When you’re cashing checks from sponsors and event wins, you’re not just an athlete—you’re a small business. Yet too many athletes treat their income like pocket money instead of corporate revenue. The result? Tax surprises, liability headaches, and missed opportunities to grow your brand. Let’s show you exactly why and how forming an LLC (or another business entity) can be one of the smartest moves you make in your athletic career.
You’ve worked for every dollar you’ve earned. Do you really want to risk it all because of a simple paperwork decision? A formal entity like an LLC separates you—with your personal assets—from your business—the money you make from things like endorsements, appearance fees, and prize winnings. Without that separation, a lawsuit or unexpected bill could come after your personal bank account, your home, even your car.
But liability protection is only the tip of the iceberg. The right structure can also:
“LLCs are expensive to set up and maintain.”
Here’s what really happens: most states charge a one-time filing fee of $50–$200 and an annual report fee of roughly the same. Compared to a hefty injury or an unexpected tax bill, that’s chump change. And when you consider the potential tax savings on travel, equipment, coaching, and even facility rental, you’ll often come out ahead.
If you’re just getting started, an LLC election is usually the sweet spot: affordable, straightforward, and protective. Once your income climbs and you’re seeing larger revenue checks, consider the S-Corp election inside your LLC to optimize taxes further.
“I need a fancy attorney and three months to get this done.”
Reality check: most LLC formations can be completed in a day and through an online service. You’ll need to:
Total time investment: 1–2 hours. Total cash outlay: $100–$300.
“I can write off personal expenses if I just claim everything as business.”
That’s a fast track to an IRS audit and penalties. The IRS expects clear separation: business expenses must be ordinary and necessary for your athletic enterprise. Personal dinners, family vacations, and new sneakers for casual wear don’t count. Keep receipts, notes on business purpose, and maintain good records.
1. Assess Your Current Earnings: Are you averaging four-figure endorsement checks or six-figure bonuses? That number should guide your urgency.
2. Set Up the LLC: Pick a trusted online formation service or your state portal; complete Articles of Organization.
3. Open Your Business Bank Account: Bring your LLC paperwork and EIN to the bank—ask about waiving fees for new business accounts.
4. Draft a Simple Operating Agreement: Use a template, customize key points, and store it with your records.
5. Track Everything: Implement accounting software, classify expenses properly, and reconcile monthly.
6. Consult a Pro: If you want deeper tax optimization, book a one-hour consultation with a firm like ours that is experienced in athlete finances.
You don’t have to be a legal expert to protect your earnings and your brand. Forming an LLC is neither expensive nor time-consuming—and it delivers a liability shield, tax benefits, and the credibility you need as a professional athlete.
Stop treating your income like loose change. Start treating yourself like the small business you are. That $10,000 check from your last event deserves more than a spending spree—it deserves smart structure and strategic management so it can fuel your career today and your life tomorrow.
Ready to lock in your LLC and take control of your financial future? Schedule time with me, and let’s get you set up in under two hours.
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Ben Beck is Managing Partner & Chief Investment Officer at Beck Bode, a deliberately different wealth management firm with a unique view on investing, business and life.