With the announcement of the interim changes by the NCAA that will allow collegiate athletes to be paid. I spoke exclusively to the Accountability Accountant Folasade Ayegbusi to explain what this means for athletes in regards to accepting deals.
Master P via TMZ Sports announced that son Hercy Miller, an incoming freshman at Tennessee has received a $2 million dollar endorsement deal Folasade uses this deal to outline what players should do to ensure their success.
Ayegbusi provided the following steps that athletes should follow to ensure they are set up for success.
Folasade states that players should first consult a tax professional and expert because there are tax implications from the moment a deal is accepted. The moment the player accepts the contract /sponsorship payments they automatically become a sole proprietor if they have not themselves up as a business the funds are subject to being taxed.
Let’s take the current deal that Hercy Miller has received. Percy now has to either have a business that that money is going to flow into, or he will have to file it under his name on a Schedule C as business revenue. The tax implication is that they have to pay taxes. And if they don’t consult with a tax professional, they’re gonna be hit with a lot of taxes. If Hercy already set up as a business the sponsor company is going to pay their business, and he’s going to be able to reduce their taxes on their income based on the business expenses.
Reaching out to a tax professional from the beginning will ensure that your business set up properly and if not the player will be hit with tremendous tax ramifications that they are not prepared to handle. It is basically them getting a windfall of money and before they know it they end up suffering and losing everything.
Players who are not set up should not accept any payments. A discussion on how payments will be received, for example, there are three ways that they can be paid through a business on a 1099 other income, or 1099-NEC Or they can be paid on an individual basis on a 1099-NEC or 1099 Miscellaneous. All of that needs to be discussed ahead of time, so the players can tax plan accordingly. The play will also need to set up bookkeeping because the other expenses that the player will incur to be able to comply with their sponsorship package is a deduction so now their lifestyles and everyday expenses may become business expenses. Consulting with and working with a reputable provider will get the player set up correctly and on track.
Folasade Ayegbusi wants to ensure that individuals are well educated and knowledgeable of how to Know their Numbers and create true generational wealth. You can find out more about her by checking out her website or by listening to her syndicated podcast, The Money Zone.
