Disclaimer: This information is made available for educational purposes. It provides general information and is not intended to provide specific legal or financial advice. This information should not be used as a substitute for competent advice from a licensed expert in your jurisdiction.
If you plan to make money on your NIL, you may want to separate your personal finances from your NIL deal income.
One of the best decisions I have made in NIL has been registering an LLC and opening a business bank account for my NIL deals.
Turning your personal brand into a business can…
- protect your personal finances
- organize your income
- offer tax advantages
- and more
In this post, we’ll cover…
- If opening a business bank account may be right for you
- How to open a business bank account for your NIL deals
- The benefits of opening a business bank account
Is a business bank account right for me?
A business bank account is not be necessary for every athlete. If you agree with any of the following statements, you may want to consider opening a business bank account.
- I plan to do more than a few NIL deals
- I plan to have significant money flowing in and out for NIL deals
- I anticipate having NIL-related expenses (such as hiring videographers, purchasing software, or paying an attorney)
- I plan to sell a product or service on my own
How do I open a business bank account for NIL deals?
There are 2 key steps to setting up your business bank account.
- Register an LLC
- Get in contact with your bank
1. Register your LLC
You must have a registered business to open a business bank account. This can be accomplished by registering an LLC with your department of state. For single-member LLCs, the filing process can typically be done online in less than an hour. The cost varies by state, but typically lands around $150. Alternatively, you can hire a professional LLC formation firm to help you out.
Note: to keep an LLC active, you’ll need to file a yearly “annual report” that ensures your business information is up-to-date. The annual process should take less than 10-minutes and typically costs around $125-$150.
Learn more about LLCs: LINK TO LLC DOC!
Once you finish the registration process, you will soon receive an employer identification number (EIN). You can then use your EIN and LLC filing documents to open a business bank account!
2. Connect with a bank of your choice
Nearly all major commercial banks offer business checking accounts. You should always research your options, but I recommend going with the same bank as your personal finances for simplicity if it makes sense. Having your personal and business accounts under one bank can make transferring funds between accounts much simpler.
Follow the instructions for opening a business checking account on the bank’s website. You may need to visit a branch in-person, and a representative will walk through the process with you. Banks often ofter multiple types of business bank accounts, so talk to a bank representative to find out what account may be a good fit.
When you set up your account, you’ll need to…
- have your EIN and LLC filing documents ready
- bring your ID and any other necessary documents listed on the bank’s website
- share the basics of what your business will do
- sometimes: make a minimum deposit (this depends on the account… mine was $25)
The process is usually easier than it sounds, and you’ll have an account set up in no time!
The benefits of opening a business bank account
There are several reasons why registering an LLC and opening a bank account for your NIL deals can be beneficial.
Liability
LLCs provide limited liability protection. If someone sues your LLC, your personal assets (personal bank account, car, etc.) are safe. It’s unlikely you’ll get sued over an NIL deal, but you’re better off safe than sorry! NIL lawsuits involving false advertising, defamation, personal injury, copyright and trademark infringement, breach of contract, or other issues are possible.
Overall, registering an LLC can protect you and your personal finances.
Always be sure to sign NIL deals through your LLC. In the name box, you can write “[Name of LLC] f/s/o” which means “for services of.” Also, set up payment directly to your business bank account.
Organization
Separating your business and personal finances makes staying organized much easier. All of your NIL income and expenses can go directly through your business account, making it easy to track and allocate your earnings. Then, you can easily “pay yourself” profits or invest back into your NIL efforts. Nowadays, you can effortlessly transfer money between your business and personal accounts with the click of a button.
Security
You’ll sometimes have to share your bank information to get paid for NIL deals. Using your business account to get paid can help keep your personal bank account information from floating around.
In addition, you can use your employment identification number (EIN) associated with your LLC instead of your social security number (SSN) on tax forms you send to sponsors. This keeps your social security number more discrete.
Tax Advantages
When you have an LLC, you can take tax deductions for legitimate business expenses, including the cost of forming the LLC.
For example, you may be able to classify up to a certain portion of your home as “office space” and “write off” software, electronics, and other expenses related to capitalizing on your name, image, and likeness. Overall, having an LLC can change the amount you must pay in taxes.
Tracking your business finances separate from your personal finances can also make everything more straightforward when tax season rolls around.
Mindset Shift
Managing your personal brand as a business can be a beneficial mindset shift. Running my NIL deals through my LLC has made everything feel less personal and more professional. It’s easier to stand up for my worth and take rejection. Plus, A clear record of my NIL revenues and expenses has pushed me to keep building my business bank account balance!
Not sure if you should open an LLC yet? Check out this article to learn more before contacting an attorney or accountant.
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