Should I provide stock options as an incentive to my employees?

It depends.  If you’re an incubator type company looking for investors and wanting to hire top talent with the expectation of being acquired or going public one day, then yes, stock options are a good option for you.  However, if you don’t have such grandiose plans for your business, it is much better to offer profit sharing or bonuses or some other form of incentive, rather than equity.  This way you avoid having to comply with complicated securities laws, minority shareholder headaches, and very complicated stock options plans and agreements.