May 1, 2025 • 31 mins
In this episode of the Main Street Business Podcast, Mark J. Kohler and Max Merritt reveal how NIL athletes can turn short-term earnings into long-term wealth. From forming an LLC to electing S corp status and leveraging mega Roth strategies, they lay out the playbook every young athlete—and their advisors—should follow.
Here are some of the highlights:
- Mark emphasizes the similarities between athletes and entrepreneurs, highlighting the self-discipline required in both fields.
- Max notes that many college athletes become entrepreneurs, often owning their own businesses.
- The importance of treating NIL income as a business transaction, suggesting the formation of an LLC and potential S corporation election.
- Mark warns against signing NIL contracts in the athlete's name, suggesting the use of the LLC to protect the athlete's interests.
- Mark and Max explain the concept of the mega backdoor Roth IRA, allowing athletes to save up to $70,000 annually in a tax-advantaged account.
- The potential for athletes to save significant amounts in retirement accounts like the solo 401(k).
- Mark encourages athletes to seek professional advice from tax lawyers and financial advisors to make informed decisions about their income and investments
- Grab my FREE Ultimate Tax Strategy Guide HERE!
- You don't want to miss this! Secure your tickets for the most significant business, tax & legal event of the year: Main Street 360
- Looking to connect with a rock star law firm? KKOS is only a click away!
- Are you ready to get certified in EVERY strategy I teach? Start your journey with a FREE 15-minute discovery call to explore the Main Street Tax Pro Certification.
- Check out our YOUTUBE Channel Here: https://www.youtube.com/markjkohler
- Craving more content? Check out my Instagram!
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:34):
I'm sorry it might be upsetting someone, but an
athlete, they know how to get upin the morning, eat healthy,
work their butt off and be thebest at their skillset, and it
takes self-discipline to do that.
Well, an entrepreneur, you justnailed 90% of what an
entrepreneur has to deal withAthletes that are college
athletes.
Speaker 2 (00:52):
it's a high number of those athletes that go on and
become entrepreneurs that owntheir own business.
Speaker 1 (00:57):
NIL athletes out there.
You are not going to make moneyforever.
This is a window.
You want to go into thisassuming that this is maybe the
last check.
You get, set it and forget it.
12% ROI, you will have two anda half million.
(01:19):
Welcome everybody to the MainStreet Business Podcast.
My name is Mark Kohler.
I'm here with the illustriousMax Merritt, another attorney in
our office, and we're talkingabout the NIL.
Max Merritt, another attorneyin our office, and we're talking
about the NIL income issue.
There are so many athletes outthere making money that they
didn't expect and there are alot of pitfalls.
Today's episode of our podcastis going to help you and the
parents with a lot of theseissues.
Max, what do you feel aboutthis issue?
(01:40):
Yes, I'm meeting with clientsevery single day in my practice
who are coming in, who have taxburdens that they never expected
, and we need to talk about whothe parents are relying on and
(02:06):
maybe it's not the right peopleto rely on.
I know you've already gotclients that have agents.
Are agents really the onesequipped to deal with this?
They're not bad.
I'm not saying fire your agentif any of you out there are
working with someone that'shelping you or your family, but
they could have someself-interest that we've got to
talk about.
Speaker 2 (02:26):
Right, yeah, what I've learned is I've met with
the student athletes, theirparents and even talked with
agents who are representingthese athletes.
Agents are admitting thatthey're kind of becoming
glorified secretaries to helptheir athletes get into concerts
, get into different sportingevents right.
But a lot of times these agentsdon't have the connections for
(02:50):
issues like tax burdens thattheir athletes are receiving or
creating an estate plan toprotect their assets and pass
them All these different issuesthat are coming along.
Agents don't have the team todo this.
Now they've got the connectionsto get you into a Lakers game
right, just sweet.
But the tax burden that comesat the end of the year.
They're deer in headlights in alot of ways.
Speaker 1 (03:12):
Yeah, and when you say scheduling everybody, what
we're really talking about toois the athlete is excited for
this agent to get them aGatorade commercial or get them
at a ribbon cutting at adealership and get them some
extra NIL income because it maycome through the alumni
association.
But the agent's there to makeyour athlete money and get them
some perks, which is cool,really cool.
Speaker 2 (03:35):
Right and they get some really good perks.
The problem is I have a coupleof my friends that are
professional athletes that theygo and they do some of these
ribbon cuttings and they don'tjust get a couple hundred dollar
check, they're getting $25,000,$50,000, $100,000 checks to
come do this.
And now the tax burden theyhave no idea, they're not
thinking about it, they just gota big chunk of money but at the
(03:56):
end of the year they're reallyupset and figuring out how they
can change that.
Speaker 1 (04:00):
So the first thing I want to emphasize here and thank
you so much, all of you thatare listening Some of you may be
the athlete Please pass thisalong to your parents.
Some of you might be theparents.
Please have your athlete listento this.
When you're receiving NILincome which is name, image or
likeness income you're beingpaid because you've got a cool
(04:21):
brand.
You're a brand now as anathlete.
That's why they're giving youmoney.
You bring eyeballs to theirproduct or service and they want
to give you money to put yourname, image or likeness in front
of them.
That's what this is about.
It's a business transaction.
Well, as an athlete, you arenow a business.
You're a business owner.
We want to get you and we'regoing to talk about some of
(04:43):
these steps a limited liabilitycompany or LLC to receive this
income.
We're probably going to make anS corporation election for that
.
There's some tax planning thatneeds to happen.
This is not just wave a magicwand, form an LLC on LegalZoom
and you're done Freaking A.
Please be careful with thatconcept.
But I just want to say from thebeginning, as a student athlete
(05:06):
, you need to treat yourself asa business and when you receive
income, you're going to get a1099.
And this could be from analumni association, a college,
and these college ADs, athleticdirectors.
They're not talking about thisbecause they don't want the
liability either.
Your thoughts?
Speaker 2 (05:22):
Yeah, and I just recently met with the GM of a
big university and this is a newposition inside of university
athletics due to NIL.
They're literally creating GMs.
They're literally creating GMswho can come in and go okay, our
athletes are going to getscrewed here, how do we help
them?
And so all of these studentathletes are receiving, all of a
(05:43):
sudden, at the end of the year,they're getting whomped with a
1099 from either a collective,the university, and their tax
burden is massive.
And guys, we're not talkingreceiving 20 grand from a
collective or university, we'retalking some of these athletes
are receiving a million dollars,800 grand, $2 million a year
(06:03):
from this NIL income thatthey're receiving.
You've got to get ahead of it.
You can't give us a call inDecember and expect us to wipe
away the tax burden as soon asyou start getting income coming
in.
You've got to get an entitycreated.
Speaker 1 (06:17):
Yeah, and I want to step back here too.
I am so grateful that you'rehere watching this grateful that
you're here watching this.
The tax advisor is verydifferent than your financial
advisor.
We're tax lawyers.
If you'll see in thedescription, I'm a partner here
at KKOS Lawyers.
Max is one of our phenoms.
He's one of our up-and-comingtax lawyers.
(06:38):
I love Max.
He's been with us for years.
I asked him to help us producethis podcast and what's
happening is the agent has aninterest in being a part of this
athlete's life as they goprofessionally, go into the
professional arena.
Maybe they're also the agentstrying to get a cut of some of
(06:59):
the ad revenue or advertisingincome or NIL income they might
get for that athlete.
Then you have investmentadvisors.
This is another player on yourpossible team.
This no pun intended, okay.
