After years representing creatives, consultants, producers, designers, strategists, photographers, developers, agencies, and the companies hiring them, I can tell you something with confidence: most freelance disputes are not caused by “bad people.” They are caused by vagueness.

Vague scope. Vague expectations. Vague timelines. Vague approval processes. Vague communication. Vague boundaries. And vague almost always becomes expensive.

Freelancers understandably focus first and foremost on the craft itself — the creative work, the technical execution, the strategy, the design, the production. But the business infrastructure surrounding the work is often treated as secondary. That can be a mistake. Because the difference between a sustainable freelance business and a perpetual stress machine is usually not talent. It is operational discipline.

Mistake #1: Lack of a proper written agreement

The most common issue I see is still the absence of a proper written agreement. A freelancer gets referred by a friend-of-a-friend, the project moves quickly, everyone seems aligned, Slack messages fly, enthusiasm is high, and work begins immediately. Then the scope expands. Then approvals stall. Then invoices age into geological formations. Suddenly everyone has a completely different memory of what was agreed and mismatched expectations regarding what will result.

Enter the Freelance Isn't Free Act (“FIFA”), which in brief requires written agreements for qualifying freelance work and provides important payment protections for freelancers. To be sure, under FIFA it is the hiring party that bears the greater legal responsibility for papering the relationship properly. But in practice, my personal rule is simple: once a scope of work begins to crystallize — whether through a pitch meeting, job posting, proposal process, or project pursuit — follow it immediately with a concrete PSA, MSA, or engagement agreement from the freelancer side establishing the baseline business and legal terms of the relationship. And importantly, even if that agreement never winds up formally signed, it may still become highly relevant (and potentially enforceable) in a later dispute as evidence of the parties’ intended arrangement and course of dealing.

FIFA is enormously helpful, but it is not a substitute for a good contract. A contract does not signal mistrust. It signals professionalism and often reflects the tip of the iceberg of broader operational infrastructure. Even relatively lean agreements should address scope, deliverables, revision limits, payment timing, late fees, intellectual property ownership, termination rights, and approval mechanics. Without those basics, clients often begin treating freelancers like employees with infinite availability.

Mistake #2: Poorly defined scope

Which leads directly into the second major problem: poorly defined scope. This is probably the single largest economic leak in freelance work. Freelancers say something broad like “branding support” or “creative direction.” Clients hear “unlimited strategic advisory services plus infinite revisions until morale improves.” Likewise, an anticipated “up to 15 hours per week” quietly becomes a baseline expectation under which effectively unlimited services are presumed available. Scope is not merely about describing deliverables; it is about defining boundaries. Strong scope language explains not only what is included, but also what is excluded, how many revision rounds are contemplated, what assumptions the timeline depends upon, and what circumstances trigger additional fees. If you fail to define the perimeter of the engagement, the perimeter will almost always expand in the direction of free labor.

Mistake #3: Confusing responsiveness with permanent availability

Another increasingly common trap is confusing responsiveness with permanent availability. Many freelancers accidentally train clients to expect immediate responses at all hours — midnight emails, weekend revisions, constant Slack monitoring, emergency calls that are somehow not emergencies. (To be sure — humble brag — I am guilty of this dynamic in my legal practice as well.) Once that expectation becomes normalized, resentment inevitably follows. Healthy freelance relationships usually establish communication norms early: business hours, expected response windows, emergency definitions, and preferred communication channels. Boundaries are not anti-client. They are infrastructure.

Mistake #4: Beginning substantial work without upfront payment

I also routinely see freelancers begin substantial work before deposits clear. While unavoidable in certain industries, whenever reasonably possible this should be avoided. One of the clearest indicators of future payment problems is reluctance to pay an initial deposit promptly. Professional clients understand deposits. Sophisticated businesses pay retainers to lawyers, architects, consultants, and production vendors every day. Yet freelancers often fear appearing “difficult” by requesting upfront payment. In reality, requiring financial commitment before mobilizing resources is not unreasonable. It is how functioning businesses operate.

Mistake #5: Operational disorganization

Operational disorganization is another major issue. Many freelancers still attempt to manage large projects entirely through sprawling email chains and text messages. Important approvals disappear. Scope changes become impossible to track. Nobody remembers which deliverable version was final. You do not necessarily need enterprise software, but you do need systems. Statements of work, centralized approvals, invoice and hour tracking (even a dedicated Excel workbook will suffice), organized deliverable folders, and written change orders are not bureaucracy for the sake of bureaucracy. They are evidentiary infrastructure. In any future dispute, documentation becomes clarity and leverage.

Mistake #6: Failure to separate friendship from commerce

Another recurring issue is the failure to separate friendship from commerce. This is often the hardest category emotionally. Freelancers discount rates excessively, avoid difficult conversations, skip contracts, or delay collections because the client is “a friend,” “a startup,” or “someone cool.” Six months later they are chasing unpaid invoices while the client posts vacation photos from Tulum. Friendliness is not infrastructure. Paper the deal anyway. Clear process often preserves relationships because expectations are aligned upfront instead of emotionally litigated later.

Mistake #7: Waiting too long to escalate nonpayment issues

Finally, many freelancers wait far too long to escalate nonpayment issues. They try to be understanding. Then more understanding. Then extraordinarily understanding. Meanwhile the invoice ages from 15 days to 90 days to six months. At a certain point, delay itself becomes leverage for the nonpaying party. Escalation does not need to be hostile, but it should be structured and deliberate — written follow-ups, clear deadlines, references to contractual obligations, and invocation of FIFA protections where appropriate. You do not need to become aggressive immediately, but you do need to become intentional.

The broader point is simple: freelancing is not merely creative work. It is risk allocation. The freelancers who build durable, sustainable careers are rarely just the most talented. They are the ones who construct systems around the talent — contracts, boundaries, payment discipline, documentation, process, and operational clarity.

That infrastructure is not bureaucracy. It is protection.

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Now that tax season for the 2025 tax year has wrapped up, it is time to plan ahead and get your 2026 tax strategy in order, especially if you earn tips or overtime income that qualifies you for a deduction based on the latest IRS guidance released in April 2026.

Which types of freelance work qualify for the overtime and tip deductions? 

Below is a detailed breakdown of the rules on tip and overtime income and to whom they apply. Remember, your local and state taxing authorities may not conform with the internal revenue code, so it is prudent to check with a qualified tax professional to see how these deductions interact with your full tax picture.

Freelancers should pay special attention to the year ahead since the "One Big Beautiful Bill Act" tax provisions are now in effect along with renewed focus from both the IRS and the Department of Labor on two areas that affect many independent workers: overtime rules and tip reporting.

Understanding these changes now will help you avoid compliance issues and stay ahead of next year's filing requirements. Start with this primer on the tax implications of tips and overtime for your freelance taxes.

Freelancers Pay Attention: FSLA Overtime Rules Only Apply to W-2 Wages

First, let’s talk about The Fair Labor Standards Act (FLSA) overtime premium payment rules. These rules are only applicable to W-2 wages. So, if you work part time or seasonally for an employer paying you as a W-2, they may pay overtime. If you fall into that category, the updated overtime landscape matters for your tax planning. 

