 1099 would make sense.