So this investment advisorwants to help invest the money
you're receiving.
We don't want you to go out andbuy a new Range Rover or a new
(07:20):
BMW and hopefully theseinvestment advisors are saying
let's put it in the bank, let'sgo buy stock or investment
accounts or annuities, andthat's a whole other issue.
We've got to be careful withthat.
Where we're trying to come in isto be a tax advisor, a legal
advisor with a fiduciary duty todo what's best for the athlete.
We don't make a commission.
(07:41):
We don't make a percentage onthe money invested.
We're here to help give yousome unadulterated, third-party,
independent advice.
That's what lawyers do.
They have a legal obligation totell you what's best for you.
The problem is, agents don'twant us at the table because we
may tell you yeah, your agent'san idiot.
(08:02):
The financial advisor doesn'twant us at the table because we
may go.
No, your agent's an idiot.
The financial advisor doesn'twant us at the table because we
may go.
No, buying life insurance isn'tthe best move and that
undermines their ability to makemoney.
So there's a lot of wolves insheep's clothing.
Did I say that?
Wolves, wolves?
I always get kind of in troublewith wolves, whatever.
Okay, there's a lot of wolvesin sheep clothing out there and
(08:23):
they're trying to prey on youand we're and don't use us.
That's fine.
I'm glad you're listening tothis podcast, but you got to
realize it's a jungle out there.
I got to shut up here.
Tell me your thoughts on allthis.
Speaker 2 (08:34):
No, I completely agree, and I think from the
opposite perspective.
These agents, in some ways,aren't meaning to do maybe not
what's best for you, but theyjust don't have the team or
ability behind them.
They're doing what they're goodat, which is getting you these
deals right, getting you infront of these people that are
major professional athletes,right, like Michael Jordan,
(09:06):
Tiger Woods all these bigathletes have their own brand,
but on a smaller scale.
You still need to prepare toreceive this income, and so you
got to have a good team aroundyou, and the nice thing is we're
great team players.
I'm a great team player.
I sat on a meeting with anagent, with their parents and
(09:26):
their CPA, and we were goodbuddies.
We made good team, but theydon't have the legal expertise
that we have right, but I don'thave the ability to get them
into a Lakers game, and so wemake a good team, but you need
all of us at that table.
Speaker 1 (09:41):
Yeah, and we're going to come to some of these steps
of what you do next.
We're not trying to hide theball here, but the step One, or
the first issue, isunderstanding.
You've got to protect yourself,you, the athlete or the parents
here.
You've got to protect yourathlete from people that may not
have the best interest of youin mind or your athlete in mind,
(10:03):
and so, as tax lawyers, again,we're going to play a part in
that process.
With that said, we won't beatit up.
Be careful.
Get a consult.
You may pay $100, $500, $600,$200, whatever per hour for a
tax lawyer to help give you someadvice.
Don't get hung up on what youpay per hour.
(10:24):
Whether you hire us or not, youwant a good tax advisor.
You're going to pay for it.
You're not going to get freeadvice.
Free advice means they're goingto make it up somewhere else
that you may not even see coming.
Be aware of that.
And it's okay.
Rich people pay for good taxlawyers.
I have clients that are likeMark, I just need an hour with
you.
I'll give you a thousanddollars because I know I'm going
(10:44):
to make 10 if I get you for anhour.
That's the concept you need tohave.
And you're not paying for mytime.
You're paying for my lastthousand consults, see, because
I've already met with a thousandclients and what I bring to the
table with you is theexperience of those thousand
consults.
So when you're meeting with Max,who's met with hundreds of
(11:06):
athletes and clients andaccountants and other team
members over his career just asshort he looks a lot younger
than me, so you're going to haveto know he hasn't done his
10,000 consoles yet.
I paid the dues.
But anyway, as you meet withMax over that time that he's put
in, you're getting the advicethat he's learned from those
experiences.
(11:26):
So he's not learning on yourdime.
So that's point number oneunderstand who your advisors are
, what their interests may be,build a team, be willing to pay
for it.
And before we go to what theathlete needs to do next, any
other thoughts on?
Speaker 2 (11:41):
that.
No, I think everything you'vepointed out is advantageous for
the athlete.
The one thing I do want topoint out is that team can
include us, the CPA, the agent,but in a lot of ways, with these
NIL students that are younger,we want your parents involved.
Having parents involved, becausethey have your best interest
from an emotional standpoint.
(12:01):
The consultations that I've hadthat I feel like have gone the
best with these student athletes, and I've had many.
Their parents are very involvedin knowing this step-by-step.
In fact, I've gotten parents asnow clients right, Because a
lot of them are entrepreneursand small business owners and
they're like holy crap, Max, Ididn't know I could do this, and
so we want a good team and thatcan include your family members
(12:23):
and that can include payingthem, creating a good tax
strategy around that.
So there's a big team that wecan create here, which is
important, gosh, and not to beatup.
Speaker 1 (12:32):
I want to make one more point on this.
If someone on your team says,get rid of them, whoever that
player may be on your advisoryteam, take it under advisement.
Don't just take what they sayand take action on that.
Try to think why are theysaying that?
Should I get a second opinionon that?
For example, max has alsoclients that are professional
(12:54):
players in different leagues,and he's seen the progression of
the student athlete in collegeinto the professional and now
what they're dealing with atanother level.
And so if someone says, oh, youdon't want that accountant, you
need this accountant, okay,tell me why.
And that's okay.
Again, you want a good lawyer,a good accountant, a good
(13:16):
financial advisor and a goodagent, and they all need to be
able to work together.
If someone on that team says getrid of them, or someone else
say why, who's going to taketheir place?
Oh, it's your brother-in-law orsomething you know.
Like what's going on here, youknow.
So just ask questions, becauseit's okay that they may make
(13:37):
those recommendations, butyou're the captain of the ship,
you're the decision maker.
Never feel like someone shouldmake a decision for you.
Don't get pushed around andthat can happen.
There's a lot of emotioninvolved with dollars and cents.
Speaker 2 (13:52):
Absolutely, and that's again another reason why
parents have been a great assetto their athlete, because
student-athletes focused onschool, maybe dating, maybe
whatever sport they're playingTaxes and setting up their
structure a lot of times nottheir biggest concern, but to
their parents, who've gonethrough taxes and had to write a
check to the IRS, recognize howimportant this is yeah.
Speaker 1 (14:14):
Okay.
So I'm going to just kind ofthrow out some basics here and
then you kind of add to it hereas we go along.
The first thing is, as studentathletes, you have to now file a
1040 tax return.
Some of you may have never hadto do this.
I have four children myself.
They're now all in their 20sand when they start to realize
they've got to file a tax returnand pay taxes, they're like, uh
(14:35):
, what's going on?
And so that's a new experienceand you know what.
It's okay.
If it's scary or unfamiliar,don't stress about it.
Ask questions like why am Ipaying taxes for this?
How does a tax table work?
What is my tax rate?
Am I paying tax in the state Ilive in?
Why and how much?
(14:58):
Those are okay questions.
Speaker 2 (14:59):
So it starts with knowing that you're going to
file a tax return.
Any thoughts there?
No, I totally agree.
I think I'll just concur withit.
Speaker 1 (15:02):
Yeah, yeah, so kind of basic, but I want to throw
that out.
Number two remember back tothis point you are a business
and we want you to form anentity that's a company and use
that company to collect andreceive your income.
This is what a dentist would do, a doctor would do, an engineer
, a brand new graduate that'sgoing to start a landscaping
(15:24):
business or a restaurant.