Only One-Third of Any W-2 Overtime Pay Is Actually Exempt on Your Tax Return

If you receive W-2 wages at any point during 2026, beware that the overtime deduction only applies to the overtime premium part of your overtime income. This is one of the most misunderstood parts of the new law. The "no tax on overtime," deduction does not apply to your entire overtime W-2 paycheck. It applies only to the premium portion, or the extra "half" in time-and-a-half overtime payments mandated by the federal law which, in the case of the following example, is $15 per hour.

This is what it looks like in practice. Say your regular hourly rate is $30. When you work overtime, you earn $45 per hour. The deductible portion is $15, the premium above your regular rate. That $15 represents one-third of your total $45 overtime hourly pay. The other two-thirds, your base rate of $30, is still fully taxable.

Another key point: if your W-2 work arrangement pays more than time-and-a-half, such as double time at $60 per hour based on the example above, the deduction is still limited to the FLSA-required premium of $15. The additional amount above time-and-a-half does not qualify.

The maximum annual deduction is $12,500 for single filers and $25,000 for joint filers. The deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers). The deduction is available for both itemizing and non-itemizing taxpayers, and it is effective for tax years 2025 through 2028.

Track Your Own Overtime Hours. Do Not Rely on Your Client to Do So.

Proper tracking of your overtime income is critical. For the 2025 tax year, employers were not required to separately report qualified overtime compensation. The IRS issued Notice 2025-62 providing penalty relief to employers for 2025 regarding the new reporting requirements. Many employers simply did not break out overtime premium pay on W-2s because they were not required to.

Beginning in 2026, employers and other payers are technically required to separately report qualified overtime compensation to all recipients. However, there is a real possibility that employers may receive another reporting waiver for 2026, similar to the relief granted for 2025. The IRS acknowledged that employers and payroll providers need time to reconfigure their systems, and 2025 was explicitly designated as a transition year.

What does this mean for you? It is imperative that you track your own overtime hours on any W-2 work, or you can risk overstating or underreporting the deduction via estimation. Keep your own log of every week you work over 40 hours, your regular rate, and the premium portion of your pay. 

If your employer does not separately report your qualified overtime compensation, you will need your own records to calculate and claim the deduction accurately. The IRS has made it clear that you can still claim the deduction even if your client does not separately report the amount, but you need documentation to support it.

What This Means for Your Freelance Tax Planning

Overtime pay increases your taxable wages and affects your estimated tax payments. What you should do now to reduce your freelance tax risk:

• Keep any invoices and payment records that include overtime payments so you have a complete record of overtime hours and taxable wages
• Track overtime periods in your own log to verify against a clients’ documentation and to create your own tracking of income that can be deducted.
• Review your tax payments quarterly to make sure it reflects your full income picture.

Tip Reporting Rules Have Tightened and Freelancers Are Now in Focus

In addition to overtime reporting, the IRS has made tip reporting a major enforcement priority. On April 13, 2026, the IRS released final regulations (IR-2026-49) implementing the "No Tax on Tips" provision under Section 224 of the Internal Revenue Code. These final regulations do two important things: they define exactly what counts as a "qualified tip," and they publish the official list of 71 occupations that qualify for the deduction. Unlike overtime wages, freelancers are eligible for this exemption.

The final regulations cover a far broader range of workers. The 71 qualifying occupations are organized into eight categories including:

• Beverage and Food Service (bartenders, wait staff, baristas, food delivery drivers)
• Entertainment and Events (DJs, event staff, performers)
• Hospitality and Guest Services (hotel staff, concierges, valets)
• Home Services (house cleaners, movers, handymen)
• Personal Services (floral designers, visual artists, pet groomers)
• Personal Appearance and Wellness (salon workers, barbers, massage therapists, personal trainers)
• Recreation and Instruction (tour guides, ski instructors, golf caddies)
• Transportation and Delivery (rideshare drivers, taxi drivers, gas pump attendants)

If you are not sure whether your occupation qualifies, you can review the full list of occupations in the final regulations published in the link here or above.

What Counts as a Qualified Tip

Under the final regulations, a qualified tip must be:

• Received by a worker in one of the 71 listed occupations
• Voluntary, meaning paid by a customer, not a mandatory service charge
• Paid in cash, check, credit card, debit card, gift card, or through an electronic payment or mobile payment app
• Reported on a Form W-2, Form 1099-NEC, Form 1099-MISC, Form 1099-K, or separately reported by the individual on Form 4137

For self-employed freelancers, this is key: you can claim the deduction even if you are not a W-2 employee, but the tips must be reported. If you receive tips through a digital platform and those tips appear on a 1099-K or 1099-NEC, they qualify. If you receive cash tips that are not reported on any form, you must report them yourself on Form 4137 for them to be deductible.

The maximum annual tip deduction is $25,000. For self-employed individuals, the deduction may not exceed your net income from the trade or business in which the tips were earned. The deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers). Like the overtime deduction, it is available for tax years 2025 through 2028.

Tips that do not qualify include amounts received through a tip pool (though tips paid directly to an individual still qualify), mandatory service charges, and tips received by partners that are reported on an information return issued to a partnership.

Digital Platforms Are Reporting More Than Ever

The IRS continues to phase in the lower 1099-K threshold, but the rule remains the same. Tip income is taxable whether or not you receive a 1099-K. This is important for freelancers who rely on digital payments. Even if a platform does not issue a form, you are still responsible for reporting all income including tips.

According to the official IRS guidance, all tips are taxable. This includes cash, digital payments, and tips added to invoices. Digital platforms now report more detailed data through 1099-K forms and internal reporting systems. Cash tips must be reported even if no third party documents them.

The IRS compares 1099-K totals, 1099-NEC totals, reported gross receipts, and industry standard tip percentages. When numbers do not align, freelancers may receive automated notices next tax season. If you receive tips in your freelance work you must report:

• Cash tips
• Tips paid through Venmo, PayPal, Cash App, Square, Stripe
• Tips added to invoices or booking platforms
• Gifts that are clearly compensation

Unreported tips can trigger back taxes, accuracy-related penalties, failure-to-pay penalties, and audits, so it’s critical to get your records and tax records on track now to avoid these or other tax issues next tax season.

Be Proactive! Track and Monitor the Impact of Overtime and Tip Income on Your Freelance Taxes Now

Freelancers often juggle multiple income streams, and the IRS's renewed focus on overtime and tip reporting adds complexity to an already challenging landscape. The good news is that both of these new deductions can put real money back in your pocket if you qualify and document properly. The key is knowing the rules: only one-third of your overtime pay qualifies for the deduction, your client may not report it for you, and your tips must be in a qualifying occupation and properly reported to be deductible.

With strong record keeping, consistent monthly reconciliation, and a clear understanding of the rules, you can stay compliant and take full advantage of these new tax benefits. 

If you are unsure how these rules apply to your situation, reach out to a tax professional who understands the unique needs of freelancers. A little planning now can make a significant difference later and help you avoid potential issues in your freelance taxes due to the new tips and overtime reporting requirements.

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Ten years ago, the New York City Council passed the Freelance Isn’t Free Act, guaranteeing freelancers the right to a contract, full payment in 30 days, and protection against retaliation. Since then, the law has been passed in the cities of Los Angeles, Columbus, Minneapolis, Seattle, and statewide in New York, California, and Illinois.

