How a former NBA player turned entrepreneur does his taxes
This year’s drop-off season threatens to be more complicated than ever thanks to a villain named Covid-19, especially for the millions of Americans in the gig economy. As part of Morning Brew’s Tax guide, we’ll be interviewing entrepreneurs, freelancers, small business owners and scammers over the next few months on how they are preparing for the 2020 filing season. I know I know. With sexy talk like adjusted gross income and depreciation that even Duke Basset needs Bridgerton? But this stuff is important because it affects your money. By understanding how these gig workers plan to sweep available tax credits better than a Dyson vacuum, you can save $$$, too.
I spoke with Paul shirley, who played professional basketball for eight years before becoming a writer and entrepreneur in Los Angeles, about his approach to taxes. He shared some financial lessons he learned the hard way and talked about the time his wallet was stolen.
Morning infusion: Let’s start with your professional basketball career. How did you manage to organize your finances at the time?
Paul Shirley: I was bad enough for it. From 2001 to 2002 I played with the Panionios Athens in Greece, and a good thing was that they covered the taxes in their country. So if I was paid $ 100,000 and the taxes were 20%, they covered that $ 20,000. Honestly, I wasn’t quite sure they were really taking care of these bills. All I cared about was getting paid, but it was the way they paid me sometimes that made me question things. We were once playing in an arena where the changing rooms were so dirty they looked like they hadn’t been cleaned since 1965. I was given $ 12,000 in cash with no safe place to store it. There were no locks on the lockers. So I had to put the money in my shoes and hope no one would take it while we were playing.
Mo: Did someone take it?
PS: Luckily no, but there was once someone broke in and stole all of our wallets. I still don’t have my social security card.
Mo: Slim. Do you remember how you did your taxes back then?
PS: I once tried doing them myself on TurboTax. I was so wrong that my accountant had to write a letter to the IRS and tell them, if you help us solve this problem, Paul promises to never pay his taxes on his own again.
You have to understand, I grew up in the lower middle class in a small town in Kansas. My family didn’t have the luxury of having a financial advisor or anything like that. As I got older I realized how nice it is to have a professional who understands how your industry works and can advise you on your finances. I found someone after about a year of playing basketball professionally, and he’s still the person I work with today. Now we have been working together for a long time and he understands my journey as well as the direction I want to take in the future.
Mo: Do not professional athletes also have to face many state taxes?
PS: Yeah, so, that was another weird thing. Let’s say we played against the Atlanta Hawks, I would basically be taxed for spending a night in Georgia. I think it goes back to California charging the Chicago Bulls when they faced the Lakers in the NBA Finals in 1991. [Editor’s Note: The “jock tax” goes back to the 1960s, but this ’91 championship game is when it ramped up big time.] And then other states were like, we want a piece of that. It’s something that mostly affects actors and athletes, but they’re not going to complain and no one really feels bad for them.
Mo: When did you decide you wanted to become a writer?
PS: When I was in the NBA, I always thought I would write a book after. But when I was playing and living in Greece I felt lonely and started writing a newsletter to my friends and family back home. Every time I wrote something particularly expressive or funny, I got more responses. It made me want to write more, and I eventually started writing a column for ESPN called “My So-Called Career.” This led to a book deal midway through my career, and Can I keep my swimsuit? was released in 2007.
One thing I learned along the way is that I don’t like to write alone. I’m the type of guy who likes to meet a friend in a cafe. So I started creating Meetup events where people could come in, write for about an hour, and then socialize afterward. About 17 people came to our first one, and I thought, hmm, maybe there’s something here. So we started to organize it a little better, providing wine and cream pies, then it became Writers’ Block, which I like to describe as a yoga studio but for writing.
Mo: How did you integrate Writers Blok as a company?
PS: So we established it as a 501 (c) 3 nonprofit which ended up being a bad idea as it is difficult to get loans if you are a nonprofit. The bank knows that you are unlikely to make a lot of money, so they are not sure that you will be able to repay the loan. It is also difficult to sell shares in a nonprofit organization. I learned a lot from the mistakes I made with Writers Blok to prepare for my new business, The Process.
Mo: Tell us a bit about that.
Basketball taught me the importance of developing routines, so The process is training yourself to access regular bursts of deep, focused work. During Covid-19, we offered virtual coaching sessions and in-depth chat-based work sessions, where you set your goals, work for 50 minutes and then chat within our community about it on Discord. We structured it in C-corp to allow us to raise capital.
Mo: How did you pay yourself at Writers Blok, and now with The Process?
PS: At Writers Blok I got paid as an entrepreneur, so I had a 1099. With The Process I have to give myself a salary, and one thing I struggled with as an entrepreneur is know how to justify what i should be paid. . It’s so tempting to put it all back into the business, but I remember, oh, I have to pay my rent. I have to do the grocery shopping.
Mo: So how do you work through this?
PS: This is a good example of knowing when to ask for help. I basically worked with my CFO.
Mo: You also have a new book now, don’t you?
PB: Yes it’s called Ball boy and this is a child named Gray whose mother moves him from LA to Beaudelaire, Kansas. Gray sees basketball as a way to get noticed in an unfamiliar place, but also as a way to give this dying town some notoriety. It’s about the power of community and finding what makes you feel special.
Mo: OK so one more basketball question. What was it like playing with the older kids?
PB: Shaquille O’Neal is one of the most genuine guys I have ever met. I was at training camp with the Lakers for a year, and the first day I walked over to him and stood up really straight and said, “I’m Paul Shirley, that’s a pleasure to meet you.” And he said, “Oh, I know who you are.” I’m sure he had no idea who I was, but he wanted me to feel seen. And he was like that with everyone.
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