That's the same point.
Don't think you're this special.
You're not.
You're just like an influenceror a lawyer or an accountant or
a gosh, a realtor.
It's the same concept.
You're not.
You're just like an influenceror a lawyer or an accountant or
a gosh, a realtor.
It's the same concept.
You're getting paid for yourname, image and likeness, to
show up and cut a ribbon or beon a commercial.
Great, okay, cool.
What entities should you form,max, your thoughts?
Speaker 2 (15:45):
Yeah, I love that you point that out, that you're not
special, because I thinksometimes people who have an
agent or someone say, hey, yougot to go set up C corporation
for this, you know.
Or just we don't need an entityjust yet, let's wait, or you
need this special advisor.
Speaker 1 (16:00):
That's $2,000 an hour because la, la, la, you know,
oh my gosh.
Speaker 2 (16:05):
Yeah, they.
They just don't have theknowledge of it.
Well, the fact is, we're goingto set up an LLC that eventually
we're going to tax as an S-corp, just like we would if you were
to go buy a window washingcompany, right, the IRS doesn't
care about your profession, theycare about getting your taxes
right.
And so make sure that, as we godown this road, that you're
(16:28):
talking with someone thatunderstands that, hey, your
profession isn't really the bigdeal.
On the type of entity that I'mdoing with the athlete world,
now, some professions we'd wantto have a conversation about,
but, as far as the NIL side goes, we just need an entity in
place so that we can make an Sselection on eventually.
Speaker 1 (16:42):
Yeah, and we're going to tailor this to you.
The conversation is going to bevery specific to you and, by
the way, I just want to I didn't.
I think I thought I may havesaid this sooner, but I didn't.
The total cost to work with ourlaw firm, to have a
consultation with a real lawyerand meet with Max, might be
around 1200 bucks, maybesomething like that.
It does not have to beexpensive.
(17:03):
Anybody that's trying to getyour student athlete to pay a
retainer of $5,000 or more andwe see that crap all the time.
You've got the wrong peopleyou're working with.
I don't care if they're a bigcity firm and all we know what
we're doing Bull crap.
We've been around for 25 years,Started Googling our firm.
Google my name, mark J Kohler.
You're going to find out.
No one has more books, morepodcasts, more blog articles or
(17:23):
YouTube videos than me in thisspace, and I stand behind what I
say.
So you don't need to go pay bigmoney to get good advice.
With that said, setting up anLLC does not have to be
expensive.
It can be tailored to you.
You're going to get an EINelectronic identification number
, open a bank account, and we'regoing to talk through this in
our consultation when you set upan entity with a lawyer, you
(17:44):
should have about an hour or soto talk about questions you
might have.
That's what we're going to do.
You're going to set up an LLC,receive that income that you
might get from 20 differentplaces advertisers, colleges,
collectives, whatever and you'regoing to put that in a business
bank account and you're goingto learn and, oh my gosh, this
(18:05):
is such a good thing.
You're going to learn how to bea business owner.
Speaker 2 (18:08):
It's so fun, right, it really is.
Well, you get to.
You get to now look at theworld a little bit differently.
That's probably my favoritepart about a lot of these
conversations is, as I talk withthem and their parents or their
team hey, yeah, when you go,we're going to put board of
advisors on this entity.
We're going to put yoursiblings, maybe your
girlfriend's parents, right?
Speaker 1 (18:28):
Boyfriend too.
Speaker 2 (18:29):
These girls are getting money too, you know,
geez.
Speaker 1 (18:31):
Right, I know You're kind of chauvinistic.
Yeah, that wasn't meant to beAll right.
Sorry, ladies, but we're goingto.
Speaker 2 (18:35):
We're going to put we're going to put a different
group of people that you maytravel with.
See now we're going to startlooking at the world a little
bit differently, which is OK.
If I go here, look atthemselves as a business and be
strategic about their taxes.
Speaker 1 (18:54):
Yeah, just for fun.
You know what?
Let's just have fun with it.
Some of the examples might benow that, as an NIL athlete, you
are a business.
You are going to be paid foryour services working for the
university.
That's really what's going on.
So you buy a plane ticket to goto Miami to be at a conference
(19:16):
where you're recognized as anathlete.
You get to ride off yourairfare, you get to ride off
your hotel, your Uber, yourvalet, your dining.
See, you're a business owner.
You're now going somewhere onbusiness.
That could even be an eventwhere you're performing.
One of our most valuableclients that's made a ton of
money is in the fencing programat Yale.
I mean, they get paid big money.
Okay, that was a joke.
All right, fencing studentsdon't get paid a lot.
(19:39):
I think it's more basketballand football, maybe gymnastics.
Speaker 2 (19:42):
Now I'm being selective.
Speaker 1 (19:45):
I know, I know, okay, the ping pong players at TCU,
they're making big money, bigmoney, yeah, all right.
All right, we can tell you wetry to have fun here at our job
too, anyway, but that businessincome is going to go into your
LLC limited liability company.
And I just want to say you'regoing to form that LLC in the
state where you live.
(20:06):
Do not listen to anybody that'sgoing to try to form this in
Nevada or Wyoming or Delaware,freaking A.
If you live in Arizona, if youlive in New Jersey, if you live
in Alabama, we're going to setup an entity in the state
Arizona.
Speaker 2 (20:21):
New Jersey or Alabama , where you live Right, which is
critical.
And the second point I reallywant to make because I've had
these conversations it's reallysad when you start that year and
you know, hey, throughout thisyear I'm going to get paid NIL
money.
Do not wait until November,december to set this LLC up.
We want to get this LLC set upimmediately, very, very quickly,
so that we have that entity tostart running the 1099 income
(20:43):
through.
Because I happen to know thatthese NIL, the money and
contracts that are being signedthey're being signed now for
next year, and a lot of the waysthey're getting around some of
this NIL stuff, with some of theparameters that are coming down
, is they're prepaying thesecontracts, right?
So this money's coming in for25, 26.
Well, they need that entity setup now because the IRS doesn't
(21:05):
care that you're prepaying thatcontract, the IRS cares.
When did you get paid?
Speaker 1 (21:08):
Yeah, on this note.
See, these are little tax tipsthat you may not know and I this
is going to freak out some ofyou when you sign that NIL
contract, I want it in the nameof your LLC, not the name of the
athlete.
Does that make sense?
Because, see, you are not theone doing business.
Your LLC is doing businesswhich is going to be taxed as an
(21:31):
S-corp, and guess who theemployee of that corporation is.
Business which is going to betaxed as an S-corp, and guess
who the employee of thatcorporation is?
You, the athlete.
See, michael Jordan does notsign a contract.
Jordan Incorporated signs acontract.
See what I'm saying.
You got to start thinking likethis you are a business, you are
an entity.
So now some of you may bealready like, oh my gosh, I made
such a big mistake.
There may be options.
(21:52):
I don't know.
I don't know the date thesethings were signed.
Have you received the money yet?
Can we modify the contract?
There's a lot of things to talkabout.
That's what your tax lawyer isthere to do.
We can help unravel some of thethings or modify them so that
you're protected when it comesto report to the IRS and to
protect yourself.
If something happened to you,say you get injured, you get
injured in this process.
(22:13):
Do you get the money or not?
Who's in the name of thecontract in?
I mean, there's so manyvariables and so that tax lawyer
at the table is just asimportant as the agent at the
table.
Anyway, gosh timing, that'ssuch a good point.
