Speaker 01 0:02

Welcome to Bean's Talk, M&J's podcast where we are sharing and showcasing our areas of expertise through conversations with practice leaders on their knowledge and experience. Welcome back to BeansT alk. Today I'm very excited to take a little bit of a deeper dive into one of our newer service lines, the name, image, and likeness, the NIL uh service advisory. And we're going to be talking today with two uh two members of that team, uh Don Van Landingham from, from Guardian Wealth Management, our Wealth Management Arm, and Nick Ryder, our uh a tax partner who leads a lot of the tax efforts for uh for the NIL services. Welcome to the podcast.

Speaker 02 0:42

Thank you.

Speaker 03 0:43

Thank you.

Speaker 02 0:43

Excited about being here.

Speaker 01 0:44

Yeah, and and welcome back, Don.

Speaker 02 0:46

Yeah.

Speaker 01 0:46

Um for for the members for the listeners who may not have uh heard your first uh Guardian Wealth podcast, uh, can you can you give us a little background on what you do, what Guardian does and all that?

Speaker 02 0:56

Sure. Uh I'm a CPA financial planner. I've been doing this in some form or fashion for over 40 years. Probably don't look like it, but I I have been. Um and what I'm really excited about talking about today is uh helping other student athletes, because when I I was a student athlete back in the day, and I made every mistake in the book as a kid. And so I want to help others not make the same mistakes.

Speaker 01 1:23

What the listeners probably don't know, what we didn't know until just a few minutes ago, is that you actually played football with my dad.

Speaker 02 1:29

That's crazy, yeah.

Speaker 01 1:30

Amazing.

Speaker 02 1:31

Yeah.

Speaker 01 1:31

So um I knowing my dad, I'm sure he made uh same number of mistakes. Um

Speaker 02 1:39

What happens there? What happens there stuff?

Speaker 01 1:43

Um, but yeah, to your point, it's a great opportunity to you know make sure that you know student athletes understand, you know, especially in this landscape, hey, these are the things you need to be looking out for, need to be thinking of. And so I'm excited to kind of talk through that more.

Speaker 02 1:58

Absolutely.

Speaker 01 1:58

And uh and want to welcome for the first time Nick Ryder to the uh to the podcast, the tax partner here. Yeah, um, can you talk through a little bit of your background and uh and some of the NIL?

Speaker 03 2:07

Yeah, uh I appreciate it. I'm excited to be here uh for the first time. And uh so unlike Don, I'm not a I wasn't a student athlete. Um, but like both of y'all, I made some mistakes in college and I'm used to that that process, but I do know tax. And and one of the things that uh we've seen with our clients is you know, we work with a lot of new businesses, new business owners that are starting out, and that's really at the end of the day what we're talking about. You know, all all the NIL, the name, image, and likeness, and you know, we're watching football, we're watching all these college sports, and it's flashy and it's fun to watch. But at the end of the day, we're talking about an entrepreneurial spirit. We're starting businesses, we're getting that started now, and with these young kids who are who are getting something started that's gonna last them for the future. And so it's really fun to watch that and to help them through that process. And we're taking the same things that we've learned with clients and every other industry that we work with, and we're applying it here, and it works the exact same. So really excited about that and looking forward to the conversation today.

Speaker 01 3:05

Yeah, and and you know, I think mistakes is a good place to start, right? Because, you know, we kind of NIL in general, like it's had its kind of ebbs and flows, and you know, are we paying players, are we not? And it's kind of been referred to as the Wild West, right? So it's just like, hey, you know, player, players, student athletes, they're hearing all sorts of things. And so it's it really is well, you know, the mistakes, the you know, everything kind of translates to the financial side as well, right? So when a student athlete kind of comes in with a you know an NIL deal or a potential NIL deal, like where where in the process, Don, for from your side, you know, like what is a good starting point? What is a good first you know, step for them to take with us that that allows them to kind of see, hey, this is your path forward, you know. Can you can I go explain your process a little bit?

Speaker 02 3:54

Yeah, that's a great question. So we start off with what we call their financial roadmap, and this is where they get to tell me their story and whatever and I love how Nick said about their their future is going to be CEO of the rest of their life. And I want them to look at that as their their own business enterprise and be the CEO of that. And so it's really a listening exercise on my end to get them talking about what's important to them so that they can get clarity and give me clarity of what's really most important to them and and really kind of chart the course of what their future, what they want that to look like.

