Managing Cyclical Income In Sports And Entertainment

The business life of professional entertainers and athletes is cyclical, so we have tailored accounting services specific to our performing clients – actors, models, musicians, and athletes. We know your business and how to serve you.

Careers in sports and entertainment are often unpredictable. Injuries, scheduling conflicts, and being in the right place at the right time can impact one’s career path.

Quite often as an actor, entertainer, athlete, influencer, or other personality, you have to predict how much potential earnings you will have to more effectively structure your deals and plan for the future. How do you benchmark against historic performance and market data to draw insights on how to more accurately predict future earnings and manage those income streams for wealth generation and preservation?

Unfortunately, we cannot predict exactly how much athletes or entertainers will earn from an entire sports or entertainment career, but what we can do is build the process and discipline to ensure all that you do earn is evaluated and managed properly for the most personal and financial benefits based on personal goals and interests. There are no guarantees; we help you plan and build a team to execute a comprehensive personalized financial well-being strategy.

Four essential accounting areas and tips for managing cyclical income for Entertainers and Athletes

In creating plans for professionals in sports and entertainment, there are several areas of focus to consider. Our CPAs and advisors guide you through this process to better manage your cyclical income. Here are a few accounting tips that will help you to think about managing your cyclical income as a professional in sports or entertainment.

Financial Planning & Budgeting

While it seems glamorous from the outside to be a professional athlete or entertainer, it takes a lot of hard work, preparation, and determination to excel. With the need to be performing at such a high level, often times little time is spent on financial planning.

We help you focus on what you do best, while understanding and managing your financial well-being. We work with you to define what you want, develop the roadmap of how to get there, and manage the process along the way to keep you on track. Think of us as a center to your quarterback. We’re the core of the offensive line, directing traffic of the infrastructure, protecting the pocket, opening up holes, allowing you and your skilled teammates to perform at your best. Whether you’re taking a few ground and pound yards, some nice underneath cushion, or going for the end-zone, we help you think through the game plan, and manage the feedback while we’re moving the ball forward. 

Many professional athletes have not had the best of luck managing their financial wealth. A startling 15.7 percent of former NFL players have filed for bankruptcy within 12 years of retiring, and it’s because they either have never been taught how to do so, or have not found the right business management partner. Some of these athletes may have had short careers with not much career earnings, and others may be players who had long careers with very significant career earnings. We don’t like those stats, and want to make sure you’re not one of them.

So why is financial planning and budgeting so important? We know you have plans, and we want to make sure the income you earn over your career, albeit choppy at times, is managed properly, so that you can execute against your plan and have fun doing so now and well into the future.  

If you don’t plan for savings, investments, and day-to-day needs now, you may be spending way more than you can afford to support your long term financial objectives. That’s where we see most of our clients get in financial trouble. They don’t plan accurately and think about the years they can no longer perform (and earn). Lifestyle decisions need to be managed while also being enjoyed. We help you consider a responsible budget to achieve all of your personal and financial goals.

Our team of licensed CPAs and other professionals make sure your interests are covered. We provide you with business management, tax, and accounting services based on your specific needs and make sure you can focus on your career without worrying whether or not you’ll have financial resources in the future.

Managing Taxes

They say “more money, more problems”, but the phrase “more money from different places, more complicated problems” also holds true. This unfortunate fact plagues most athletes and entertainers since you “perform” in different cities and states, all with different tax programs. Consider the range from states like Florida, Nevada, and Texas that don’t have any state or local jurisdiction taxes, compared to California’s 13.3% income tax rate. Beyond the cost of such calculations, there’s also the compliance side, making sure it’s all calculated, filed and paid correctly. We consider all of your complex tax needs and leverage other strategies for capital preservation.

We make sure to consider safe and effective short and long term tax strategies to avoid surprises and costs we didn’t plan for and save more money that you earn today.

Building Your Nest Egg (Building Savings)

Nothing feels better than having money to do the things you want to do when you want to do them, now and in the future.  Savings is that portion of net income that is allocated to allow you to live your same lifestyle for some defined period of time.  Once we start to consider “long-term” savings, we start to also talk about investments for long-term wealth appreciation.

One strategy, as shared by Shaquille O’Neal, is to save money from every paycheck, no matter how much. Whether you bucket your earnings into a safety bucket, growth bucket, dream bucket or any other bucket, there’s a strategy that will work for you. We’ll help you define and manage against that plan. This is most important for earnings that entertainment professionals and athletes receive that are both cyclical and variable in nature. The only way to both feel and be secure is to have proper guide rails in place, and we help you to define them.

Investment

Whether or not you’re looking to invest in basic security instruments or to open a bookstore, gym, restaurant, or any other business concept that comes to mind, the decision is based on various factors that have financial implications. The life of an entertainer and athlete does not guarantee performing income forever, so we need to be thoughtful about how we will need our investments to cover our future financial needs.

Unfortunately, the skillset necessary to have a successful career in sports and entertainment may not be the same as that of a successful investor. Athletes and Entertainers have a unique position of influence. Those who use that influence and experience wisely can create generational wealth. From playing it safe to taking the long shot, developing an investment roadmap is complicated and requires guidance and technical support. 

We’re the team behind the team. That is to say, for all those high profile investments, there are professionals who are helping to evaluate each deal and also the structures to make those investments (venture capital funds, private equity funds, or firms themselves). We’ll work with you to align your goals against a sound investment plan that considers your earnings and cyclical income.

We’re here to understand and support your needs. Adeptus Partners provides various accounting services to help you manage your cyclical income. Knowing what to do, especially when confronted with non-standard income, complex tax structures and other complications, requires experience and expertise. We’re here for you to focus on your craft, while we focus on ours.  If you’re an athlete or entertainer, or represent one, contact us to help understand and better manage the complications of your cyclical income.