Speaker 2 (22:25):
Yeah, the timing is huge and that's where I've seen
this past year where studentathletes are really hurting in
the year 2024, wondering, Max,how can I amend this?
And we're kind of stuck.
And so this pre-planning, withthese new athletes coming in,
and even if you're a currentathlete that doesn't have this,
better late than never get itset up.
Speaker 1 (22:45):
What he means by 2024 , but this is recorded here in
the spring of 2025, but theincome may have been received in
2024.
So you're filing a tax returnfor last year and you're like,
oh, I'll form an LLC now.
Okay, that's only good.
Moving forward, anything youreceived in the past, before
today, is going to be harder todeal with.
And again, you, parents thatown a small business, you get
(23:08):
this.
You're like, oh yeah, thismakes sense, but everybody makes
it hocus, pocus, smoke andmirrors.
You're dumb, we're smart, andparents and athletes feel like
they're at the mercy of some ofthese big city advisors.
Makes me mad.
We're about Main Street.
Speaker 2 (23:27):
I just and I think the other thing that I want to
point out is be the captain ofyour ship.
Yeah Right, if you're a studentathlete watching this, or
you're a parent of a studentathlete, you be the captain of
your ship.
Go to the university, go to theAD, go to the general manager
if they have one, and say, hey,I know my student athlete is
going to be receiving income.
What do you guys have set up?
Give us a call, let us help atuniversities on this.
(23:49):
We need to get your studentathletes set up.
But don't just wait around andhope that the university is
going to take care of thisBecause, as you pointed out
earlier, they see a liability, alittle bit, trying to give now
tax advice, legal advice, sothey're going to stay in their
lane.
They're going to help yourstudent athlete get paid.
They're not going to worryabout the back end of it.
So be the captain of that shipand take advantage of what we're
(24:10):
offering here.
Speaker 1 (24:11):
And great point.
Don't be mad at the AD or theGM at the university because
they didn't tell you this.
Put yourself in their shoes.
They're scared to death if theysend you to the wrong
accountant, the wrong lawyer,give you bad advice.
Now they're on the freakinghook.
So what do they do?
Say nothing at all.
That's safer for them.
So now you can see where we'recoming from Now them.
(24:34):
So now you can see where we'recoming from now.
Okay, one other topic or two,and then let's wrap this up.
I want to say this too as you,the athlete, received this money
and some people have maybealready said this, I apologize.
Some old accountant lawyerstelling you this, but you are
not going to make money forever.
This is a window.
It may be three years, it maybe one year, it may be five
years.
You may get lucky, make it tothe pros and make money the next
(24:55):
15.
I don't know, but you want togo into this assuming that this
is maybe the last check you get.
So let's be safe, let's becareful.
Yeah, you need to pay somebills, get out of debt, maybe
get a new car or truck thatworks better than the one you
have now.
But, yes, I want you to getwith a good financial advisor
and put some money away.
(25:16):
We're not going to invest yourmoney.
We can give your opinion, we'lltell you what to look out for
and we can see where you mightbe getting taken advantage of.
But we do want you to save andbe careful with your spending,
because this could be the money.
And be careful with yourspending because this could be
the money.
That's the seed money to starta business.
Buy a rental property, start,buy some raw land, do something
(25:39):
you've dreamed of, becauseyou're not going to be an
athlete forever.
Speaker 2 (25:52):
No, and I think it's a high number of those athletes
that go on and becomeentrepreneurs that own their own
business, and this is just thefoundational piece for you to
continue to do that.
It's important to take thesethings and remember there are
ways for us to save as much aswe can of what you're earning
now so that we can make moneyand have it continue to grow
throughout your and I want tocompliment you.
Speaker 1 (26:14):
Do you know why these athletes become entrepreneurs?
Because being an entrepreneur,being a real estate investor,
takes self-discipline.
A normal college student theydon't have that.
I'm sorry I might be upsettingsomeone, but an athlete, they
know how to get up in themorning, eat healthy, work their
(26:34):
butt off and be the best attheir skill set.
And it takes self-discipline todo that.
Well, an entrepreneur, you justnailed 90% of what an
entrepreneur has to deal with,and so if you have a dream in
business, you're going to takethese same skills you built as
an athlete and now direct themtowards a business idea.
(26:56):
And if you can take some of thecapital and the money you're
getting paid in NIL right nowand do that, oh my gosh, where's
a pen?
Pen drop.
So yeah, the world is youroyster.
We're excited for you it is.
Speaker 2 (27:12):
And the conversation or the point in the conversation
that always gets, for example,parents going for their student
athlete is when I go.
Well, we can save in retirementin a 401k for your 20 year old
athlete who just made 800 grandas a parent that's turning 55,
60, hitting that retirement agethat's trying to max produce
into their 401k that they can go.
(27:34):
Oh, my kid might not have toworry about this If I can max
this out through a solo 401k.
That gets parents emotionalbecause they're able to see how
they can set their kid up for abetter future.
Speaker 1 (27:46):
Okay, max, I love what you said about the 401k,
and so let's just do some mathhere real quick.
Let's say, as a student athletewhich you can do you can set up
a solo 401k that's structuredas a Roth and we call it the
mega backdoor Roth.
We teach this on YouTube allthe time.
Business owners do this all thetime.
So as a student athlete, youcould put away for three years
(28:08):
let's just say hypothetically,you get a good run at this and
out of all the money you getpaid, we just put away $70,000 a
year in savings in a Roth 401k.
Is that possible?
Absolutely, it's absolutelypossible, very doable.
Some of you are like hold it aRoth IRA, roth 401k.
Just go Google this.
I write articles on this allthe time.
It's called a mega backdoorRoth IRA.
(28:30):
It's called a mega backdoorRoth IRA.
It's a combination of a solo401k Roth with your traditional
or I should say, your individualRoth account.
Okay, more to learn on that,but here's the point.
You can put away $70,000 forthree years as a student athlete
and never put in another dollar.
If we assume a 12% return,because you're going to
self-direct this, you might putit in real estate, crypto notes,
(28:54):
whatever.
12% is very realistic.
Wall Street would tell you sixto 8%.
Nah, we're not going to do thatand we've got again podcast
after podcast on that point.
But let's say it's 12%.
70 grand for three years Isthat crazy?
I don't think it's crazy at all.
You'd want to guess what am Igoing to have in 20 years?
20 years from now?
(29:14):
You're now an athlete.
You're going to just put itaway for set it, forget it.
20 years.
What's my guess?
Yeah, what's your guess?
I'm going over 2 million.
I love it.
You're right.
2.493.
So that's two and a halfmillion.
We'll be and a half millionwill be sitting there tax-free
for the rest of your life in 20years.
(29:35):
So if you're a 20-year-oldathlete right now, add 20 to
that.
You're 40 years old.
But you're going to forgetabout this.
Parents, you know what I'msaying.
You want to tell them this,right?
You don't even tell them.
$70,000 in a mega backdoor Rothfor three years.
Set it and forget it.
12% ROI you will have two and ahalf million.
Too aggressive.
(29:56):
You want to go 8%, 1.7 million.
Fine, that's what we're talkingabout.
Get this money dialed in, dosome good tax planning, set it
and forget it and build wealthfor the future.
You can do this.
Speaker 2 (30:11):
You can absolutely do it, and it's encouraging
because these figures sometimesseem arbitrary.
Come meet with us.
Let's run them to your specificexample and walk you
step-by-step how you can makeyour dream become your reality.
Speaker 1 (30:25):
I love it.