Speaker 01 4:40

And and and what does that horizon look like? I mean, we're not just talking about, hey, you're you know, you got four years as a student athlete in college, maybe NFL, maybe not. I mean, what you know, what kinds of things are you looking at on the horizon for them? Or is it is it is a full four-year plan, is it a life plan or something in between?

Speaker 02 4:58

It's a life plan. Um I'm I don't I never want to kill their dreams if their dreams is to go NFL, but the reality is only about one, one and a half percent of all college athletes go further. Uh and uh and especially as we're talking about college football, NFL, and so forth. So that's like every draft there's like 250 uh people drafted out of 15,000. So I'd never want to kill that dream, but yet I do want them to think further than that.

Speaker 01 5:32

You've got to take practical steps.

Speaker 02 5:33

Yes

Speaker 01 5:33

In the event of. I mean, it's like anything. It's like, you know, what are the risk rewards? What is it what are the variables and and things to be thinking about, right?

Speaker 02 5:41

Yeah, there's a saying and and college football uh coaches taught me this. You don't know what you don't know, right? And so a big part of what we want to do is educate them because finance finance is the same way. You don't know what you don't know.

Speaker 01 5:57

And I assume parents are part of this. I mean, what what what what is the conversation with them like? What do they need to be thinking about as their as their kids go through this?

Speaker 02 6:05

Yeah, a big part of my goal is really just to reiterate what the parents have been telling their kids from the get-go also, um and really be a support for them and and build that trust with both the parents and and the student athlete that we've got their back.

Speaker 01 6:28

Obviously, everybody here has been in college and been 19 years old before. I mean, how do you help balance that desire to spend the money versus hey, you know, uh we have to plan for the future? I mean, you know, it is it is it an easy conversation or there are there, you know, how do you how do you help with that?

Speaker 02 6:46

Yeah, you you have to be direct, don't you? Um and so one of the required um uh for them to be a client with us is for them to sit down with their parents. Remember the ESPN documentary broke, it was on 30 for 30, and so much um precau- that's a precautionary tale for, and this this is about professional athletes and that who are older than these student athletes are. So I want them to watch that with their parents, and a lot of the eye-opening things come out of there. Uh one is uh 78% of NFL players are either in bankruptcy or close to bankruptcy two years after their NFL play-in days are over.

Speaker 01 7:32

Yeah.

Speaker 02 7:32

That's a shocking statistic. And so I want to kind of shock in all the the these young men and um to not let that happen to them. Yeah.

Speaker 01 7:44

So I mean financial literacy is obviously a big part of that, and Guardian Wealth helps them kind of develop that literacy, so to speak. I mean, uh are you are you working with them?

Speaker 02 7:52

Yeah, you're not this is you know You're not gonna do it in one meeting, of course. So the first meeting is to get their vision. Um and and we actually talk, all right, what's your vision? And then the second step would be to hire us to put a written financial game plan together. And so we're in in that is gonna be a budget. Um and that's where we bring Nick and the uh tax professionals in to calculate the taxes, and Nick can talk about that. And then uh we want them to pay themselves first. So after the taxes are taken care of, we want them to start building up savings and even start an investment portfolio and then figure out how to live off the rest of that. Obviously, we're not gonna make them put every penny into savings or taxes or whatever, but I want to get them into a routine, a habit of paying themselves first.

Speaker 01 8:46

Yeah. And that that probably resonates with them, right? I mean, you're you're talking about people who, you know, they're they're potential, you know, future athletes in the NFL, MBA, whatever. Like they've they've probably committed to a routine or or something to get them where they are now. So it's kind of the same in life, right? Like you kind of have to establish your process, you know, trust your process and and and work through the same the same struggles, right, on the financial side.

Speaker 02 9:11

Absolutely. They wouldn't have got to where they got if they didn't uh understand the right habits and the routines and so forth. And finance is exactly the same way.

Speaker 01 9:20

And Don, expanding on financial literacy, let's let's kind of talk with, you know, how often you're you're you're talking to your clients to to you know make sure monitoring their goals, you know, staying true to their you know their uh their goals that y'all defined in the financial roadmap. Can you talk a little bit more about that?

Speaker 02 9:35

Yeah, I'm glad you brought that up, Brent. So we don't just they don't just come in, meet us one time, and then we're one and done, and they don't hear from us anymore. This is a relationship type of uh business, of course. And so we are continually uh having conversations, especially at the front end, that there's a lot of work to be done because we want to we call it get your financial house in perfect order, and uh there's a lot of work it takes to do that. So we're continually communicating. But once that first wave of work is done, we have quarterly meetings, either usually either in person or Zoom or uh sometimes rarely, a phone call, but I like to see their face, I like them to see me, look them in the eyes, kind of hear where they're at on everything, and then give them updates of where they're at, which gives me the chance to not just hold them accountable, but teach them the basic fundamentals of success for not just financial, but just as help them grow into the man that their parents want them to grow into.

