Professional sports is a multi-billion dollar industry that requires meticulous financial management to protect the wealth of athletes while ensuring their regulatory compliance. Adhering to the tax and accounting guidelines can be tricky for this profession, as they often travel across the world to work, which can have multi-state tax implications. In this dynamic and fast-paced world, the role of an accountant becomes invaluable.
As a team of highly skilled CPAs with extensive experience working with professional athletes and artists in the entertainment industry, we at Fusion understand the unique financial challenges faced by professional athletes. For this reason, we understand that the role of accountants in this industry is fundamental to the financial success of professional athletes.
We take a look at some of the ways in which accountants alleviate some of the financial pressures faced by professional athletes.
The Role of an Accountant in professional sports
Accountants provide invaluable support to professional athletes, helping them navigate complex financial landscapes, manage taxes, and protect their hard-earned wealth in the following ways:
1. Financial planning and education
Accountants in professional sports work closely with athletes to ensure accurate and up-to-date financial records. They analyze all income streams and create a roadmap to ensure financial stability for the athlete while making sure that their financial records are in line with IRS requirements. But, there’s more to the service than just adhering to accounting guidelines. Accountants also work alongside athletes to provide them with financial guidance that includes setting financial goals and making informed decisions about investments, real estate, and retirement planning. This is to ensure wealth longevity for the athlete, beyond their sports years.
2. Contract negotiation
Financial planning stretches far beyond current earnings. Accountants provide professional athletes with essential support during contract negotiations. This involves analyzing the terms and incentives to ensure favorable financial outcomes. Accountants do this to ensure that the athlete is fully aware of the contract offering prior to signing a new contract. This is a crucial step in ensuring the long-term liquidity of the athlete.
3. Tax planning and compliance
Tax planning is a crucial aspect of managing an athlete’s finances. Accountants specializing in professional sports understand the intricacies of tax laws and regulations that impact athletes’ income. This includes knowing the relevant tax implications for athletes at both state and federal levels. They work closely with athletes to minimize tax liabilities, maximize deductions, and ensure compliance with all tax obligations. Accountants also provide guidance on the tax implications of endorsement deals and sponsorship income.
4. Expense management
From travel expenses and training costs to insurance premiums and professional service fees, earning big often leads to spending big, or mindless spending. But, accountants play a vital role in managing and tracking expenses for professional athletes. This is to help establish systems to monitor and control spending, ensuring that athletes stay within their budgets and make informed financial decisions. Accountants provide valuable guidance on managing and categorizing expenses to maintain financial transparency and optimize tax deductions.
5. Risk management and asset protection strategies
Professional athletes often face unique financial risks and challenges, such as sudden wealth, investment scams, and potential legal issues. Accountants work in collaboration with wealth managers, financial advisors, and legal professionals to implement risk management strategies that protect their assets.
Accountants play a crucial role when it comes to protecting the financial well-being of athletes. At Fusion CPA, we look at sporting contracts to help individuals and organizations optimize their earnings. We also implement effective tax strategies, and make sound investment decisions for athletes that extends far beyond their years playing the sport. Contact us today to learn how our team can help you achieve your financial goals.
This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. Articles are based on current or proposed tax rules at the time they are written, and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.