Yet there are still scores of freelancers who aren’t paid on time, threatening their livelihoods and making independent work too precarious for many to enter into. 75% of freelancers, roughly 150,000 people each year, experience late pay in New York City alone.

That’s why New York City Council Member Chi Ossé recently introduced a bill to create the City-Run Freelancers Payment Fund.

Freelancers could choose to opt into the fund by paying a small fee. Freelancers would then get paid via the fund, instead of waiting on payment from their client. The city would be responsible for being reimbursed by the hiring party, engaging them for the payment instead of the freelancer. This relieves the freelancer of having to wait on payment that might never come, or risk fraying relationships by chasing it.

If the bill passes, the program would be administered by the Department of Small Business Services, and the fund’s operations handled by the Economic Development Corporation. The Department of Consumer and Worker Protection would also play a role in implementation and enforcement.

For those of you in New York City, contact your local city council member and let them know that you want them to sign onto Council Member Ossé’s bill.

The Freelance Isn't Free Act passed in New York City and then was quickly adopted elsewhere. A decade later, it's time to set another precedent.

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You did a scope of work, you may have shared and signed a contract, agreed to terms, you did all of the work for the client, finally you sent your invoice when it was all wrapped up, and then… 

Nothing. 

No response from the client. No payment. 

The client no longer responds to your calls, emails, or texts. You have a creeping realization. You’ve been stiffed, and it feels like now there’s nothing you can do about it.

Every day across the country freelancers go without payment for their owed invoices. Clients act with impunity. Whether clients are unaware of what they’re doing, don’t care, or somehow believe they are acting appropriately – the consequences of not paying their freelancers what they’re owed can mean that freelancers may not be able to pay their own bills, for their businesses, rent, healthcare, or groceries. At the Freelancers Union, we are acutely aware of this struggle. Through our legal clinic at the Freelancers Union, we handle each individual freelancer complaint that comes our way and walk through the steps with freelancers on the  road to payment. 

Every freelancer is entitled to a just resolution to any issue they are having with their clients. We also encourage every freelancer to exhaust every opportunity to reach their client and resolve any dispute within their rights. This can sometimes mean negotiating or settling for a resolution that is less than what you as the freelancer are legally entitled pursuant to the law. However, it is important to consider that the process of pursuing legal remedy for a client issue can take a long time and can be expensive if the freelancer has an especially challenging client. Pursuing the legal path of a civil complaint in court can be very expensive and can take months or years to get to a resolution. 

Your time and money is important to us. We want you to be aware and equipped with what the legal process can entail, so that you can make the most informed decision possible! Below you will find the common steps and timeline for the freelancer legal complaint process:

You encounter an issue with your client (i.e. nonpayment, delayed payment, harassment, employer misclassification, retaliation, unsafe working conditions, or other forms of abuse)

STOP. You have a problem!

Gather and organize all relevant documents – any form of contract, relevant work materials, communication (texts, emails), unpaid invoices, and any other documentation that could be helpful evidence for pursuing your issue 

MONTH 1

Reach out to the Freelancers Union Legal Clinic for support by filling out our complaint form on our website. 

The Freelancers Union Legal Clinic responds to you. If you know other freelancers encountering issues with the same client, please encourage them to submit a complaint through our website. We will consult with you, and depending upon your specific issue – if it is a nonpayment issue, we can write a formal letter of demand to the client citing your rights

Depending on where you live, you may be entitled to certain freelancer legal protections. If you are based in NYC, we work closely with the Department of Consumer and Worker Protection. You should file a Freelance Isn’t Free Complaint, and encourage any other freelancers with the same client to do the same. We have had success recouping nonpayment and resolving other disputes through these collective actions against clients. We also recommend that you consider our other resources: sign up for consultation with the Founder & Managing Director of the Freelancers Union legal clinic, our attorney, John Rudikoff [link]. If you are a creative or artist freelancing in NYC and seeking legal advice, please sign up to work with our partners at the Volunteer Lawyers for the Arts (VLA) [link].

MONTH 2 & 3 

City and state agencies often take up to 10 weeks to process and respond to your complaint. If you are based in NYC, DCWP fields 800+ freelancer complaints every year and individually considers each submitted issue. If you haven’t received a response regarding your DCWP Freelance Isn't Free Act (FIFA) complaint after 10 weeks since filing, you are encouraged to contact the Office of Labor Policy & Standards (OLPS) at freelancer@dcwp.nyc.gov, or call: 212-436-0380. 

In NYC, after receipt of the DCWP complaint, clients have 20 days to respond. If your client responds, DCWP can assign a mediator to handle your dispute. And if your client does not respond within 20 days after receiving the notice of complaint from DCWP, you will receive a notice that creates a “rebuttable presumption” that you can then take to court, if you would like to proceed with enforcement of your rights.

If you are still encountering issues with your client and want more support, reach out to your local and state elected officials and other non-governmental orgs that could offer support. 

MONTH 4 and Beyond

If your complaint is still unresolved, you can sue your client in court. If your issue is a nonpayment problem worth $10,000 or less, you can pursue it in Small Claims Court.

• If it’s worth less than $12,500 in LA – LA Small Claims Court
• Resources in NYC, if pursuing Small Claims Court:
• Legal Aid Society
• National Employment Law Project
• NYC Courts
• If your complaint is worth more than $10,000 and you would like to pursue all legal remedies available to you, you can hire a litigation attorney.
  • NYC Bar
  • NY State Bar Lawyer Referral Service
  • Legal Aid Society, Worker Justice Project

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You know what they say (or, ok, what I say): If you’re in business long enough, you’re going to hit some bumpy times. It’s part of the entrepreneurial/human experience.  

If you’re feeling we might be in the midst of one of those bumpy times, you’re not alone. Between economic uncertainty that leads to longer sales cycles, a challenging political landscape, AI, or simply aging as a creative, it seems there are no shortage of things to keep us up at night.

Yet, experience tells me that if you can stay calm, get your mind right, and keep moving your feet (even if it feels like a shuffle rather than a sprint), you will make it through to the next, inevitable, upswing.

Here are three tried and tested ways I’ve been personally using, and sharing with my coaching clients to stay sane, stay in the game, and rebound!

Put yourself in the company of like-minded, can-do people

Ever since I started my coaching business in 2010, I’ve made it my business to be in community with business owners who are where I’m at or a few steps ahead of me. I’ve been a part of networking group, coaching programs, and completely free accountability partner arrangements and here’s why:

• At some point, you’ll reach the limit of your knowledge, expertise, and confidence in a certain area. A curated group of folks who have diverse skills, experiences, and resources are invaluable in giving you the support, courage and confidence you need to fill the gaps.
• Trust me when I say, nothing is worse for business and economic uncertainty than surrounding yourself with complainers and whiners. Where there is a challenge, there is also an opportunity. Surround yourself with folks who are looking for the opportunities and have some ideas about how to seize them!
• When we speak an intention, goal, or dream aloud to someone who’s invested, yet neutral, it takes on a whole new meaning and level of resolve.  