Speaker 01 10:40

Yeah, so that seems like a good cadence. And and you can, you know, kind of update their, you know, their goals accordingly, right?

Speaker 02 10:46

Yeah, so they get a a pretty simple report. Here's what you started with on your investments and so forth, here's how much you saved during since the last time we met, here's what your investments grew or or went back temporarily uh during that time, here's what you ended it with, here's your return for the quarter, here's a return since you started. You know, and that's just on the investment piece, but also um, you know, going through the other big pieces of their finance. Where are we at on getting your Wills put together, your power of attorneys, your health care power, you know, all of those kind of things. Where are we at on your insurance and just giving them updates? Yeah. And and then the other part, and this is where we really bring make sure Nick and his team's involved, especially as we're getting close to the end of the year, we want to have to have a tax planning meeting so that there's no surprises by the time they file their tax return. So we do we we have an estimate, here's what here's what it looks like your income is, here's what your taxes sh uh look like they're gonna be, here's what you've paid in, here's what you'll end up owing when you file your return.

Speaker 01 11:51

Yeah, and that's what I like, the no surprises piece of that, right? And then talking quarterly or how you know however often to keep the client comfortable, keep the student athlete comfortable in this instance, right? But that that's very important.

Speaker 02 12:02

Externally.

Speaker 01 12:03

Yeah. Yeah. And so shifting gears to another member of the uh the team, right? The tax team or the financial team. Um, Nick, let's let's kind of dive into what people need to be, what student athletes need to be considering as they're as they're getting going, as they're you know, entering these NIL deals. A lot of them are set up as you know, kind of independent contractors, meaning, hey, they're kind of responsible for everything, right? The tax payments, everything. So, you know, what what can you explain to us what does that mean to be an independent contractor and and what are some of the advantages, what are some of the disadvantages of that kind of initial setup?

Speaker 03 12:34

Yeah, and I'll I'll go into that. I want to make a couple of points real quick. First, um, because I think what's really important, and Don, I really like what you said earlier. You said that we got to listen to them, right? But that's part of this entire thing. We need to listen to what they want. And taxes are gonna play a huge role in that because taxes are gonna come off the top, right? I mean, that's that's one of the first larger expenses that they're gonna have. So we do need to listen. We need to come up with that plan and put a stake in the ground, is the way I usually phrase it, 10 years out. And then that way we've got something that we are striving for, we've got a destination so that we're not arbitrarily making tax decisions just based on what's right in front of us right now. Because I think that's where people really get in trouble. Um, is they see a tax number and they say, I've got to get that number down, right? And so they'll do anything they can to get that number down, but they're not thinking about the the consequences of that of that decision.

Speaker 01 13:27

I don't want the tax tail wagging the dog.

Speaker 03 13:29

Exactly. Yeah. And there are so many tax decisions that can be made that drive this enterprise in the wrong direction. And so uh to get back to one of your other questions, another thing that I think is really important to talk about that we've been seeing with a lot of these students is they're filing their tax return for the first time. You know, I've reached out to a couple that um I say, hey, you know, send me a copy of your prior return so we can get everything going. Like they've never filed a tax return. So it, you know, it kind of resonates that this is the first time they've seen uh a 1040 or you know, a 1120s, whatever it may be. And so we really have to start from the ground level and work up. So, but to get back to your question about the the um the uh contractor, so you know, they're going to be a a contractor uh in in all essence uh with the college. And so there are a lot of considerations to have here. Um and I don't know how deep into the weeds, I'm sure you'll have some questions to kind of break up as I get into it, but you know, one of the most important things is they're gonna get a 1099, they're gonna be a contractor when they start working or whenever they get this uh contract set up. And the tax structure, if you just look at that, um they're gonna have their personal return and then they're gonna pay self-employment tax. That's honestly the first thing that I think about is if I'm a 1099 contractor, I'm gonna have a business on my personal return and I'm gonna pay self-employment tax.

Speaker 01 14:54

In addition to income tax, right?

Speaker 03 14:56

In addition, thank you.

Speaker 01 14:56

I think that's what a lot of people don't understand is is hey, it's not just income tax, it is self-employment tax, it's state and local tax, right?

Speaker 03 15:03

Absolutely.

Speaker 01 15:03

So there are a lot of considerations that just off the top, Don, to your point, it's just like, well, we got, yeah, we want to pay ourselves first, but the government's gonna take their piece.

