It tears my heart when I hear that someone has been taken for granted due to a lack of information. We hear stories every day about good people that just caught out there due to innocent ignorance. Believe it or not, I hear these stories and have these conversations more often than I would like to with professional athletes. Below are a few tips that professional athletes should consider when accepting professional, independent contractor positions overseas.
1 – Set up a business entity and DON’T just sign agreements as an individual player. First, in this cyber security environment, they shouldn’t be signing these agreements with their SSN and second, there is no liability protection from the stand point of other endeavors they may be involved in on the home front while playing abroad.
2 – The professional player’s business entity should be set up before negotiations and before they decide to go and play overseas. Even if they have other business ventures they want to get involved in, setting up this entity to start with can better further those objectives if planned properly.
3 – Overseas contracts should be paying the business entity, not the individual player. The player should be paid via proper payroll planning.
4 – The individual needs to account for their own payroll taxes to the U.S. NO MATTER WHAT the contracting country is deducting. This will mean that contract negotiations should factor in tax allocations that the player will need to pay from the bottom-line. A number to consider is 30% (that should be added to the contract’s bottom-line during negotiations).
5 – This is the ideal time for professional players to bring on a reputable tax professional. Their tax professional should be plugged into their payroll and processing ALL of their accounting (they can’t get deductions if they don’t have accurate books and records).
Playing professional sports may be your love and livelihood, but it’s also your business and you’ve got to start treating it as such.
photo credit: sports.vice.com