Try it: Find someone you trust to share an intention or goal with. Want to make it even stickier? Break it down to a clear action you’ll take—e.g. write a pitch and send it to a new client, give it a deadline, and ask that person to hold you accountable.

Differentiate between taking in information and taking action

I’ve always been a personal and professional development enthusiast. Which is just as well because a large part of my work as a business coach for creative professionals involves taking in a lot of information on everything from positioning and marketing to business models, pricing, and neurodiversity in the workplace.  There is no shortage of information to absorb. And yet, taking information is not the same as taking action on it. If I don’t decide what’s useful, put it through my own filter, and turn it into actionable information or resources, then it was just more information. As a result, I’ve transformed my webinars into “virtual masterclasses” complete with a simple worksheet to help participants implement as they go. 

Try it: Next time you attend a conference, join a webinar, or read a business book, set the intention to implement ONE thing you learned. Trust me, taking action on one takeaway can totally change the trajectory of your business.

Practice the rule of three

One of the challenges a group coaching client recently shared was their difficulty in focusing on one or two areas of their expertise or body of work vs. trying to show it all and hope some of it landed. There was lots of nodding and “me too!” from the rest of the cohort. Maybe you can relate too? I know I can!  

While feeling uncertain or overwhelmed is a totally normal part of entrepreneurship, especially when things are going sideways. It’s also a state we don’t want to stay in for too long. My strategy for staying focused and moving forward is to choose three things to focus on for a set period of time e.g. a quarter, a month, or a week. Want to take a deeper dive into this concept? Check out my article for the Freelancer’s Union: The golden rule for ADHD creative freelancers (Neurotypicals, it works for you too!)

Try it: Choose three things you will focus on for a set period of time e.g. one week, one month, or one quarter. Put it where you can see it and when you feel yourself feeling overwhelmed or spinning, return to one of your three things and take the smallest action you need to move forward.

The takeaway of this post is this: we all have the capacity to rise to the occasion and do things we think we can’t. Whether that occasion is a really tough moment in time, or a growth edge in business or life, these three simple strategies will help ground you enough to take the next step. You’ve got this. And if you need support, I’ve got you!

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May 1 marks May Day, also known as International Workers Day, a chance to celebrate and recognize the contributions of workers and the labor movement. Freelance is a vital part of the workforce, yet often goes underpaid and undervalued.

Yet there’s power in numbers. And there are lots of us, all across the country. In advance of May Day — and Freelance Isn’t Free month — these are the top ten states where Freelancers Union members are living, working, and organizing.

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This post originally ran on Sarah Duran's blog, Fruition Initiatives.

Scarcity slips in through the cracks of a slow month, whispers during client negotiations, and sits heavy in your chest when you check your bank balance. For freelancers, scarcity thinking feels both rational and suffocating; a voice that claims to protect you while slowly eroding your potential. 

Under scarcity's influence, every decision becomes a survival calculation. You say yes to projects that drain your soul because “money is money.” You undercharge because something is better than nothing. You hoard opportunities, clients, and even knowledge, afraid that sharing might somehow diminish your slice of an already too-small pie.

Scarcity makes you small in your pricing, small in your vision, small in your willingness to take the risks that could transform your business.

But perhaps most insidiously, scarcity thinking becomes a self-fulfilling prophecy. When you operate from fear, you attract clients who take advantage of you. When you price desperately, you signal desperation. When you grab at every opportunity, you lack the focus needed to build something meaningful. Scarcity, in trying to protect you from having nothing, often ensures you never have enough.

Why “Abundance” Isn't the Answer

The typical response to scarcity thinking is to “think abundantly,” manifest prosperity, and believe there's enough for everyone. But after years of watching this advice both help and harm freelancers, I've realized that abundance thinking can be its own trap.

Abundance mentality, taken to its extreme, can become a form of spiritual bypassing that ignores real constraints.

I've seen freelancers go bankrupt because of abundance thinking: over-investing in tools, courses, and coaches because scarcity was supposedly holding them back. I've watched them give away their work for “exposure” because abundance meant trusting the universe to provide. I've seen the shame that comes when positive thinking doesn't magically solve cash flow problems, when the abundant life remains stubbornly out of reach.

The opposite of scarcity isn't abundance, it's something more nuanced, more grounded, more sustainable.

Resilience: Building for the Long Game

True resilience isn't about having enough resources to weather any storm; it's about developing the capacity to adapt when storms inevitably come. Where scarcity hoards and abundance spends freely, resilience builds responsively.

Resilient freelancers create systems that can flex without breaking. They diversify their income streams not from fear of losing everything, but from the practical wisdom that variety creates stability. They maintain emergency funds not because they expect disaster, but because financial cushions enable better decision-making.

This kind of resilience shows up in how you structure your business. Instead of saying yes to every opportunity (scarcity) or waiting for the perfectly aligned client (abundance), you build a portfolio of work that balances security with growth. You create processes that scale, relationships that endure, and skills that transfer across industries.

Resilience also means building emotional capacity for uncertainty. Rather than needing to control every variable or trust blindly in positive outcomes, you develop comfort with not knowing what's next. You learn to make decisions with incomplete information, to pivot without panicking, to see setbacks as data rather than disasters.

The resilient freelancer asks not "How can I guarantee success?" but "How can I build the internal and external structures to adapt to whatever comes?"

Faith: The Practice of Informed Trust

Faith, in the context of freelance life, isn't blind optimism or religious certainty; it's informed trust in your ability to solve problems you haven't encountered yet. It's the quiet confidence that comes from repeatedly proving to yourself that you can figure things out.

This kind of faith is earned through experience. Every time you navigate a difficult client situation, learn a new skill, or find a creative solution to a business challenge, you make deposits in your faith account. You build evidence that you're resourceful, adaptable, capable of growth.

The faithful freelancer operates from a place of grounded confidence, asking not "Will everything work out perfectly?" but "Can I handle whatever comes and learn from it?"

Opportunity: Choosing Your Yes

Scarcity sees opportunity as scarce and grabs everything within reach. Abundance sees opportunity everywhere and struggles to choose. But mature opportunity recognition understands that every yes is also a no to something else, and the real skill lies in choosing wisely.

This approach requires developing what I call "opportunity discernment," the ability to quickly assess not just whether you can do something, but whether you should. It means getting comfortable with letting good opportunities pass because great ones require space to emerge.

Strategic opportunity selection also means thinking in portfolios rather than individual projects. Maybe you take one project that pays well but isn't creatively fulfilling, balanced by another that's lower-paying but builds skills you want to develop. Maybe you accept work that's slightly outside your comfort zone because it opens doors to new industries.

The opportunity-savvy freelancer asks not "Is this a good opportunity?" but "Is this the right opportunity for me, now, given everything else I'm building?"

Pivoting: Strategic Adaptation

When scarcity forces a pivot, it feels like desperation, abandoning a sinking ship for any available life raft. When abundance drives change, it can feel like chasing every new shiny possibility. But strategic pivoting is different: it's a conscious adaptation based on clear signals and a coherent vision.

Strategic pivoting starts with an honest assessment. What's working? What isn't? What external factors are changing that require adaptation? What internal factors are shifting? This kind of pivoting doesn't happen reactively in crisis moments; it's an ongoing process of small adjustments and periodic larger recalibrations.