Speaker 03 15:12

Exactly.

Speaker 01 15:12

And so how do we set up for that in a useful way, you know, with with estimated payments or tax structuring or whatever?

Speaker 03 15:20

Exactly.

Speaker 01 15:21

Um, you know, what are the first things you're you're telling clients, hey, hey, this these are the things we need to be aware of, these are the options we have.

Speaker 03 15:29

Yeah, that's another good point. And so and I want to kind of put some numbers to this too. I think that'll help. So when we're talking about self-employment tax, we're talking about 15%, give or take, um, of the amount of net income that they get from these businesses. So it's not just a contract or you know, the 1099 that they get, but uh net of expenses and and other costs associated, but 15% there for self-employment tax, and then you've got your income tax. And I I took a couple of numbers now. Look, I don't memorize tax brackets. I've I've learned long ago we don't need to memorize tax brackets. So I do have a couple of numbers. Yeah, yeah, it really is. But uh the point I want to make on this is like I said, you've got a lot of people who are gonna file their tax returns for the first time. They're gonna be filing single. And when we're talking about some of these NIL contracts, they get up in you know, 50, 70, 100,000, 200,000, 500,000 really quick. And so not only do you have the self-employment tax piece of that, but you also have your income tax. And as a single individual taxpayer, you're hitting those brackets really quickly, uh, respectively, you know, compared to married finally joint. Uh, but so for instance, you're gonna hit the 24% bracket on all of your other income at $103,000. Most NIL contracts that we're seeing are close to that already. You know, now you've got some other things that are coming into that that'll lower it, but you're in the 24% bracket really quick. You hit 32% at 197. How many have we seen come through .

Speaker 01 16:53

Yeah for sure.

Speaker 03 16:54

More than you're in the 35% bracket at 250? And so you're hitting those, and then you add 15% on top of that, you're talking about 50% of the income going to taxes. And you need to know that number.

Speaker 01 17:07

Well if you're if you're in a state where your taxes well, you know, add another 5% to that. So, you know.

Speaker 03 17:13

100%.

Speaker 01 17:14

You know, it's and and and the 15% self-employment is obviously kind of gets capped at under 80 or 200,000, and then it's kind of more four percent after that. But if you're in the highest bracket and you're self-employed, well, you're still paying 45%, right?

Speaker 03 17:28

Absolutely, absolutely.

Speaker 01 17:28

So I think that's what people don't understand is that you know that that it's a big chunk. And so, you know, are there some strategies to, you know, once you get to a level where it makes sense, right, to to start, you know, talking about ways to reduce other self-employment or you know, just retirement planning, things like that. I mean, w when does that conversation start?

Speaker 03 17:50

Yeah, and and I think what a lot of people would do kind of reactionary is they'll see this contractor work come in and they'll say, I'm I'm gonna make an S-corp. That's kind of what you hear now. It's uh we're gonna do S-Corps. I see uh YouTube videos of S-corp tax secrets that you can that you're not using. Um and so we see that a lot, but I do look at so you asked earlier, what are what are kind of the first few things you're gonna look at? I'm gonna look at the NIL contract first. I want to know what dollar amounts are we working with. Um because as a service provider, as a as a business where you're providing a service, you're not gonna have a lot of equipment. We're not gonna have you know all these uh elaborate expenses, we're gonna have some travel, some meals, some entertainment, but those are limited. Um, but so I'm gonna look at the contract first, and then depending on the level of income. So uh depending on who you talk to, that conversation's a little different. But I usually run if I've got net income from a business around 180,000, and we can talk about why I think that's the number. Um, but $180,000 of net income from this business or this enterprise, I'm gonna want to make an S election. I'm gonna want to decide I'm gonna make an S-corp election. Um I'm gonna start filing a separate tax return. Um, and I don't know how much detail you want to get into on that number.

Speaker 01 19:04

Before we go down that road, let's let's just talk about, you know, tax, there's there's tax strategy, there's legal strategy, right? I mean, you know, you know, talk about the difference between LLCs, I guess, and S-corps. You know, what what's different? What's the same, if that makes sense? I mean, you can be an LLC and also be an S-corp. Like, why why is an LLC important in this whole thing, you know, from a legal perspective, but also a tax perspective.

