How to decide if RSUs are right for you and your business
Restricted stock units (RSUs) are a form of equity compensation that is often used by companies in Canada to reward and retain employees. RSUs are granted to employees as a way to share in the success of the company, and they have the potential to generate significant wealth for the employee over time.
However, it is important to carefully consider whether RSUs are right for you and your business before making a decision.
Here are some factors to consider when deciding if RSUs are right for you and your business:
Your business's financial health: RSUs are tied to the performance of the company, so it is important to consider the financial health of your business before deciding to accept them. If the company is not performing well or is experiencing financial difficulties, the value of your RSUs may be negatively impacted.
Your financial goals: RSUs can be a useful tool for building wealth, but they are not appropriate for everyone. Consider your financial goals and risk tolerance before deciding if RSUs are right for you.
Your vesting schedule: RSUs typically have a vesting schedule, which means that you must meet certain requirements (such as staying with the company for a certain number of years) in order to receive the full value of the units. Make sure you understand the vesting schedule for your RSUs and consider whether it aligns with your career goals.
Your tax implications: RSUs are considered taxable income when they vest, so it is important to consider the tax implications of accepting them. You may want to consult with a financial advisor or tax professional to determine the potential tax consequences of accepting RSUs.
In conclusion, RSUs can be a valuable form of equity compensation for employees, but they are not right for everyone.
It is important to carefully consider the financial health of your business, your financial goals, the vesting schedule, and the tax implications before deciding if RSUs are right for you.