Strategic pivoting also requires vigilance against the sunk cost fallacy, the tendency to continue investing in something simply because you've already invested so much. Sometimes the most strategic move is to acknowledge that what you've built isn't working and redirect your energy, even if it means "wasting" previous investments of time, money, or reputation.

The strategic pivoter asks not "What should I do to survive?" but "How can I adapt what I'm building to serve emerging needs, both mine and the market's?"

The Space Between

The opposite of scarcity isn't a single thing; it's a dynamic balance between competing truths. You need enough security to take risks, but not so much that you become complacent. You need faith in your abilities, but tempered by an honest assessment of challenges. You need to recognize opportunities, but also decline them strategically.

In this space between scarcity and abundance, sustainable freelance businesses are built; not on the shaky foundation of fear or the unstable ground of wishful thinking, but on the solid bedrock of skillful navigation through an inherently uncertain world.

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Are you a freelancer yearning to break free from the expectations of others and truly embrace who you are? The freelance journey is an open field for creativity, self-direction, and the chance to shape your professional identity. Or it's supposed to be — but sometimes  it can feel like you need to fit a certain mold to succeed.

We freelancers often feel pressured to fit into boxes—whether it’s matching a certain style, following industry trends, or projecting the persona we think clients expect. Maybe you’ve seen bold personalities like me, Hardy Brooklyn, and wondered if you need to be loud or extreme to succeed. The truth is, you don’t need to be flamboyant to attract clients or do great work —you just need to be unapologetically you, at your own pace and in your own style.

Why Authenticity Looks Different for Every Freelancer

Authenticity isn’t a one-size-fits-all experience, especially in the freelance world. For me, being authentic has meant learning to trust my instincts, honor my unique values, and show up as myself in client relationships and creative projects, even when that doesn’t look like the typical freelancer’s path.

Every freelancer’s version of authenticity is as individual as their portfolio. What feels honest and freeing for me—you may have seen my purple hair and beard down at the Hub!—might not resonate for you, and that’s exactly how it should be.

What’s more, embracing your authentic self isn’t just good for your business—it’s good for your health. Research has shown that when we live and work in alignment with our true selves, we experience less stress, lower burnout rates, and greater overall well-being. When you stop pretending or performing and start working from a place of genuine motivation, you not only attract the right clients but also create a more sustainable and satisfying freelance life.

That's been my personal experience, too. Your story, background, and dreams are uniquely yours. Embracing authenticity means leaning into what makes you different, not trying to fit into someone else’s mold — even if you admire their boldness or style. For freelancers, this might mean developing a niche, showcasing a personal creative process, or simply communicating with clients in a way that feels natural.

Simple Ways to Practice Authenticity as a Freelancer

• Clarify your values: Take time to identify what professional values matter most to you, and let them guide your decisions and interactions.
• Embrace your unique process: Don’t be afraid to work in the way that suits you best — even if it’s different from industry norms. 
• Communicate honestly: Whether connecting with clients or collaborators, aim to express your needs, boundaries, and strengths openly.
• Pay attention to your well-being: Notice how you feel when you are authentic versus when you are not. Often, living and working authentically leads to greater peace, resilience, and long-term health.
• Find your community: Seek out other freelancers whose styles and stories resonate with you. Sharing experiences can help you stay true to yourself.

You don’t have to be as bold as me, to be real. Authenticity for freelancers is about finding what makes you feel comfortable, confident, and true to yourself —whatever that looks like for you. Being true to yourself isn’t just a personal benefit— it’s a professional asset and a foundation for a healthier, happier freelance journey. The freelance world has space for every personality and working style, and your well-being is just as important as your professional success.

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Most freelancers don't have a time management problem. They have a time allocation problem.

You're booked solid, but your bank account doesn't reflect it. You're working constantly, but the numbers don't add up. You wake up looking at your calendar and think, "How did I get here?"

You're not bad at managing time; the problem is what you're spending those hours on.

You're replying to Slack messages that don't move projects forward. You're formatting client deliverables for three hours when the actual strategy work took one. You're on your fifth "quick call" of the day that wasn't on the original scope. You're spending Tuesday afternoon learning a new project management tool even though your current system works fine.

These aren't time management failures. They're time allocation failures.

Your best hours often go to $0 work: work that generates zero revenue, builds zero systems, and moves your business zero steps forward. Work that keeps you busy but broke. Work that used to energize you but now just exhausts you.

How do I know? I’ve been there. 

I used to measure my days by how many things I crossed off my to-do list.

One day, I looked at everything I'd done that week and asked: "What did this actually earn me?"

The answer was brutal. Half of it made zero dollars. And the stuff that could actually move the needle? It got pushed to the bottom every single day.

So I built a process. A simple audit that helped me finally see where my time was going and what it was worth. I built an on-demand workshop on this system called the $1K Time Audit. Here’s a sneak peek at the process. 

Separate Your Work Into Two Buckets

Before you can audit anything, you need to understand that freelance work falls into two distinct categories:

Working IN your business (aka client work): the deliverables, the calls, the revisions, everything you do directly for clients.

Working ON your business (aka everything else): admin, systems, marketing, strategy, the work that keeps your business running but doesn't have an immediate paycheck attached.

Most freelancers only pay attention to the first category. Paying attention to working ON your business is one of the key boss mindset shifts you need to make if you want to be a sustainable business, not a task rabbit that sells anything to the highest bidder. 

Build Your Ranking Framework

Here's how to categorize the work you do IN your business (for clients):

The $0 Work: This is what I call "the BS" work that generates zero revenue but eats up hours:

• Over-delivering on tasks the client didn't ask for
• Being micromanaged (constant status updates, out-of-scope edits)
• Task-switching between 10 different projects in a single day
• "Pain and suffering" (e.g., lying awake worrying about client emails, dealing with difficult clients who drain your energy)

The $50-100 Work: This is the "Goldilocks problem": work that's either too high or too low:

Too high: You're not great at it yet, so it takes longer and delivers less value to the client. Maybe you took on something outside your wheelhouse, or you're building a new skill.

Too low: You've mastered it to the point of it being brainless. Someone else could probably do it faster or cheaper. You're really good at it, but when it shows up on your calendar, you think, "Not this again."

The $500+ Work: This is your superpower:

• Feels like rocket science to everyone else, but you can do it instinctively
• You're twice as fast at it as anyone else
• It's still challenging enough that you actually love doing it

Now, here’s the big caveat: our businesses will always be a combination of all three levels because we evolve as we learn. What was once your superpower may be your $50 work in a year. What was “too high” will become your superpower. The key is paying attention, so you’re not stuck in a business you’ve grown to hate.

And then there are things we do that are priceless, like showing up human-to-human for clients and colleagues: sending a thank you note, talking a peer through a problem, and buying your best client a gift when they need a pick-me-up. Not everything is about money, and an hour spent here is often worth more than anything. 

Evaluate Your Business Work Differently

For the work you do ON your business, the criteria shift. Use these categories:

Admin: Can someone else do this better, faster, or cheaper?

Systems: Are you solving real problems or theoretical ones? Are you building things that make future work more efficient, or procrastinating by "fixing" things that aren't broken?