Speaker 03 19:28

Yeah, that's great. And I think the way we're even going through this conversation is exactly how I would go through it with somebody who's coming in with a contract like this, right? It's you start to try to fix the problems, but you didn't, you don't we don't even go through why we need to fix the problem in the first place. And so, yeah, I think an LLC conversation is really important because when when I've got a business, one of the biggest concerns that I have in that business is actually outside of the tax conversation entirely, and that's my liability. And what what type of liability do I carry with me with the actions that I have and what I do? And so when I have this contract, I'm recommending to student athletes to set up an LLC just for liability protection. Right. Now, the LLC is a state designation. Um for federal or tax purposes, you can be an S-Corp, a partnership, you're a sole proprietor as an LLC. Um, and so you have some options there from a tax perspective. But legally, I want that LLC protection. I want to set up some protections there.

Speaker 01 20:30

Well, I thought I I I think it is, yeah. It's just like, well, what what duties are you performing as part of your brand, you know, and what exposures are there? Well, an LLC kind of, you know, somewhat encapsulates or isolates the risk to your LLC. And Don, maybe you can weigh in here too, right? I mean, it that there is an element of risk because you're you're kind of turning into a business enterprise. So, you know, the conversation can't always be tax. It's, hey, am I to a degree, am I insured? You know, am I protected personally for the things that I'm doing? Do I need insurance for you know certain things that I'm doing in NIL? I mean, how often does that come up in a conversation, or is that does that kind of happen, you know, down the road?

Speaker 02 21:07

It's usually the first question the parents ask, uh frankly, of uh how can we protect uh our son or daughter from um all that's out there? Because we see every day in the newspaper this athlete got in trouble or getting sued or whatever. So it's the real world. And so that's part of the conversation. And I I again I go back to what Nick said when we first started. They're your CEO of your company. Uh you're an entrepreneur, think that way. And risk management is a big part of that. Yeah. Yeah.

Speaker 03 21:44

I I think you we have a lot of students, it's really easy for them to think about this NIL thing as what they do on the field. Yeah. But they are building a brand. They've got a business at this point, and it's based on them. And I think that's one of the things that just because they step off the field doesn't mean that NIL business goes away. And so literally everything they do is under the microscope. And so you want liability protection. You want this coverage over you to make sure that you're protected when you're out living your life and not just on the field. I think that's really important.

Speaker 01 22:19

Yeah, the tax issues aside. I mean, and financial issues aside, it's just like I want to just be protected just legally right away. And so, you know, I think it's generally the rule of thumb is going to be, well, let's let's get the assets into an LLC where we can so that you're protected personally. Um, and then it kind of this the the conversation, at least from a tax perspective, will shift, right?

Speaker 03 22:39

Exactly.

Speaker 01 22:40

You know, maybe maybe go into a little more detail now. It's like, all right, well, I've got my LLC.

Speaker 03 22:44

Okay.

Speaker 01 22:44

You know, what is what does it mean to me now from a tax perspective, how that that LLC is taxed, you know, you know, kind of maybe dig in a little more detail on the S in the S election and what that means.

Speaker 03 22:55

Yeah, so yeah, so and I think we can kind of look at this as a case study. Okay, I'm a student athlete, I've got my LLC. Now what do we do? You mentioned the S Corp earlier. What why do I need that? You know, how do we get there? And and so I'll go back to my $180,000 number. I'm gonna keep that on the table here for a minute. And the reason why there's a couple of different things to think about. If if we don't make any sort of election, if we just create an LLC and run that as a sole proprietorship, single member LLC, it's it's called a couple of different things, but we file the activity on the personal return. We're gonna be subject to self-employment tax. And we mentioned that earlier. That's that 15%. But if I set up an S Corp, I'm able to move that income off of my personal return, and I'm filing a separate business tax return. And I'm able to protect some of that income from that self-employment tax. Now, there's a couple of things here, and I think it's really important because you hear that and you're like, oh, well, why didn't everybody have an S Corp? Right. Why wouldn't everybody just set that up? It seems like no brainer. I can move all this, and why 180? I'll do it at 100,000, right? And so you kind of start getting into this rhythm. Um, but a couple of things on that. So, one, once you set up that S corp, once you set up a separate entity and you are the CEO, like Don said, you're now an officer of the company, and the IRS requires you to pay a reasonable salary. And so that's when we really start to get into conversations because now not only do you have another business tax return that you're filing, you're having to do payroll. And like Don said, we're gonna set up payroll anyway, likely, but you're required to do it at this point. And you have to pay a reasonable salary. Your income's got to be a certain level at the W 2. And once you're paying yourself a W-2, you're essentially paying self-employment tax anyway. And so, you know, without a whiteboard here, I could walk through all the numbers and kind of show, but around 180 is where that break even is.