Well, thanks everybody forwatching.
Please check out the links andthe info below to work with our
law firm, a small boutique taxlaw firm.
We've been around for 20 plusyears.
You can make an appointmentwith Max Merritt here.
I would recommend that more sothan me.
If you're a student athlete,you're going to get a lot better
service too.
Please do that.
(30:45):
Check it out.
We've got a great ongoingpodcast with the blog articles.
Our YouTube channel we're notgoing anywhere.
You parents, we hope that youcan join that phone call.
Make it happen, make theinvestment with a tax lawyer,
even if it's not us, to help youbuild your team for your NIL
athlete.
Thanks for watching, max.
Thanks for being here.
(31:05):
Yeah, thank you, this isawesome.
It's awesome.
We'll see you around and seeyou next week for another
episode of the Main StreetBusiness Podcast.
I'm sorry it might be upsetting someone, but an
athlete, they know how to get upin the morning, eat healthy,
work their butt off and be thebest at their skillset, and it
takes self-discipline to do that.
Well, an entrepreneur, you justnailed 90% of what an
entrepreneur has to deal withAthletes that are college
athletes.
Speaker 2 (00:52):
it's a high number of those athletes that go on and
become entrepreneurs that owntheir own business.
Speaker 1 (00:57):
NIL athletes out there.
You are not going to make moneyforever.
This is a window.
You want to go into thisassuming that this is maybe the
last check.
You get, set it and forget it.
12% ROI, you will have two anda half million.
(01:19):
Welcome everybody to the MainStreet Business Podcast.
My name is Mark Kohler.
I'm here with the illustriousMax Merritt, another attorney in
our office, and we're talkingabout the NIL.
Max Merritt, another attorneyin our office, and we're talking
about the NIL income issue.
There are so many athletes outthere making money that they
didn't expect and there are alot of pitfalls.
Today's episode of our podcastis going to help you and the
parents with a lot of theseissues.
Max, what do you feel aboutthis issue?
(01:40):
Yes, I'm meeting with clientsevery single day in my practice
who are coming in, who have taxburdens that they never expected
, and we need to talk about whothe parents are relying on and
(02:06):
maybe it's not the right peopleto rely on.
I know you've already gotclients that have agents.
Are agents really the onesequipped to deal with this?
They're not bad.
I'm not saying fire your agentif any of you out there are
working with someone that'shelping you or your family, but
they could have someself-interest that we've got to
talk about.
Speaker 2 (02:26):
Right, yeah, what I've learned is I've met with
the student athletes, theirparents and even talked with
agents who are representingthese athletes.
Agents are admitting thatthey're kind of becoming
glorified secretaries to helptheir athletes get into concerts
, get into different sportingevents right.
But a lot of times these agentsdon't have the connections for
(02:50):
issues like tax burdens thattheir athletes are receiving or
creating an estate plan toprotect their assets and pass
them All these different issuesthat are coming along.
Agents don't have the team todo this.
Now they've got the connectionsto get you into a Lakers game
right, just sweet.
But the tax burden that comesat the end of the year.
They're deer in headlights in alot of ways.
Speaker 1 (03:12):
Yeah, and when you say scheduling everybody, what
we're really talking about toois the athlete is excited for
this agent to get them aGatorade commercial or get them
at a ribbon cutting at adealership and get them some
extra NIL income because it maycome through the alumni
association.
But the agent's there to makeyour athlete money and get them
some perks, which is cool,really cool.
Speaker 2 (03:35):
Right and they get some really good perks.
The problem is I have a coupleof my friends that are
professional athletes that theygo and they do some of these
ribbon cuttings and they don'tjust get a couple hundred dollar
check, they're getting $25,000,$50,000, $100,000 checks to
come do this.
And now the tax burden theyhave no idea, they're not
thinking about it, they just gota big chunk of money but at the
(03:56):
end of the year they're reallyupset and figuring out how they
can change that.
Speaker 1 (04:00):
So the first thing I want to emphasize here and thank
you so much, all of you thatare listening Some of you may be
the athlete Please pass thisalong to your parents.
Some of you might be theparents.
Please have your athlete listento this.
When you're receiving NILincome which is name, image or
likeness income you're beingpaid because you've got a cool
(04:21):
brand.
You're a brand now as anathlete.
That's why they're giving youmoney.
You bring eyeballs to theirproduct or service and they want
to give you money to put yourname, image or likeness in front
of them.
That's what this is about.
It's a business transaction.
Well, as an athlete, you arenow a business.
You're a business owner.
We want to get you and we'regoing to talk about some of
(04:43):
these steps a limited liabilitycompany or LLC to receive this
income.
We're probably going to make anS corporation election for that
.
There's some tax planning thatneeds to happen.
This is not just wave a magicwand, form an LLC on LegalZoom
and you're done Freaking A.
Please be careful with thatconcept.
But I just want to say from thebeginning, as a student athlete
(05:06):
, you need to treat yourself asa business and when you receive
income, you're going to get a1099.
And this could be from analumni association, a college,
and these college ADs, athleticdirectors.
They're not talking about thisbecause they don't want the
liability either.
Your thoughts?
Speaker 2 (05:22):
Yeah, and I just recently met with the GM of a
big university and this is a newposition inside of university
athletics due to NIL.
They're literally creating GMs.
They're literally creating GMswho can come in and go okay, our
athletes are going to getscrewed here, how do we help
them?
And so all of these studentathletes are receiving, all of a
(05:43):
sudden, at the end of the year,they're getting whomped with a
1099 from either a collective,the university, and their tax
burden is massive.
And guys, we're not talkingreceiving 20 grand from a
collective or university, we'retalking some of these athletes
are receiving a million dollars,800 grand, $2 million a year
(06:03):
from this NIL income thatthey're receiving.
You've got to get ahead of it.
You can't give us a call inDecember and expect us to wipe
away the tax burden as soon asyou start getting income coming
in.
You've got to get an entitycreated.
Speaker 1 (06:17):
Yeah, and I want to step back here too.
I am so grateful that you'rehere watching this grateful that
you're here watching this.
The tax advisor is verydifferent than your financial
advisor.
We're tax lawyers.
If you'll see in thedescription, I'm a partner here
at KKOS Lawyers.
Max is one of our phenoms.
He's one of our up-and-comingtax lawyers.
(06:38):
I love Max.
He's been with us for years.
I asked him to help us producethis podcast and what's
happening is the agent has aninterest in being a part of this
athlete's life as they goprofessionally, go into the
professional arena.
Maybe they're also the agentstrying to get a cut of some of
(06:59):
the ad revenue or advertisingincome or NIL income they might
get for that athlete.
Then you have investmentadvisors.
This is another player on yourpossible team.
This no pun intended, okay.
So this investment advisorwants to help invest the money
you're receiving.
We don't want you to go out andbuy a new Range Rover or a new
(07:20):
BMW and hopefully theseinvestment advisors are saying
let's put it in the bank, let'sgo buy stock or investment
accounts or annuities, andthat's a whole other issue.
We've got to be careful withthat.
Where we're trying to come in isto be a tax advisor, a legal
advisor with a fiduciary duty todo what's best for the athlete.
We don't make a commission.
(07:41):
We don't make a percentage onthe money invested.
We're here to help give yousome unadulterated, third-party,
independent advice.
That's what lawyers do.
They have a legal obligation totell you what's best for you.
The problem is, agents don'twant us at the table because we
may tell you yeah, your agent'san idiot.
(08:02):
The financial advisor doesn'twant us at the table because we
may go.
