Avoid these Costly NIL Mistakes:

1. Underestimating the Tax Implications

NIL payments don’t have taxes automatically withheld, and athletes may not realize how much they owe until it’s too late. Between federal, state, and self-employment taxes, it’s not unusual to owe up to 30% of gross income.

Pro Tip: Once you start to make over $1,000 in NIL compensation, athletes should considering seeking consultation from a CPA to project their tax liability. They should also set aside money from each deal and consider making quarterly payments to avoid penalties. Set up a bank account specifically for taxes, to keep everything nice and clean.

2. Overspending on Unnecessary Expenses 

A sudden influx of income often leads to impulsive spending — cars, fashion, travel, and helping friends and family.

Unchecked and unaccounted for spending, can quickly deplete even substantial earnings. 

Pro Tip: Start with a budget before the money even comes.

Pre-determine how much money will be allocated to taxes, savings, investments, and pleasure, before it's in your hand. Everything should be in alignment with short-term, mid-term, and long-term goals.  

3. Relying on Bad Advice 

From social media to unvetted “agents,” athletes are bombarded with advice.

Unfortunately, not all of it is sound.

In many cases, poor advice (or advice not specific to the athlete’s particular circumstances) is worst than an athlete doing things on their own.

Poor guidance can lead to financial mismanagement, bad investments, scams, or even legal trouble. 

Pro Tip: Athletes should assemble a vetted and trusted advisory group as it becomes evident that substantial NIL opportunities may be in play.

Essential team members should include a financial advisor, a qualified CPA, and a sports-savvy attorney. High profile athletes may also consider a PR rep. 

4. Not Forming a Legal Entity 

NIL turned all amateur sports into professional sports.

Having the proper business structure (like an LLC or S-Corp), allows athletes to take advantage of critical tax deductions and decrease their NIL legal liability.

A business entity also adds professionalism when working with companies and brands. 

Pro Tip: Consider setting up an LLC or S-Corp entity to manage NIL contracts, brand partnerships, and related expenses, and separate personal liability from business liabilities.

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5. Missing the Long-Term Value 

NIL earnings can be temporary, but their impact can be permanent if done right.

Without saving and investing, many athletes will look back and wonder where all the money went?

It is our mission at NIL-LLC to make sure that doesn't happen to you! 

Pro Tip: Commit to saving a portion of every NIL deal. Whether it’s the stock market, real estate, or building a business, let today’s earnings fund tomorrow’s kick-start! 

The Bottom Line: Utilize NIL Responsibly

Whether you’re a high-profile athlete staying in school because of strong NIL deals or someone facing complex contract disputes, one thing is clear: NIL success isn’t just about how much you make — it’s about how much you keep and well you manage it. 

If you’re a student-athlete, family member, coach, or athletic director.

We would love to chat with you and support you as an athlete, school or organization.

Please reach out to us at [email protected]