Networking/Marketing: Are you testing things out randomly, or implementing clear, targeted strategies based on what you've learned?

Strategy: Are you reflecting on what actually worked and creating short-cycle goals, or copying what you saw on Pinterest?

Here's a personal example: I do all my own bookkeeping. I handle all my billing, and I love it. But there’s a threshold there; right now, I have enough time to do that, and I’m pretty good at it, which means I’m fast and effective. There may come a day when that’s no longer true for my business, which means I’ll have to make a different decision. 

That lands differently when you admit you love bookkeeping versus white-knuckling through it because you think you "should" do it yourself.

Build YOUR Criteria (Not Mine)

Here's where most people get stuck: they try to use someone else's framework exactly as written.

One participant asked: "What if something is my superpower and I'm good at it, but I don't enjoy it?"

I told her to put it in the "too low" category. Because if you're spending all your time doing $500+ tasks that you hate, what's the point?

Another participant couldn't categorize a major part of their client work: "It takes me a long time, longer than I would like to, but it is valuable for my customers and it's not necessarily something I enjoy doing 100%."

This is the messy reality of freelance work that productivity advice doesn't account for: Sometimes the thing that makes you the most money isn't the thing you're best at, and it's definitely not the thing you love most.

The framework isn't about simple categorization. It's about creating your own criteria—skill level, preference, value to client, BS level—and then being honest about what you see.

Audit Your Actual Week (Not Your Ideal Week)

Pull up your calendar. Look at last week, or pick a representative week that shows what you typically do.

List out everything. And I mean everything:

• Client deliverables
• Emails and Slack messages
• Admin tasks
• The two hours you spent learning a new project management tool, even though your spreadsheet works fine
• That thing you've been moving on your to-do list for three weeks

Now rank each task using your criteria and you'll start seeing patterns:

• 50% of your week might be $0 work
• Things you used to love are now just "neutral"
• You're spending prime hours on work someone else could do cheaper
• You're procrastinating on actual strategy by solving theoretical problems

Identify the Sneaky $0 Work

The hardest things to identify are the invisible time sucks that don't show up on your calendar.

To find these, you might need to look beyond your calendar:

• Your task list
• Your inbox
• Your Slack activity
• How many times you checked email today
• The "quick client edit" that took three hours

These are the $0 things creeping in that you don't even realize are there until you actually look.

Decide What to Shift

Once you've identified what needs to change, you have four options:

1. Let it go: What if you just stopped doing it?

Earlier this year, I stopped doing my podcast. It freed up hours every week. But it also had implications: that was one of my main content engines. I had to think about different ways to produce content for my audience.

2. Limit it: Place boundaries around it.

Check email three times a day instead of 15. Batch client calls on specific days. Stop being available on Slack 24/7.

3. Structure it: Build systems to make it more efficient.

I used to manually send emails for a project every week. Then I built an automation. That task went from one hour per week to one minute. Did I bill the client less? No. It's a flat-rate contract. I'm still delivering the same value, I'm just doing it better, faster, and cheaper for myself.

4. Outsource it: If someone can do it better, faster, or cheaper, delegate.

But here's the thing: None of these are silver bullets in isolation.

Acknowledge That This Isn't Simple

Here's what gets missed in most productivity advice: this work is nuanced.

One participant in the live $1K Time Audit workshop shared something that's probably true for you too: "I'm looking at something that is medium-high effort and medium value. It makes me a decent amount of money, but it's a fuck ton of work and it exhausts me. Where do I put that?"

I walked them through applying additional criteria: What's the value to your client? What's the value to your business model?

They realized: "It's my biggest work. It doesn't even really fit in my business model."

That's not a "stop doing it tomorrow" realization. But it IS information that helps you make better decisions going forward.

Understanding the Ripple Effects

Here's what makes this complicated: every decision about how you spend your time has ripple effects across your entire business.

This is why I use the Sustainable Scale Framework as the foundation to balance all of this: 

• Work (strategy + systems)
• Worth (profit + value)
• Wisdom (clients + services)

When you change one thing, it impacts everything else.

If you decide to stop doing "too low" work, that might mean:

• Raising your rates (pricing shift)
• Changing who you serve (client shift)
• Restructuring your packages (business model shift)
• Hiring someone (capacity shift)
• Setting new boundaries (relationship shift)

It's not a simple "let it go, limit it, structure it, or outsource it" checklist. Each decision represents a choice that might impact your pricing, your business model, the types of clients you serve, your capacity, your boundaries, everything.

What Comes Next

One participant summed it up: "I like the framework a lot. I feel like I would need about three to four times as much time to actually do each of these steps. I almost want six copies of this so I can do it every other month or something."

This isn't a one-time exercise. It's a regular practice because your business constantly shifts. What you used to love might become neutral. And what feels neutral now might become something you love again once you change the conditions around it.

The point isn't to achieve some perfect calendar where every hour is $500+ work you love. The point is to stop waking up one day with four hours of work on your calendar that makes you think, "How did I get here? I don't want to do that."

The point is to make conscious decisions about your business model instead of just reacting to whatever lands in your inbox.

The audit isn't about squeezing more productivity out of your day. It's about reclaiming hours for income-generating work and the rest of your life.

Because what's the point of running your own business if it runs you?

This post initially appeared on Sarah Duran's website, Fruition Initiatives.

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The deadline for filing your personal tax return as a freelancer (including your Schedule C if you are reporting your income as an LLC on your Form 1040) is just around the corner on April 15, 2026. 

As you may be aware, being a freelancer means that you face a unique tax landscape. Unlike traditional employees, you may juggle multiple income streams, diverse tax obligations and a wide range of deductible expenses. This complexity is part of the reason why your tax return may contain moving parts that put you at higher risk than the average tax filer of triggering the red flags that can lead to an IRS audit.

To be clear, a tax audit notice is not an accusation of wrongdoing, it simply means the IRS wants to verify information on your return. However, audits take time, energy, and documentation plus if you are found to have made an error or underpaid your taxes in some areas, the penalties and fines can be significant. This means that the best strategy is prevention by understanding what the IRS looks for when considering taxpayer audits and filing a return that is accurate, consistent, and well‑supported.

Below are the most important 1040 red flags freelancers should avoid for the 2025 tax year, along with practical guidance to help you stay off the IRS radar.

1. Mismatched or unreported Income on your return.
   
   This is one of the biggest audit triggers for freelance tax returns. The IRS receives copies of every Form 1099‑NEC, 1099‑K and other third‑party reporting forms issued to you by your clients. Their systems automatically compare what you report with what they have on file. If the numbers don’t match, your return is flagged almost instantly.
   
   When filing, it is imperative to include all income from clients, digital platforms, payment processors, and even small one‑off jobs. Many freelancers assume that if they didn’t receive a 1099, they don’t need to report the income. Unfortunately, that’s not how the IRS sees it. All income is taxable, whether or not a form was issued.
   
   To avoid this red flag, reconcile every 1099 you receive with your own bookkeeping. If you know you earned income that wasn’t reported on a form, make sure to include it.
2. Excessive or unusual deductions.
   