No, your agent's an idiot.
The financial advisor doesn'twant us at the table because we
may go.
No, buying life insurance isn'tthe best move and that
undermines their ability to makemoney.
So there's a lot of wolves insheep's clothing.
Did I say that?
Wolves, wolves?
I always get kind of in troublewith wolves, whatever.
Okay, there's a lot of wolvesin sheep clothing out there and
(08:23):
they're trying to prey on youand we're and don't use us.
That's fine.
I'm glad you're listening tothis podcast, but you got to
realize it's a jungle out there.
I got to shut up here.
Tell me your thoughts on allthis.
Speaker 2 (08:34):
No, I completely agree, and I think from the
opposite perspective.
These agents, in some ways,aren't meaning to do maybe not
what's best for you, but theyjust don't have the team or
ability behind them.
They're doing what they're goodat, which is getting you these
deals right, getting you infront of these people that are
major professional athletes,right, like Michael Jordan,
(09:06):
Tiger Woods all these bigathletes have their own brand,
but on a smaller scale.
You still need to prepare toreceive this income, and so you
got to have a good team aroundyou, and the nice thing is we're
great team players.
I'm a great team player.
I sat on a meeting with anagent, with their parents and
(09:26):
their CPA, and we were goodbuddies.
We made good team, but theydon't have the legal expertise
that we have right, but I don'thave the ability to get them
into a Lakers game, and so wemake a good team, but you need
all of us at that table.
Speaker 1 (09:41):
Yeah, and we're going to come to some of these steps
of what you do next.
We're not trying to hide theball here, but the step One, or
the first issue, isunderstanding.
You've got to protect yourself,you, the athlete or the parents
here.
You've got to protect yourathlete from people that may not
have the best interest of youin mind or your athlete in mind,
(10:03):
and so, as tax lawyers, again,we're going to play a part in
that process.
With that said, we won't beatit up.
Be careful.
Get a consult.
You may pay $100, $500, $600,$200, whatever per hour for a
tax lawyer to help give you someadvice.
Don't get hung up on what youpay per hour.
(10:24):
Whether you hire us or not, youwant a good tax advisor.
You're going to pay for it.
You're not going to get freeadvice.
Free advice means they're goingto make it up somewhere else
that you may not even see coming.
Be aware of that.
And it's okay.
Rich people pay for good taxlawyers.
I have clients that are likeMark, I just need an hour with
you.
I'll give you a thousanddollars because I know I'm going
(10:44):
to make 10 if I get you for anhour.
That's the concept you need tohave.
And you're not paying for mytime.
You're paying for my lastthousand consults, see, because
I've already met with a thousandclients and what I bring to the
table with you is theexperience of those thousand
consults.
So when you're meeting with Max,who's met with hundreds of
(11:06):
athletes and clients andaccountants and other team
members over his career just asshort he looks a lot younger
than me, so you're going to haveto know he hasn't done his
10,000 consoles yet.
I paid the dues.
But anyway, as you meet withMax over that time that he's put
in, you're getting the advicethat he's learned from those
experiences.
(11:26):
So he's not learning on yourdime.
So that's point number oneunderstand who your advisors are
, what their interests may be,build a team, be willing to pay
for it.
And before we go to what theathlete needs to do next, any
other thoughts on?
Speaker 2 (11:41):
that.
No, I think everything you'vepointed out is advantageous for
the athlete.
The one thing I do want topoint out is that team can
include us, the CPA, the agent,but in a lot of ways, with these
NIL students that are younger,we want your parents involved.
Having parents involved, becausethey have your best interest
from an emotional standpoint.
(12:01):
The consultations that I've hadthat I feel like have gone the
best with these student athletes, and I've had many.
Their parents are very involvedin knowing this step-by-step.
In fact, I've gotten parents asnow clients right, Because a
lot of them are entrepreneursand small business owners and
they're like holy crap, Max, Ididn't know I could do this, and
so we want a good team and thatcan include your family members
(12:23):
and that can include payingthem, creating a good tax
strategy around that.
So there's a big team that wecan create here, which is
important, gosh, and not to beatup.
Speaker 1 (12:32):
I want to make one more point on this.
If someone on your team says,get rid of them, whoever that
player may be on your advisoryteam, take it under advisement.
Don't just take what they sayand take action on that.
Try to think why are theysaying that?
Should I get a second opinionon that?
For example, max has alsoclients that are professional
(12:54):
players in different leagues,and he's seen the progression of
the student athlete in collegeinto the professional and now
what they're dealing with atanother level.
And so if someone says, oh, youdon't want that accountant, you
need this accountant, okay,tell me why.
And that's okay.
Again, you want a good lawyer,a good accountant, a good
(13:16):
financial advisor and a goodagent, and they all need to be
able to work together.
If someone on that team says getrid of them, or someone else
say why, who's going to taketheir place?
Oh, it's your brother-in-law orsomething you know.
Like what's going on here, youknow.
So just ask questions, becauseit's okay that they may make
(13:37):
those recommendations, butyou're the captain of the ship,
you're the decision maker.
Never feel like someone shouldmake a decision for you.
Don't get pushed around andthat can happen.
There's a lot of emotioninvolved with dollars and cents.
Speaker 2 (13:52):
Absolutely, and that's again another reason why
parents have been a great assetto their athlete, because
student-athletes focused onschool, maybe dating, maybe
whatever sport they're playingTaxes and setting up their
structure a lot of times nottheir biggest concern, but to
their parents, who've gonethrough taxes and had to write a
check to the IRS, recognize howimportant this is yeah.
Speaker 1 (14:14):
Okay.
So I'm going to just kind ofthrow out some basics here and
then you kind of add to it hereas we go along.
The first thing is, as studentathletes, you have to now file a
1040 tax return.
Some of you may have never hadto do this.
I have four children myself.
They're now all in their 20sand when they start to realize
they've got to file a tax returnand pay taxes, they're like, uh
(14:35):
, what's going on?
And so that's a new experienceand you know what.
It's okay.
If it's scary or unfamiliar,don't stress about it.
Ask questions like why am Ipaying taxes for this?
How does a tax table work?
What is my tax rate?
Am I paying tax in the state Ilive in?
Why and how much?
(14:58):
Those are okay questions.
Speaker 2 (14:59):
So it starts with knowing that you're going to
file a tax return.
Any thoughts there?
No, I totally agree.
I think I'll just concur withit.
Speaker 1 (15:02):
Yeah, yeah, so kind of basic, but I want to throw
that out.
Number two remember back tothis point you are a business
and we want you to form anentity that's a company and use
that company to collect andreceive your income.
This is what a dentist would do, a doctor would do, an engineer
, a brand new graduate that'sgoing to start a landscaping
(15:24):
business or a restaurant.
That's the same point.
Don't think you're this special.
You're not.
You're just like an influenceror a lawyer or an accountant or
a gosh, a realtor.
It's the same concept.
You're not.
You're just like an influenceror a lawyer or an accountant or
a gosh, a realtor.
It's the same concept.
You're getting paid for yourname, image and likeness, to
show up and cut a ribbon or beon a commercial.
Great, okay, cool.
What entities should you form,max, your thoughts?
Speaker 2 (15:45):
Yeah, I love that you point that out, that you're not
special, because I thinksometimes people who have an
agent or someone say, hey, yougot to go set up C corporation
for this, you know.
Or just we don't need an entityjust yet, let's wait, or you
need this special advisor.
Speaker 1 (16:00):
That's $2,000 an hour because la, la, la, you know,
oh my gosh.