Speaker 01 24:49

A kind of rule of thumb at least.

Speaker 03 24:50

Exactly.

Speaker 01 24:51

And I think what else is important in there is well, when you're an S Corp versus just a single member LLC where you know all your earnings are taxed and self-employment. Well, now retirement planning becomes a different discussion too, right? And that's where I like, you know, kind of the uh the division of duties with with M & J and Guardian Wealth, right? I mean, we're also always constantly talking to each other, well, you know, if we do this, then we can't do that, or we have to, you know, we want to make sure everybody's on the same page and and and the working together and kind of painting the whole picture, not just the picture in a one-year vacuum.

Speaker 03 25:22

Exactly.

Speaker 01 25:22

You know, and and developing that roadmap, I think, has been great to see. Right.

Speaker 03 25:26

Yep. Well, and because I've also seen where clients, and again, what we're talking about here is just another business. And I don't I don't want to say it like that to diminish it, but it's another, it's a business. And so we see uh business planning go sideways like this all the time, where I have a client who um, you know, maybe one year they have $300,000 of income on a Schedule C or on their single member LLC. And they look up and say, hey, I think it's better for me to be an S-corp. Well, this is the only year you've had $300,000 of net income in the last 10 years, and next year you're gonna be at $50,000. You're you're going to create a problem if we don't think about this long term. And so I think it's important to know where you're going, what's coming up, not just react. Like you said, we're not reacting. We want to be proactive and think through what's coming up. Yeah.

Speaker 01 26:14

Well, well, dovetailing a life plan with a roadmap while you, you know, while you're in college, with what you expect after college. I mean, it all it all fits into one giant puzzle. So and that that's what I think we're trying to do, right? Is we're trying to, you know, get all the pieces of puzzle we can into place and just deal with the variables and leave some flexibility for the future to, you know, to make sure you can accomplish your goals. Is that is that a fair statement?

Speaker 02 26:38

Very fair. And um as Nick alluded, it's very complicated, right? And so part of our job as their advisors is to simplify that down for them. So it might wouldn't there might be certain income levels where a retirement plan may not make sense uh from a tax standpoint, but I want to get them more into the habits of it and teaching them fundamentals. So almost every student athlete that we work with, we have we set them up a SEP plan, which is like a so uh self-employed retirement plan for their business. And I want to get them into the habit of putting money into that, and that that allows me to teach them how compound interest grows, pay yourself first, and the magic of compound interest and so forth. So that's a big part of the piece of the puzzle too. Yeah. Yeah, that makes sense.

Speaker 01 27:30

Um well, I I think that's a good good dive into you know, kind of the the general rules of thumb on the tax side. I mean, obviously as you grow, you know, your complexities are gonna grow. I mean, you know, do you want to speak to any more other things to be thinking about as they grow? I mean, that you know, there's kind of what everybody calls the jock tags, right? Where where you you may, if you're if you're doing services in multiple states, maybe you're getting hit by multiple states. So just just other things maybe ancillarily to be aware of.

Speaker 03 27:57

Yeah, and another thing that I was thinking through, you know, uh Don as he's talking about the retirement plans and things like that. I think another um thing that we see sometimes uh that can trip people up is once you set up some of these retirement plans, you know, a lot of people want to hire friends and family that are close to them. And they bring in, you know, other employees that can create issues with retirement plans. It's there's so many pieces of this that work together and work in concert with each other that uh, you know, one misstep here could create a problem that you're not expecting. And so working through that. Um, but the state issue is is a great uh example of one of those things that um, you know, as these athletes travel across the country, especially now the way that and I know we keep talking about football, but it's every it's every sport, right?

Speaker 01 28:45

But I think it's it's easiest, is it's kind of no dissrespct.

Speaker 03 28:49

Absolutely not. Um I know baseball travels, volleyball travels, everything, but football is kind of the primary. Um, but you see these schools playing games all over the country, and so there are going to be, and professional athletes also playing all over the country, you're going to see these states want to tax the income that's earned while they're playing in that state. And I think, you know, it's so easy for us to talk about even earlier. I was talking about tax rates, and I mentioned all the federal, and we didn't even I didn't even mention the state. It's so easy to just kind of let the state fall to the wayside. Uh, but some of your states have significant tax rates that are gonna be paid and are gonna be required. Um, and as these student athletes travel to different states and play, there's a requirement on some of them to pay tax and file tax returns in these states. And so it's important for them to know what what the implications are where they're going.

