NIL: Setting Up an LLC and 501c3 for Student-Athletes
Athletes in colleges can now take advantage of their likeness, name and image. One such shining example of profiting from a bright name, image and likeness is lacrosse champ Charlotte North. She capitalized her popularity as an athlete in college by creating LLC and filing for trademark of her brand.
Now she is not only known as a star attacker on Boston college champion lacrosse team but is also widely known as an entrepreneur who has transformed her athletic career into a business.
This all became possible for her when National Collegiate Athletic AssociationNCAA designed new rules that allowed college athletes to get paid for the use of their name, image and likeness (NIL). This was a perfect timing for North because recently she has shown in outstanding star take her that held her team to take home their first ever lacrosse title. She was honored with Tewaaraton Award for winning most outstanding college lacrosse player in 2021 and 2022. Since then, she became a brand because of her outstanding performance and now she is taking full advantage of the new policies by NCAA.
Let’s learn from the tactics of North that she has used to build her business that all athletes can follow in order to reap the benefits of a bright name, image and likeness (NIL),
From Athlete to Entrepreneur
North has her personal social media handles and her website having more than 63,000 followers and counting. She is reaping the benefits of her on field performance and has translated it into success outside the sports field through diverse activities. This includes her public appearances and running clinics that have attracted sponsors as well.
At initial level to get her business off the ground she needed to formalize its structure. For that North incorporated two limited liability companies LLCs: Charlotte North Lacrosse and Ocho Lacrosse (a nod to her lacrosse jersey, No. 8).
LLC is a kind of legal status that actually turns a business into a separate entity from the person who actually owns it. This distinction between LLC and its owner offers several benefits for student athletes who are eager to earn money from their brand.
The top most advantage for student athletes in forming LLC is to stay immune against personal responsibility for business debts, bankruptcy or any legal dispute. North also benefited from this distinct feature of forming her first LLC in 2021 which acted as a kind of safety net for her. And she was relieved that through LLC her personal assets are totally secure if something goes wrong.
Because of forming LLC, North was also able to leverage pass through profits benefit of LLCs in which the tax is passed through the owner and is taxed at individual income rates which actually lower the percentage of taxes as compared to corporations that pay humungous amount of taxes on their earnings.
Each state in America has its particular rules of setting up a business entity. Therefore, you have to start by selecting a business name and check that whether it’s something that people can relate with or not. The second step is to select a registered agent and create a proper business operational plan.
Considering nonprofit 501 c3 Status
It’s not necessary to limit your athletic image for starting an LLC only you can use NIL for social good also by creating a nonprofit corporation with 501 c3 status. This not only helps you in getting exemption from Federal income taxes but can also draw sponsors and donors to support your nonprofit cause. The way you can protect your assets in LLC, you can also protect your personal assets in case of any legal issue if you are operating a nonprofit 501 (c)(3). For that you can complete the initial process of registering a nonprofit and file the articles of incorporation.
Protecting Your Brand Identity with Trademarks
With new policies of NCAA athletes like North are finding new ways of capitalizing on popularity of their NIL. North has registered three trademark applications for logos based on her NIL being the first athlete from Boston college.
The logos that North has officially registered based on her popularity feature core elements of a brand such as silhouette of her shooting a lacrosse ball. While her signature braid blows in the wind along with the stacked words ” Charlotte North Lacrosse”.
It is important to carefully understand the registration of trademark process because it requires careful research to make sure your logo, name or slogan is distinct from other trademarks and will not be confused with any existing trademark, any other athlete or a sports organization. Usually, it takes 12 to 18 months to properly review the application by United States Patent and Trademarks Office.
Once North is done with complexity of registering her trademark now, she will be able to sell cell phone cases, sports caps, lanyards, water bottles and other branded items that emerging sports athletes can benefit from. North can also capitalize her athletic image and trademark to license or logo to major companies such as footwear and apparel makers that can bring additional revenue from E-Commerce and retail sales.
Every athlete or an entrepreneur embarks upon his/her own journey of business endeavor. North is just one emerging example who started her journey from lacrosse star to incorporate her business using NIL. There are still countless ways that emerging athletes can capitalize upon to gain financial freedom.