You may not realize it at the time, but your business credit is just as important to the overall health of your business as your personal credit is to your private life. Many creative people will rush headlong into starting their own business without any inkling on how to create a healthy business credit profile. Let’s take a look at a few basic steps you need to take to give your new business the healthy start it needs to get off the ground.

Separation is key

There is a reason why so many companies out there are listed as corporations. When a company becomes a corporation, it essentially becomes its own person with its own credit profile and history. Even if your own personal credit is sterling, you want to create a LLC or limited liability company so that in case your business fails, your own personal credit will remain untouched. You should never, ever run a business based on your own personal credit profile. The failure rate, even for well run businesses, is simply too high and the cost is far too great.

Stick to the plan

Next, you need a first class business plan. If you aren’t familiar with business plans, they are like an outline for your business. Before you can lay a single brick or write your first line of code for your business website, you need to have a viable, successful business on paper. You will need to outline every expense, from overhead to employee salaries to incidentals. You will need to go into detail about the product or service you will be providing and how you plan on making a profit. A viable business plan is absolutely essential to getting the loans, and the credit, you need to start your business.

Cross your T’s and dot your I’s

Going hand in hand with your business plan is making sure that you have all of the necessary permits and legal permissions you need to start your business. If you are planning an online business, make sure that you are allowed to run it out of your home. You could have the best written business plan in the world but if you can’t get your business licensed, it is a non starter and no bank will even consider extending you the credit you need.

Time to get assessing

Before you head off to your lender of choice, you will need to perform a credit assessment. A credit assessment is an evaluation that you can perform that will give you an idea of the standards you need to meet to get the necessary financing. These assessments don’t take very long and they can give you a goal to shoot for so you don’t waste time talking to a lender who is simply going to turn you down.

Once you’ve gotten an initial investment from a lender, it is up to you to maintain a good credit score. Vendors will be much more willing to do business with you if you have a small debt load, and it will be easier to convince other investors to come on board if you are paying your bills on time. Getting and maintaining a good business credit score is all about preparation and execution of your business plan.

Popularity: 7% [?]

A Restricted Stock Unit Agreement is an agreement made between a company and a recipient or purchaser of that companies restricted stock, usually an employee. A Restricted Stock Unit is a grant valued in terms of company stock, but in such a situation, company stock is not issued at the time of the grant. After the recipient of a unit satisfies the vesting requirement, the company distributes shares, or the cash equivalent of the number of shares used to value the unit. Depending on plan rules, the participant or donor may be allowed to choose whether to settle in stock or cash.

Common in corporate settings, Restricted Stock Unit Agreements generally address the following issues:

1. Parties. The name of the company and the employee must be identified.

2. Number of Shares and Price. The amount of restricted shares, the price of each share, and the total purchase price should be identified. When and how payment is to be made should also be discussed. Details regarding the purchase price may not be important if the shares are given to the employee for free.

3. Covenant Not to Sell. The most important provision of the agreement is the employee’s promise not to sell, assign, transfer, or otherwise dispose of any or all of the restricted shares until the termination date(s) set forth.

4. Termination Dates. This provision should set forth the dates that the restrictions on selling the stock terminates. The date may be the same for all shares or may be broken off. For example, perhaps 1/3 of the shares lose their restrictions after one year, 1/3 the next year, and 1/3 the following year.

5. Termination of Agreement. The agreement should refer to specific provisions of the employment agreement in terms of addressing the issue of the termination of the employee’s employment with the company. Generally, if the employee is terminated without cause, then he gets to keep the shares and they lose their restricted status. If the employee is terminated for cause, then the employee loses the shares altogether.

6. Clear Explanation of Restricted Status. The agreement should clearly notify the employee that the certificate for restricted shares shall bear a legend to the effect that the transferability of each share is restricted in accordance with the provisions of the agreement and that they have not been registered with the SEC and thus they may not be sold or transferred.

7. Employee Representations. The employee must represent and warrant to the company that the restricted shares are being acquired for him or her solely for his or her own account and not with a view to, or for sale in connection with, the distribution thereof.

8. Miscellaneous. A provision should be included that states that the agreement, together with the Employment Agreement, embodies the entire understanding between the company and the employee and supersedes all prior agreements and understandings relating to the matter covered.

These are the most essential provisions of a Restricted Stock Units Agreement. Generally entered into by an employer and an employee, this agreement is a critical part of enticing the employee to stay with the company and, by tying the employee’s financial interests to those of the company, motivates the employee to perform at his her best.

Popularity: 6% [?]