Filing an LLC for NIL deals may sound scary, but it can actually be easy and beneficial. This post will cover…
- What an LLC is
- When you might want an LLC
- How to open an LLC
- The benefits of opening an LLC
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.
What is an LLC?
A Limited Liability Corporation (LLC) is a basic business structure. LLC’s provide “limited liability protection,” which keeps your personal assets safe if your business gets sued or goes into debt.
Do I need an LLC for NIL deals?
The short answer: not necessarily. You can legally make money off your name, image, and likeness without registering an LLC. However, there are many reasons why it’s a good idea to consider creating an LLC for your NIL business.
We spoke with Michael Raymond, founder of Raymond Representation and a star agent for some of the biggest names in collegiate athletics.
Raymond has all of his clients open an LLC if they feel comfortable. He believes “it is absolutely necessary if you are making more then $10,000-$25,000.”
Raymond also points out that you can start making serious money at any point in your athletic career, so it is best to be prepared! Learn more about how to get NIL deals.
Overall, LLC’s help you reduce personal liability and help separate your business and personal finances. We’ll dive deeper into the costs and benefits in the rest of this post.
How do I open an LLC for NIL deals?
There are two methods for filing an LLC…
- Do it yourself through your state’s department of state website (or by mail)
- Hire a professional LLC formation company
Where should I file my LLC?
Every state has different requirements for forming an LLC. It’s often easiest to form your LLC in the state you do business, but you can form it in a different state if you choose.
What are the different LLC classifications?
A single-member LLC is the simplest type of LLC to create. It may be appropriate if you do not plan to employ other people for your activities. Single member LLCs have low setup costs and require little paperwork to form. When you have a single-member LLC, business activities are included in your own tax return.
There are several types of multi-member LLCs. In addition to LLC’s, other common business types include corporations, partnerships, sole proprietorships, and more. It’s always a good idea to contact an attorney or accountant to see what business type is right for you.
How much does it cost to file an LLC for NIL?
The cost varies by state but typically lands around $150. 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 report process should take less than 10-minutes and typically costs around $125-$150.
It may cost more to use a professional LLC formation company.
How long does it take to file an LLC for NIL?
For single-member LLC’s, you can usually file the necessary documents and pay associated fees in less than an hour. Once you finish the registration process, you will soon receive an employer identification number (EIN) when your company is approved.
To do it yourself, navigate to your chosen department of state website and follow the instructions.
- First, you’ll need to choose an available name for your LLC. Using “[Your Full Name] LLC” can often be an appropriate and versatile name for monetizing your NIL.
- Next, fill out all of the necessary information and pay associated fees with a debit or credit card. Alternatively, you print the necessary documents and mail them along with a check or money order.
What do these LLC terms mean?
Member: A member owns a part of the business and can manage LLC operations. You’re a member.
Managing Member: A managing member is the leader of business operations. You’re probably the managing member too.
Manager: LLC members can choose an external manager to run the business operations. The manager does not have to be a member who owns a share of the business.
Registered Agent: The registered agent accepts legal and court documents on behalf of the business and shares them with LLC members. If you want to handle the documents, you can be the registered agent.
Registered Office: The address where the registered agent accepts documents.
The Articles of Organization: A document that outlines basic information about the business and its members (a.k.a. certificate of formation). You will submit the articles of organization through a department of state website along with the filing fee (varies by state).
Benefits of opening an LLC for your NIL deals
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 it’s safer to be protected! NIL lawsuits can occur if you provide false advertising, hurt other’s reputations, infringe on copyright/trademark protected items, or fail to abide to a contract.
Financial organization
With an LLC, you have the power to open a business bank account. Having a business bank account can help you stay organized and ultimately make more money. Read more about opening a business bank account here.
Privacy Protection
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 private.
Tax Advantages
When you have an LLC, you can take tax deductions for legitimate business expenses. For example, you may be able to classify up to a certain portion of your home as “office space” and “write off” software, electronics, LLC formation costs, and other expenses related to your NIL endeavors.
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 negotiate.
Grab our copy-and-paste messages for negotiating NIL deals to increase your earnings.
Risks of opening an LLC
There are a few downsides to opening an LLC, namely the cost of filing the Articles of Organization and annual reports.
It takes some time and energy to complete the documents to file and keep your LLC active. Also, if you fail to properly leverage your LLC the limited liability protection may not be valid (ex: signing NIL deal contracts with your personal name instead of through your business).
In addition, LLCs can make filing your taxes a little bit more complex, and having an LLC may change the amount of taxes you pay.
Summary
In my experience, the benefits of opening an LLC have far outweighed the costs. Talk to an attorney or accountant to see if opening an LLC for your NIL deals makes sense for you!
