In recent years, the world of college athletics has seen a significant shift with the introduction of Name, Image, and Likeness (NIL) regulations. This means that student-athletes are now able to earn money from endorsements, sponsorships, and other activities related to their personal brand. While this is undoubtedly an exciting development for student-athletes, it also brings with it a new set of challenges and responsibilities, including tax implications and financial management. This is where working with a Certified Public Accountant (CPA) becomes essential.
Here are a few reasons why working with a CPA while obtaining an NIL deal is important:
Tax implications
When a student-athlete enters into an NIL deal, they are essentially starting their own business. As a business owner, they will be responsible for paying taxes on any income earned. However, the tax laws surrounding NIL deals can be complex, and without the guidance of a CPA, a student-athlete may not fully understand their tax obligations. A CPA can provide valuable guidance on tax planning and compliance to ensure that the student-athlete is meeting all their tax obligations and minimizing their tax liability.
Financial management
Earning money as a student-athlete can be a double-edged sword. On one hand, it can provide financial security and the ability to pursue their dreams without financial constraints. On the other hand, it can also be overwhelming, and without proper financial management, it can lead to financial problems down the road. A CPA can help a student-athlete develop a financial plan and provide guidance on budgeting, saving, and investing, to ensure that they are making the most of their earnings and protecting their financial future.
Compliance
NIL deals are subject to regulations and guidelines set forth by the NCAA, state laws, and federal laws. These regulations can be complex and can change frequently. Working with a CPA who is knowledgeable about the rules and regulations surrounding NIL deals can help ensure that the student-athlete remains in compliance and avoids any potential legal or financial issues.
Protection of earnings
One of the most important roles a CPA can play in an NIL deal is helping to protect the student-athlete’s earnings. This includes developing a strategy for managing the money earned, including setting up a separate bank account for NIL income, creating a budget, and monitoring cash flow. A CPA can also help the student-athlete evaluate potential deals to ensure that they are getting fair compensation for their brand and image.
If you’re a student-athlete who is interested in maximizing your earning potential through NIL deals, it’s important to work with a CPA firm that has experience in this area. At DPW, we have a team of experts who specialize in working with student-athletes and helping them navigate the complex world of NIL deals.
Visit nil.cpa to download the Free NIL FACT SHEET.
