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Best Business Structure for NIL Athletes (LLC vs S Corp)

  • Writer: MJ Cunningham, EA
    MJ Cunningham, EA
  • May 3
  • 3 min read

The business structure you choose for your NIL income determines how much you keep and how much goes to the IRS. Most athletes get this wrong because nobody explained the options clearly. Here is the full breakdown.


As NIL income grows, many college athletes start asking the same question: what is the best business structure for NIL income?


Should NIL income stay in your personal name, go into an LLC, or should you elect S corporation status?


The right answer depends on income level, tax planning goals, and long term NIL opportunities. This guide breaks down the best business structure options for NIL athletes and when each makes sense.


1. How NIL Athletes Are Taxed by Default By default, NIL athletes are treated as self employed individuals.


This means:

  • Income reported on Schedule C

  • Subject to self employment tax

  • No taxes withheld

  • Athlete responsible for quarterly payments


This applies whether you form an LLC or not.

This is important because forming an LLC alone does not change taxes.



2. Business Structure Options for NIL Athletes

Most NIL athletes choose one of three structures:

  • Personal income

  • LLC

  • LLC with S Corp election


Each has different benefits.



3. Option 1: NIL Income Paid Personally

Many athletes start by receiving NIL income in their personal name.


This works well when:

  • Income is low

  • Deals are limited

  • Just starting NIL opportunities

  • Minimal expenses

  • Short term deals


Pros:

  1. Simple setup

  2. No entity required

  3. Low administrative burden


Cons:

  1. No liability protection

  2. Harder to separate finances

  3. No S Corp tax planning

  4. Less professional branding


This is common for early NIL athletes.


4. Option 2: LLC for NIL Athletes


An LLC is the most common first step for NIL athletes.


Benefits include:

  1. Separate business identity

  2. Business bank account

  3. Cleaner bookkeeping

  4. Professional branding

  5. Liability protection

  6. Future tax planning options


Important: An LLC alone does not reduce taxes.

Income still flows to your personal tax return.

However, it creates structure.


5. When NIL Athletes Should Consider an LLC

Business Structure for NIL

An LLC may make sense when:

  • Income exceeds $15,000 to $25,000

  • Multiple NIL deals

  • Long term partnerships

  • Brand growth

  • Agent involvement

  • Travel for appearances

  • Increasing expenses


At this point, organization becomes important.



6. Option 3: LLC With S Corporation Election

Some higher income NIL athletes elect S corporation status.

This can reduce self employment tax in certain situations.


With an S Corp:

  • Athlete pays themselves a salary

  • Remaining profit may avoid self employment tax

  • Additional compliance required


This structure is typically considered when NIL income reaches:

$50,000 or more

This varies depending on deductions and expenses.


Schedule a NIL consultation to determine the best business structure for your NIL income.

7. Example: NIL Athlete Without Structure

Athlete earns:

$20,000 NIL income


No LLC:

  • Reported on Schedule C

  • Pays full self employment tax

  • Simple structure


This is common.



8. Example: NIL Athlete Using LLC Athlete earns:

$40,000 NIL income


LLC:

  • Business bank account

  • Track deductions

  • Professional structure

  • Still taxed same


Helps organization.



9. Example: NIL Athlete Using S Corp

Athlete earns:

$120,000 NIL income


LLC with S Corp:

  • Salary paid to athlete

  • Remaining profit distributions

  • Potential tax savings

  • More compliance required


This is more advanced planning.



10. LLC vs S Corp for NIL Athletes

LLC:

  • Simple

  • Flexible

  • Good first step

  • No automatic tax savings


S Corp:

  • More complex

  • Potential tax savings

  • Best for higher income

  • Requires payroll and compliance


Many athletes start with LLC, then elect S Corp later.



11. When NIL Athletes Should Consider S Corp

S Corp may make sense when:

  1. Income exceeds $50,000

  2. Consistent NIL deals

  3. Higher profits

  4. Long term brand deals

  5. Significant deductions

  6. Agent involvement

Planning is important.



12. Common NIL Structure Mistakes

  1. Forming S Corp too early

  2. Not forming LLC when income grows

  3. Mixing personal and business funds

  4. Not opening business bank account

  5. Ignoring quarterly taxes

  6. Not tracking deductions

  7. Not planning for growth


Avoiding these mistakes saves money.



13. Best Structure for Most NIL Athletes

General guideline:

Under $15,000

Personal income usually fine


$15,000 to $50,000

LLC often helpful


Over $50,000

LLC with possible S Corp planning

This varies by athlete.



14. Why NIL Structure Matters

Choosing the right structure helps:

  • Reduce taxes

  • Stay compliant

  • Separate finances

  • Protect income

  • Plan for growth

  • Create professional brand


This becomes more important as NIL income increases.



Need Help Choosing the Best NIL Structure?

If you are earning NIL income and unsure whether to use personal income, LLC, or S Corp, it is better to plan early.


Schedule a NIL consultation to determine the best business structure for your NIL income.

Aureus Advisory helps NIL athletes:

  • Choose best structure

  • Set up LLCs

  • Evaluate S Corp election

  • Plan tax strategy

  • Structure NIL income properly


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