Speaker 2 (16:05):
Yeah, they.
They just don't have theknowledge of it.
Well, the fact is, we're goingto set up an LLC that eventually
we're going to tax as an S-corp, just like we would if you were
to go buy a window washingcompany, right, the IRS doesn't
care about your profession, theycare about getting your taxes
right.
And so make sure that, as we godown this road, that you're
(16:28):
talking with someone thatunderstands that, hey, your
profession isn't really the bigdeal.
On the type of entity that I'mdoing with the athlete world,
now, some professions we'd wantto have a conversation about,
but, as far as the NIL side goes, we just need an entity in
place so that we can make an Sselection on eventually.
Speaker 1 (16:42):
Yeah, and we're going to tailor this to you.
The conversation is going to bevery specific to you and, by
the way, I just want to I didn't.
I think I thought I may havesaid this sooner, but I didn't.
The total cost to work with ourlaw firm, to have a
consultation with a real lawyerand meet with Max, might be
around 1200 bucks, maybesomething like that.
It does not have to beexpensive.
(17:03):
Anybody that's trying to getyour student athlete to pay a
retainer of $5,000 or more andwe see that crap all the time.
You've got the wrong peopleyou're working with.
I don't care if they're a bigcity firm and all we know what
we're doing Bull crap.
We've been around for 25 years,Started Googling our firm.
Google my name, mark J Kohler.
You're going to find out.
No one has more books, morepodcasts, more blog articles or
(17:23):
YouTube videos than me in thisspace, and I stand behind what I
say.
So you don't need to go pay bigmoney to get good advice.
With that said, setting up anLLC does not have to be
expensive.
It can be tailored to you.
You're going to get an EINelectronic identification number
, open a bank account, and we'regoing to talk through this in
our consultation when you set upan entity with a lawyer, you
(17:44):
should have about an hour or soto talk about questions you
might have.
That's what we're going to do.
You're going to set up an LLC,receive that income that you
might get from 20 differentplaces advertisers, colleges,
collectives, whatever and you'regoing to put that in a business
bank account and you're goingto learn and, oh my gosh, this
(18:05):
is such a good thing.
You're going to learn how to bea business owner.
Speaker 2 (18:08):
It's so fun, right, it really is.
Well, you get to.
You get to now look at theworld a little bit differently.
That's probably my favoritepart about a lot of these
conversations is, as I talk withthem and their parents or their
team hey, yeah, when you go,we're going to put board of
advisors on this entity.
We're going to put yoursiblings, maybe your
girlfriend's parents, right?
Speaker 1 (18:28):
Boyfriend too.
Speaker 2 (18:29):
These girls are getting money too, you know,
geez.
Speaker 1 (18:31):
Right, I know You're kind of chauvinistic.
Yeah, that wasn't meant to beAll right.
Sorry, ladies, but we're goingto.
Speaker 2 (18:35):
We're going to put we're going to put a different
group of people that you maytravel with.
See now we're going to startlooking at the world a little
bit differently, which is OK.
If I go here, look atthemselves as a business and be
strategic about their taxes.
Speaker 1 (18:54):
Yeah, just for fun.
You know what?
Let's just have fun with it.
Some of the examples might benow that, as an NIL athlete, you
are a business.
You are going to be paid foryour services working for the
university.
That's really what's going on.
So you buy a plane ticket to goto Miami to be at a conference
(19:16):
where you're recognized as anathlete.
You get to ride off yourairfare, you get to ride off
your hotel, your Uber, yourvalet, your dining.
See, you're a business owner.
You're now going somewhere onbusiness.
That could even be an eventwhere you're performing.
One of our most valuableclients that's made a ton of
money is in the fencing programat Yale.
I mean, they get paid big money.
Okay, that was a joke.
All right, fencing studentsdon't get paid a lot.
(19:39):
I think it's more basketballand football, maybe gymnastics.
Speaker 2 (19:42):
Now I'm being selective.
Speaker 1 (19:45):
I know, I know, okay, the ping pong players at TCU,
they're making big money, bigmoney, yeah, all right.
All right, we can tell you wetry to have fun here at our job
too, anyway, but that businessincome is going to go into your
LLC limited liability company.
And I just want to say you'regoing to form that LLC in the
state where you live.
(20:06):
Do not listen to anybody that'sgoing to try to form this in
Nevada or Wyoming or Delaware,freaking A.
If you live in Arizona, if youlive in New Jersey, if you live
in Alabama, we're going to setup an entity in the state
Arizona.
Speaker 2 (20:21):
New Jersey or Alabama , where you live Right, which is
critical.
And the second point I reallywant to make because I've had
these conversations it's reallysad when you start that year and
you know, hey, throughout thisyear I'm going to get paid NIL
money.
Do not wait until November,december to set this LLC up.
We want to get this LLC set upimmediately, very, very quickly,
so that we have that entity tostart running the 1099 income
(20:43):
through.
Because I happen to know thatthese NIL, the money and
contracts that are being signedthey're being signed now for
next year, and a lot of the waysthey're getting around some of
this NIL stuff, with some of theparameters that are coming down
, is they're prepaying thesecontracts, right?
So this money's coming in for25, 26.
Well, they need that entity setup now because the IRS doesn't
(21:05):
care that you're prepaying thatcontract, the IRS cares.
When did you get paid?
Speaker 1 (21:08):
Yeah, on this note.
See, these are little tax tipsthat you may not know and I this
is going to freak out some ofyou when you sign that NIL
contract, I want it in the nameof your LLC, not the name of the
athlete.
Does that make sense?
Because, see, you are not theone doing business.
Your LLC is doing businesswhich is going to be taxed as an
(21:31):
S-corp, and guess who theemployee of that corporation is.
Business which is going to betaxed as an S-corp, and guess
who the employee of thatcorporation is?
You, the athlete.
See, michael Jordan does notsign a contract.
Jordan Incorporated signs acontract.
See what I'm saying.
You got to start thinking likethis you are a business, you are
an entity.
So now some of you may bealready like, oh my gosh, I made
such a big mistake.
There may be options.
(21:52):
I don't know.
I don't know the date thesethings were signed.
Have you received the money yet?
Can we modify the contract?
There's a lot of things to talkabout.
That's what your tax lawyer isthere to do.
We can help unravel some of thethings or modify them so that
you're protected when it comesto report to the IRS and to
protect yourself.
If something happened to you,say you get injured, you get
injured in this process.
(22:13):
Do you get the money or not?
Who's in the name of thecontract in?
I mean, there's so manyvariables and so that tax lawyer
at the table is just asimportant as the agent at the
table.
Anyway, gosh timing, that'ssuch a good point.
Speaker 2 (22:25):
Yeah, the timing is huge and that's where I've seen
this past year where studentathletes are really hurting in
the year 2024, wondering, Max,how can I amend this?
And we're kind of stuck.
And so this pre-planning, withthese new athletes coming in,
and even if you're a currentathlete that doesn't have this,
better late than never get itset up.
Speaker 1 (22:45):
What he means by 2024 , but this is recorded here in
the spring of 2025, but theincome may have been received in
2024.
So you're filing a tax returnfor last year and you're like,
oh, I'll form an LLC now.
Okay, that's only good.
Moving forward, anything youreceived in the past, before
today, is going to be harder todeal with.
And again, you, parents thatown a small business, you get
(23:08):
this.
You're like, oh yeah, thismakes sense, but everybody makes
it hocus, pocus, smoke andmirrors.
