Starting a sole proprietorship during the prototyping stages?

by LtDenali. Posted on Sep 10, 2020    2    2


I'm developing a product that I eventually plan to sell. I am still VERY deep in the prototyping proof-of-concept phase.

I am interested in setting up a sole proprietorship for tax purposes. While my expenses haven't gotten bad yet, they are bound to in the future.

I would not be making any income during this time, as once I plan to sell I'll set up an LLC.

Is doing this...allowed? Am I thinking about this wrong?


Comments

avalpert 1

You don't 'set up' a sole proprietorship, a sole proprietorship is the default tax structure for a business that hasn't incorporated (or elected to be treated as such). You are not yet operating a business, you can deduct (and/or capitalize) certain start-up costs in the first year you are open for business.

CCC_PLLC 3

By default you are a sole proprietorship, you don’t need to do anything else. And yes, you can form an LLC later. - an attorney