Quote from Pat Brown, MBA on February 14, 2025, 6:05 pm

Should Your Student-Athlete Form an LLC?
By Pat Brown, MBA
www.parentsofstudentathletes.com

With the rise of Name, Image, and Likeness (NIL) opportunities, student-athletes are now earning income through endorsements, sponsorships, and personal brands. This raises an important question for parents: Should your son or daughter form a Limited Liability Company (LLC)? Let’s explore the pros and cons of forming an LLC as a student-athlete and why consulting with an attorney who specializes in LLCs is essential.

What is an LLC?

A Limited Liability Company (LLC) is a legal business structure that offers liability protection and potential tax advantages. It separates personal assets from business activities, providing a layer of protection against lawsuits and debts.

Pros of Forming an LLC for a Student-Athlete

1. Liability Protection – An LLC can protect your child’s personal assets from lawsuits related to business activities, contracts, or endorsement deals.
2. Tax Advantages – Depending on income, an LLC may provide tax benefits, such as deducting business expenses (training, travel, marketing, etc.).
3. Professionalism – Having an LLC adds credibility when negotiating sponsorships and brand deals.
4. Brand Protection – An LLC can help protect the athlete’s brand name and intellectual property.
5. Control Over Income – Funds can be managed through a business bank account, keeping personal and business finances separate.
6. Flexible Management – Unlike corporations, LLCs have fewer formalities and offer more control over business decisions.
7. Easier Contract Negotiations – Many companies prefer dealing with an LLC rather than an individual.
8. Estate Planning – An LLC allows families to plan for long-term financial management.

Cons of Forming an LLC for a Student-Athlete

1. Setup and Maintenance Costs – Forming and maintaining an LLC involves filing fees, potential legal costs, and annual state fees.
2. Complex Taxation – Depending on the state and revenue, an LLC may require more complex tax filings.
3. Compliance Requirements – Student-athletes must stay compliant with NIL rules, NCAA guidelines, and state laws.
4. Banking and Accounting – Keeping separate business accounts and tracking expenses requires additional financial management.
5. Legal Considerations – Certain sponsorships and agreements may require additional legal oversight.
6. Limited Liability Isn’t Absolute – If an athlete personally guarantees a contract or loan, they may still be held liable.
7. Potential NCAA and School Compliance Issues – Some schools have NIL policies that require prior approval for business entities.
8. Time Commitment – Managing an LLC requires time and effort, which can be challenging for student-athletes balancing academics and sports.

Why You Should Consult an Attorney

Given the legal complexities, it is crucial to hire an attorney who specializes in LLC formations and NIL-related issues. An attorney can help ensure:

• The LLC is properly structured.
• Compliance with NIL rules and tax laws.
• Contract negotiations are legally sound.
• Personal assets are fully protected.

Final Thoughts

While forming an LLC can provide numerous benefits for a student-athlete, it is not a one-size-fits-all solution. Parents should weigh the pros and cons, understand their child’s financial and career goals, and seek professional legal guidance before making a decision. Consulting an attorney experienced in LLCs and NIL contracts can make the process smoother and ensure the best outcome for your student-athlete’s future.

If you’re considering an LLC for your son or daughter, take the next step by speaking with a qualified legal professional today!