Speaker 01 29:46

Yeah, I mean, if if you just take a step back and just look at the NIL landscape, right? I mean, there's so much money involved, and you know, certain states are gonna want to reach out and and try and grab a portion of that. And, you know, whether a state does that or not, I mean, I I think you'll you'll see a lot of that evolve as the NIL landscape continues to evolve. And it and it's, you know, I'll I'll plug M &J's state and local practice. I mean, they're they're they're on top of it, and and so it's something that you have to continuously monitor because the rules change all the time.

Speaker 03 30:14

And and another thing to think about too with the NIL that's different than maybe a lot of businesses is that it's public. It's out there, you know. I mean, and I don't think we like to think about it because it makes a little sound a little paranoid, but you've got revenue agents sitting there watching TV that see.

Speaker 01 30:30

They see your contracts.

Speaker 03 30:31

They see contracts, they see uh they see a game being played in their state. They're the information's out there, it's available. And so things can be found much easier when it's public like that.

Speaker 01 30:43

Yeah. So I mean, yeah, lot lots of things to be thinking about. Obviously, you know, we're we're here to help where we can. Absolutely. Um, you know, just kind of taking a step back from tax and and and just thinking about the athlete, right? I mean, uh as there, you know, anything else we need to be thinking about for them as as they, you know, not from a legal perspective or anything like that, but but you know, or if a student transfers schools or or you know, like what what have you seen any issues that arise from that or just what from a student athlete perspective like how do we keep their kind of headspace okay? You know?

Speaker 02 31:15

What one of the things Brent I really like about doing the financial roadmap with these student athletes is they articulate their vision of what they want their life to look like. And so a big part of my coach and leadership with them is to keep bringing them back to that. Because once you get crystal clear on your vision, your di your decisions should be more black and white and um and not emotional. So I'm always bringing them back to their roadmap on what's really important to them, which helps them make those decisions with with their long-term future in mind instead of shooting from the hip.

Speaker 01 31:53

Yeah. Well, and you go back to your point about hey, I want I might want friends and family as part of my business. Well, it's like that's probably part of the roadmap of just, hey, let's let's figure out who you want to take care of, how you want to take care of them. Like it it all just kind of interplays, right?

Speaker 02 32:06

Absolutely. Well, it also kind of like, well, you didn't talk about taking care of all this and in our road. Are you sure that's really what you want to do now? And and it just kind of brings them zeroed back in. Well, what am I really trying to accomplish here? Yeah.

Speaker 03 32:21

And and I think another thing to to watch for is you know, we talk about tax, we talk about the planning, we talk about um just sports in general. And again, I just I want to keep going back to the fact that this is a business enterprise, this is a this is an entity, this is a this is a real world business that they're creating. And the contracts that they're signing are real contracts. I mean, this is this is real world stuff. And what we've seen crop up with some colleges is, you know, hey, you're you're signing a contract. We're paying you a lot of money. We expect that contract to be adhered to. And we've seen things in contracts related to personal um activities, you know, uh character, uh all sorts of things that say, you know, if you're out doing things outside of your time playing ball or doing whatever sport it is, and we're not happy with that, that's in violation of this contract. You know, I mean, it what I think what the student athlete needs to understand is when they sign on that dotted line, you are now representing a college more than probably you were in the past. Not only are you wearing a uniform, but you're also getting paid.

Speaker 02 33:29

Yeah.

Speaker 03 33:29

And I I that changes the landscape of that conversation with the school at that point, uh, because now it's money involved and that changes the conversation. So it's a little bit more.

Speaker 02 33:38

Yeah.

Speaker 03 33:38

Specific.

Speaker 02 33:40

That's a great uh point, Nick. And so even uh even putting them in an LLC does not protect them from all of that, right?

Speaker 03 33:47

Exactly. Because as soon as you sign that contract.

Speaker 02 33:49

Yes.

Speaker 03 33:49

You're in. And your LLC is the one

Speaker 02 33:52

Yeah. So you better not spend all that money, so saving some of that, uh you know, and also making sure we have the right insurance. Most student athletes, you know, a lot of them get by their first car with some of this money. Well, those as we know, those cars are um lia big you're driving liability. And so having proper car insurance, umbrella uh uh coverage on top of the basic car insurance and all that. Um and that costs money. And so it it's it's it's an eye-opening thing for um, I mean, just the taxes like Nick was talking about, that could be half of your contract.

Speaker 03 34:32

Yeah.

Speaker 02 34:32

And so then we're only working with the other half, and we gotta pay for this and that and whatever. And uh, you know, there's not uh there's not as much as they think is left over for fun things. And so uh that this is uh a very much an adult again, back to the CEO of your business conversation.