   Freelancers are entitled to deduct legitimate business expenses, but deductions that appear disproportionately high relative to your income can raise questions. The IRS uses statistical models to compare your deductions to those of similar taxpayers. If your expenses fall far outside the norm, your return may be selected for review.
   
   Common problem areas include travel, meals, equipment purchases and home office deductions. These are valid deductions, but they must be ordinary, necessary and directly related to your business. Claiming a large percentage of your income as expenses, especially year after year, can signal to the IRS that something doesn’t add up.
   
   The best way to avoid this issue is to keep detailed records and only deduct expenses that truly relate to your freelance work. If you’re ever unsure whether something qualifies, err on the side of caution by consulting a tax professional.
3. Repeated Schedule C losses.
   
   It’s not unusual for freelancers to have a loss in a given year, especially when starting out or investing heavily in equipment or marketing. But multiple years of losses can raise concerns. The IRS may question whether your freelance activity is a business or a hobby. Businesses are expected to operate with a profit motive; hobbies are not.
   
   If you report losses year after year, the IRS may ask you to prove that you are running a legitimate business. This could include showing evidence of marketing efforts, a business plan, separate business accounts, and consistent invoicing.
   
   To avoid this red flag, make sure your records demonstrate that you are actively trying to make a profit. Even if your income fluctuates, your documentation should show that you are operating professionally.
4. Mixing personal and business expenses.
   
   One of the most common mistakes freelancers make is blending personal and business spending. Using a business account for personal purchases or deducting personal expenses as business costs can create confusion and raise red flags.
   
   The IRS expects freelancers to maintain clear boundaries between personal and business finances. When those lines blur, it becomes harder to substantiate deductions, and the IRS may question the legitimacy of your expenses.
   
   The solution is simple: keep separate bank accounts and credit cards for your business. Categorize expenses regularly and maintain receipts. Clean, organized records go a long way in preventing audit issues.
5. Underreported digital payments and gig‑platform income.
   
   Digital payments are a major enforcement focus for the IRS. Platforms like PayPal, Venmo, Etsy, Patreon, and Upwork issue 1099‑Ks when you meet reporting thresholds, and the IRS matches this data against your return. If you fail to report income from these sources, your return may be flagged.
   
   Even if you don’t receive a 1099‑K, you are still required to report all income. Many freelancers overlook small payments, tips, or subscription revenue, but the IRS considers all of it taxable.
   
   To avoid this red flag, track all digital income throughout the year. Don’t rely solely on the forms you receive; maintain your own records and report all of your income. When it comes to tip and any overtime income this is especially true if you are planning to use the new tax law deductions going forward for this type of income. Documentation is critical!
6. Any crypto and digital asset activity.
   
   If you bought, sold, traded, staked, or received crypto payments in 2025, the IRS expects full reporting. The agency has significantly increased its focus on digital assets, and new broker reporting rules mean the IRS will have more transaction data than ever.
   
   Failing to check “yes” on the digital asset question on Form 1040 or omitting crypto transactions is a major red flag. Even small trades or transfers can trigger reporting requirements.
   
   To stay compliant, use a crypto tax tool or work with a tax professional who understands digital assets. Keep detailed records of every transaction, including cost basis and fair market value.
7. Large charitable deductions without documentation.
   
   Charitable contributions are a common deduction, but they must be properly documented. Large donations relative to your income, or non‑cash contributions without appraisals, can attract IRS attention.
   
   The IRS requires written acknowledgments for donations of $250 or more and appraisals for non‑cash gifts over certain thresholds. Without proper documentation, your deduction may be disallowed.
   
   To avoid this red flag, keep receipts, letters from charities, and appraisals for non‑cash gifts. Make sure your records clearly support the amounts you claim.
8. Foreign accounts or international income.
   
   If you have foreign bank accounts, investments or income you may be required to file additional forms such as FBAR (FinCEN 114) or Form 8938. Failing to report foreign assets is a serious red flag and can result in significant penalties.
   
   To avoid this issue, report all foreign accounts and consult a tax professional if you have cross‑border income.

Take action now to file your freelance tax return and avoid IRS red flags.

There are just a few days left to get your freelance taxes filed by the April 15 deadline. If you have complete accounting records, are reporting all income and also documenting your deductions thoroughly, there is a good chance that your tax filing will be smooth, even with the IRS’s advanced data‑matching and analytics capabilities. The bottom line is to focus on accuracy and transparency in your freelance tax filing which is your best defense against an IRS audit.

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At SXSW, the future of music and culture is always on display. From packed showcases to surprise sets and branded activations, the festival offers a glimpse of what’s next. But behind every viral moment and seamless event is a workforce SXSW rarely acknowledges: freelancers.

They are the sound engineers running live sets, the videographers capturing performances that travel the world, the stage managers keeping showcases on schedule, the photographers, producers, and crew who turn ideas into experiences. SXSW depends on them.

I saw this up close at a Latino Victory Fund event during the festival, where filmmaker Robert Rodriguez took the stage to celebrate Los Lobos — an iconic band that has shaped generations of music and culture — and the documentary premiere, Native Sons. It was the kind of moment SXSW is known for: electric, cross-generational, deeply rooted in place. And like every showcase and panel, it was powered by freelancers—producers, technicians, videographers, and crews whose labor makes these moments possible, and who too often remain invisible.

Independent workers now make up a massive share of the U.S. workforce, with more than 60 million Americans freelancing today—nearly two in five workers—up from roughly one in three pre-pandemic.¹ The “future of work” SXSW celebrates isn’t something on the horizon. It’s already here. And yet, the conditions under which many of these workers operate remain anything but forward-looking. 

And the stakes are not abstract. According to a recent Freelancers Union survey, 82% of freelancers say healthcare access influences how they vote—a powerful signal that economic insecurity in this sector is shaping political behavior in real time. 

With the world’s eyes on Texas during a pivotal election year, Congressman Greg Casar figured prominently at this year’s festival. Speaking at Axios House, he made a clear case that Democrats must prove they are delivering for working people —especially Latino workers — are driving much of the country’s economic growth.  But at SXSW, that question isn’t abstract. It’s embodied by the freelancers powering the festival itself—workers whose economic realities too often fall outside the protections policymakers claim to champion.

We cannot continue to celebrate the future of work on stage while ignoring the conditions of the people doing that work behind the scenes. In New York, we passed the Freelance Isn’t Free Act, guaranteeing freelancers the right to a written contract and timely payment. It’s simple: if you do the work, you should get paid—on time and in full.

It works. But step outside New York, including to places like Texas where SXSW takes place, and those protections disappear. That gap matters—not just for freelancers, but for the future SXSW claims to represent, and a future we are not waiting for. Millions of Americans are already building careers as independent workers across the industries that power our cultural and economic life. The question isn’t whether freelance work will grow. It’s whether we will build an economy that respects it.

Festivals like SXSW have an opportunity—and a responsibility—to lead. That means more than putting creators on stage. It means committing to fair standards behind the scenes: contracts, timely payment, and basic protections for the people who make the entire ecosystem possible.

fIt also means policymakers must catch up. States across the country should adopt and expand laws like Freelance Isn’t Free so that a worker’s rights don’t end at a city or state line.