You're dumb, we're smart, andparents and athletes feel like
they're at the mercy of some ofthese big city advisors.
Makes me mad.
We're about Main Street.
Speaker 2 (23:27):
I just and I think the other thing that I want to
point out is be the captain ofyour ship.
Yeah Right, if you're a studentathlete watching this, or
you're a parent of a studentathlete, you be the captain of
your ship.
Go to the university, go to theAD, go to the general manager
if they have one, and say, hey,I know my student athlete is
going to be receiving income.
What do you guys have set up?
Give us a call, let us help atuniversities on this.
(23:49):
We need to get your studentathletes set up.
But don't just wait around andhope that the university is
going to take care of thisBecause, as you pointed out
earlier, they see a liability, alittle bit, trying to give now
tax advice, legal advice, sothey're going to stay in their
lane.
They're going to help yourstudent athlete get paid.
They're not going to worryabout the back end of it.
So be the captain of that shipand take advantage of what we're
(24:10):
offering here.
Speaker 1 (24:11):
And great point.
Don't be mad at the AD or theGM at the university because
they didn't tell you this.
Put yourself in their shoes.
They're scared to death if theysend you to the wrong
accountant, the wrong lawyer,give you bad advice.
Now they're on the freakinghook.
So what do they do?
Say nothing at all.
That's safer for them.
So now you can see where we'recoming from Now them.
(24:34):
So now you can see where we'recoming from now.
Okay, one other topic or two,and then let's wrap this up.
I want to say this too as you,the athlete, received this money
and some people have maybealready said this, I apologize.
Some old accountant lawyerstelling you this, but you are
not going to make money forever.
This is a window.
It may be three years, it maybe one year, it may be five
years.
You may get lucky, make it tothe pros and make money the next
(24:55):
15.
I don't know, but you want togo into this assuming that this
is maybe the last check you get.
So let's be safe, let's becareful.
Yeah, you need to pay somebills, get out of debt, maybe
get a new car or truck thatworks better than the one you
have now.
But, yes, I want you to getwith a good financial advisor
and put some money away.
(25:16):
We're not going to invest yourmoney.
We can give your opinion, we'lltell you what to look out for
and we can see where you mightbe getting taken advantage of.
But we do want you to save andbe careful with your spending,
because this could be the money.
And be careful with yourspending because this could be
the money.
That's the seed money to starta business.
Buy a rental property, start,buy some raw land, do something
(25:39):
you've dreamed of, becauseyou're not going to be an
athlete forever.
Speaker 2 (25:52):
No, and I think it's a high number of those athletes
that go on and becomeentrepreneurs that own their own
business, and this is just thefoundational piece for you to
continue to do that.
It's important to take thesethings and remember there are
ways for us to save as much aswe can of what you're earning
now so that we can make moneyand have it continue to grow
throughout your and I want tocompliment you.
Speaker 1 (26:14):
Do you know why these athletes become entrepreneurs?
Because being an entrepreneur,being a real estate investor,
takes self-discipline.
A normal college student theydon't have that.
I'm sorry I might be upsettingsomeone, but an athlete, they
know how to get up in themorning, eat healthy, work their
(26:34):
butt off and be the best attheir skill set.
And it takes self-discipline todo that.
Well, an entrepreneur, you justnailed 90% of what an
entrepreneur has to deal with,and so if you have a dream in
business, you're going to takethese same skills you built as
an athlete and now direct themtowards a business idea.
(26:56):
And if you can take some of thecapital and the money you're
getting paid in NIL right nowand do that, oh my gosh, where's
a pen?
Pen drop.
So yeah, the world is youroyster.
We're excited for you it is.
Speaker 2 (27:12):
And the conversation or the point in the conversation
that always gets, for example,parents going for their student
athlete is when I go.
Well, we can save in retirementin a 401k for your 20 year old
athlete who just made 800 grandas a parent that's turning 55,
60, hitting that retirement agethat's trying to max produce
into their 401k that they can go.
(27:34):
Oh, my kid might not have toworry about this If I can max
this out through a solo 401k.
That gets parents emotionalbecause they're able to see how
they can set their kid up for abetter future.
Speaker 1 (27:46):
Okay, max, I love what you said about the 401k,
and so let's just do some mathhere real quick.
Let's say, as a student athletewhich you can do you can set up
a solo 401k that's structuredas a Roth and we call it the
mega backdoor Roth.
We teach this on YouTube allthe time.
Business owners do this all thetime.
So as a student athlete, youcould put away for three years
(28:08):
let's just say hypothetically,you get a good run at this and
out of all the money you getpaid, we just put away $70,000 a
year in savings in a Roth 401k.
Is that possible?
Absolutely, it's absolutelypossible, very doable.
Some of you are like hold it aRoth IRA, roth 401k.
Just go Google this.
I write articles on this allthe time.
It's called a mega backdoorRoth IRA.
(28:30):
It's called a mega backdoorRoth IRA.
It's a combination of a solo401k Roth with your traditional
or I should say, your individualRoth account.
Okay, more to learn on that,but here's the point.
You can put away $70,000 forthree years as a student athlete
and never put in another dollar.
If we assume a 12% return,because you're going to
self-direct this, you might putit in real estate, crypto notes,
(28:54):
whatever.
12% is very realistic.
Wall Street would tell you sixto 8%.
Nah, we're not going to do thatand we've got again podcast
after podcast on that point.
But let's say it's 12%.
70 grand for three years Isthat crazy?
I don't think it's crazy at all.
You'd want to guess what am Igoing to have in 20 years?
20 years from now?
(29:14):
You're now an athlete.
You're going to just put itaway for set it, forget it.
20 years.
What's my guess?
Yeah, what's your guess?
I'm going over 2 million.
I love it.
You're right.
2.493.
So that's two and a halfmillion.
We'll be and a half millionwill be sitting there tax-free
for the rest of your life in 20years.
(29:35):
So if you're a 20-year-oldathlete right now, add 20 to
that.
You're 40 years old.
But you're going to forgetabout this.
Parents, you know what I'msaying.
You want to tell them this,right?
You don't even tell them.
$70,000 in a mega backdoor Rothfor three years.
Set it and forget it.
12% ROI you will have two and ahalf million.
Too aggressive.
(29:56):
You want to go 8%, 1.7 million.
Fine, that's what we're talkingabout.
Get this money dialed in, dosome good tax planning, set it
and forget it and build wealthfor the future.
You can do this.
Speaker 2 (30:11):
You can absolutely do it, and it's encouraging
because these figures sometimesseem arbitrary.
Come meet with us.
Let's run them to your specificexample and walk you
step-by-step how you can makeyour dream become your reality.
Speaker 1 (30:25):
I love it.
Well, thanks everybody forwatching.
Please check out the links andthe info below to work with our
law firm, a small boutique taxlaw firm.
We've been around for 20 plusyears.
You can make an appointmentwith Max Merritt here.
I would recommend that more sothan me.
If you're a student athlete,you're going to get a lot better
service too.
Please do that.
(30:45):
Check it out.
We've got a great ongoingpodcast with the blog articles.
Our YouTube channel we're notgoing anywhere.
You parents, we hope that youcan join that phone call.
Make it happen, make theinvestment with a tax lawyer,
even if it's not us, to help youbuild your team for your NIL
athlete.
Thanks for watching, max.
Thanks for being here.
(31:05):
Yeah, thank you, this isawesome.
It's awesome.
We'll see you around and seeyou next week for another
episode of the Main StreetBusiness Podcast.
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