Speaker 01 34:53

Well, they they grow up so fast, right?

Speaker 02 34:54

Yeah.

Speaker 01 34:54

As far as a result of this.

Speaker 02 34:56

Yeah.

Speaker 01 34:56

So it is that I mean that's uh another reason I like this, is is we're the goal is to try and take as much off your plate so you can focus on what you need to focus on, right?

Speaker 02 35:04

Yeah.

Speaker 01 35:05

And so, you know, we I think we preach this on pretty much every podcast, just getting the right team in place.

Speaker 03 35:10

Absolutely.

Speaker 01 35:11

To help you and guide you and you know, just advise you on where you want to go.

Speaker 03 35:15

Yeah.

Speaker 01 35:15

And hold you accountable sometimes too, right? So um I think that's that's where I I like this this service so much.

Speaker 03 35:22

Yeah, and and I think another thing, and not to turn this into a podcast about the the portal, you know, but we see a lot of a lot of students transferring all the time. And and what we've seen in these contracts is hey, if you leave, you know, and we've seen colleges and universities pull back this money and say, you know, you're gonna you're owing us all this money back, whether it was paid or not. And so again, just having that right team, because I can look at a contract and I give you my thoughts, but having an attorney to go over that contract and really deep dive into that, having that, having the advice, the financial advising, the wealth management, the tax, that team is extremely important so that the student athlete can focus on what they do best and what got them to this point in the first place.

Speaker 01 36:05

That's right. Yep. Don, anything to add?

Speaker 02 36:08

I think he said it best. I I think uh I like the accountability, the leadership, that's a very big part of it, so they can stay focused on what they're so what they need to stay focused on.

Speaker 01 36:21

Yeah, I agree. I I think that that's the whole goal is hey, focus on what got you here, do what you do best, um, and what we're here to help you along the way. So um if if there's any other one piece of advice that you may have to offer or or the first step once you get an NIL offer in your hand, do you have one?

Speaker 03 36:38

Yeah, one thing that I want to say, because as we're sitting here talking, I'm nervous, right? I I feel nervous to get a to get a contract. If there's a student athlete out there who's gotten a contract, be excited.

Speaker 01 36:51

Yeah.

Speaker 03 36:51

I think Don, I'm sure you go through that in a conversation. Enjoy it. Be excited about it. It's it's a super I mean you we were talking about earlier, you you put all this effort, all this work to get here. Be excited, enjoy it. Um, but also turn it into something. Don't just let it fizzle out, don't let it be a flash in the pan. Use it. Turn it into something that you can use for the rest of your life and and build on top of that. I think is really important. Um, use this as a foundation for everything that you're gonna do going forward. And and at that point, the world is is yours. I mean, you can do whatever you want. And you know, we that's the American dream, right?

Speaker 02 37:31

Yeah.

Speaker 03 37:31

I mean, that's that's what we're here trying to do. Um, and so I just think uh enjoy it, be excited about it, but be careful and make sure that you're working through and you're building the right team, and you've got the right advisors around you so that you're making the right decisions going forward.

Speaker 01 37:48

Well, I think that goes back to our original NIL podcast when we were introducing this. It's just hey, you you're kind of developing a team, not just for NIL, but for life, right?

Speaker 03 37:56

Yes, absolutely.

Speaker 01 37:56

Whatever endeavors you go on, well, now you got some trusted people to work through through it with you forever.

Speaker 03 38:01

Absolutely.

Speaker 01 38:02

It's not just a it's not just about your playing career. It's like we care about you as a person. We want to see you succeed as a person.

Speaker 03 38:08

Yeah, absolutely.

Speaker 02 38:09

Yeah, I would just add uh what Nick said, stay true to yourself, too. I I think that's a big part of my job is to remind them of that. Because they're getting bombarded by a lot of different things. And so a big part of my job, I think, is to keep them grounded and stay true to yourself. And the other thing I would say is if it sounds too good to be true, it usually is. It pro it probably is, and so to remind them of sticking to the fundamentals too. Okay.

Speaker 01 38:37

Well, great. Well, thank you both for joining us. Um, I enjoy this very much. Um amazing that you and my dad played together.

Speaker 02 38:43

That's crazy. That's crazy.

Speaker 01 38:44

Outrageous.

Speaker 02 38:45

I'm scared of what he's gonna say.

Speaker 01 38:48

The first text I'm gonna send, right? So um, but yes, uh, for for the listeners, thank you for joining us. Uh, if you do have questions, please reach out to Don or Nick or visit our website at mjcpa.com. Thank you for joining us.