If SXSW is where the future comes into focus, it should also be where we decide what kind of future we’re building—one where creativity is celebrated and protected, and where the workers behind the scenes are finally recognized as essential to the story.

1 Upwork Research Institute, Freelance Forward 2023: The Growing Freelance Workforce in the United States, 2023, https://www.upwork.com/research/freelance-forward-2023-research-report; see also Gig Economy Data Hub (Rockefeller Institute of Government), “Freelance Forward Data Sources,” https://gigeconomydata.org/research/data-sources/freelance-forward.html.

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As businesses grow, financial decisions become more complex. Cash flow planning, forecasting, hiring, pricing, and long-term strategy all start to matter more, yet many small and mid-sized businesses are not ready to hire a full-time Chief Financial Officer (CFO).

That’s where fractional CFO services come in.

A fractional CFO can give businesses access to high-level financial expertise without the cost or commitment of a full-time executive. For many companies, it’s the missing link between basic bookkeeping and true financial leadership.

What Is a Fractional CFO?

A fractional CFO is a senior financial professional who works with a business on a part-time or contract basis. Instead of being on payroll full-time, they provide strategic financial guidance for a set number of hours or on a recurring monthly basis.

Fractional CFO services are designed to give business owners access to CFO-level insight without the overhead of a six-figure salary, benefits, and long-term employment commitment.

While bookkeepers and accountants focus on recording transactions and reporting on what already happened, a fractional CFO focuses on what’s coming next and how to prepare for it.

What Does a Fractional CFO Actually Do?

The scope of fractional CFO services varies by business, but the role is always focused on strategy, planning, and decision support.

1. Financial Strategy and Planning
   
   A fractional CFO helps businesses think beyond day-to-day operations. This includes setting financial goals, evaluating growth opportunities, and aligning financial decisions with long-term plans.
   
   They look at the full financial picture and help answer questions like:
   
   1. Can we afford to hire?
   2. Is now the right time to expand?
   3. How much cash do we need to support growth?
2. Cash Flow Management
   
   Cash flow is one of the biggest challenges for growing businesses. Even profitable companies can struggle if cash is not managed properly
   
   Fractional CFO services focus heavily on understanding cash inflows and outflows, identifying timing issues, and building systems that keep cash stable. This often includes cash flow forecasting, scenario planning, and identifying areas where working capital can be improved.
3. Budgeting and Forecasting
   
   A budget is not just a spreadsheet. When done correctly, it becomes a roadmap for the business.
   
   A fractional CFO helps create realistic budgets and forecasts based on historical data, current performance, and future plans. These forecasts are updated regularly so business owners can see how actual results compare to expectations and adjust early when needed.
4. Financial Reporting and Interpretation
   
   Most business owners receive financial reports but are not always sure what to do with them.
   
   Fractional CFO services include reviewing financial statements and translating the numbers into practical insights. This means explaining trends, identifying red flags, and helping owners understand what the data is actually saying about the business.
   
   The goal is clarity, not complexity.
5. Pricing and Profitability Analysis
   
   Many businesses underprice their services or products without realizing it. A fractional CFO analyzes costs, margins, and pricing structures to ensure profitability is sustainable.
   
   This often includes evaluating which products, services, or clients are most profitable and where margins can be improved.
6. Support for Big Decisions
   
   Major decisions like taking on debt, seeking investment, acquiring another business, or restructuring operations require careful financial analysis.
   
   Fractional CFO services provide objective insight during these moments. The CFO role is to evaluate risk, model outcomes, and help leadership make informed choices based on data rather than guesswork.

How Fractional CFO Services Differ from Accounting and Bookkeeping

It’s common for business owners to assume that bookkeeping, accounting, and CFO services all fall under the same umbrella. While they work closely together, each serves a different purpose.

Bookkeeping focuses on recording transactions accurately and consistently. Accounting builds on that data to produce financial statements and handle tax compliance. Fractional CFO services sit above both, using that information to guide strategy and decision-making.

In other words:

• Bookkeeping tells you what happened
• Accounting explains it
• A fractional CFO helps you decide what to do next

At firms like RMP Accounting, these services often work together, creating a complete financial support system rather than disconnected pieces.

When Does a Business Need a Fractional CFO?

Not every business needs fractional CFO services right away, but many reach a point where basic financial reporting is no longer enough.

Some common signs include:

• Revenue is growing, but cash feels tight
• Financial decisions feel reactive rather than planned
• You’re unsure whether growth is actually profitable
• You need forecasts for lenders or investors
• You want clearer insight before making major moves

Businesses often seek fractional CFO services when they are transitioning from early-stage operations into a more structured growth phase.

The Benefits of Fractional CFO Services

Access to Experience Without Full-Time Cost
Hiring a full-time CFO can be expensive and unnecessary for many businesses. Fractional CFO services provide access to senior-level expertise at a fraction of the cost.

Objective, Outside Perspective
A fractional CFO brings an outside viewpoint. This objectivity helps identify issues that may be overlooked internally and provides honest feedback grounded in financial reality.

Better Decision-Making
With accurate forecasts, clear reporting, and strategic insight, business owners can make decisions with confidence rather than relying on instinct alone.

Scalability
Fractional CFO services scale with your business. As needs change, the level of support can increase or decrease without the disruption of hiring or restructuring.

How Fractional CFO Services Support Long-Term Growth

Sustainable growth is rarely accidental. It requires planning, discipline, and financial clarity.

Fractional CFO services help businesses:

• Plan growth without overextending
• Understand the financial impact of decisions before acting
• Build systems that support scale
• Avoid costly mistakes caused by poor cash management

Over time, this kind of guidance creates stability and resilience, even during periods of rapid change.

Choosing the Right Fractional CFO Partner

Not all fractional CFO services are the same. Experience, communication style, and industry knowledge all matter.

When evaluating a provider, business owners should look for:

• Clear explanations, not financial jargon
• Experience working with growing businesses
• A collaborative approach that fits their team
• Strong foundations in bookkeeping and accounting

At RMP Accounting, we often provide fractional CFO services as part of a broader financial partnership, ensuring strategy is always backed by clean data and accurate reporting.

Final Thoughts

Fractional CFO services are not about replacing internal teams or adding unnecessary complexity. They exist to fill a critical gap between day-to-day financial tasks and long-term business strategy.

For many growing businesses, a fractional CFO becomes a trusted advisor who helps bring clarity, structure, and confidence to financial decisions. When used effectively, fractional CFO services don’t just support growth. They help businesses grow smarter.

For businesses considering fractional CFO services, RMP Accounting offers experienced, practical guidance to help you navigate financial decisions with confidence. Contact our team today. 

The information provided in this article is for general educational purposes only and should not be considered financial, accounting, or tax advice. Every business situation is unique. Please consult a qualified professional regarding your specific circumstances.

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As an independent worker, you shouldn't have to choose between flexibility and security. Freelancers Union is designing a new portable benefits program, and we need your input to get it right.

We know that in the months following the expiration of the Affordable Care Act subsidies, access to healthcare has narrowed dramatically, with basic plans out of reach for many freelancers. The demand for flexible healthcare will only continue to grow, particularly as more and more workers across the country go independent.

New portable benefits proposals seek to remediate this, clearing barriers for clients to disperse money into an independent worker’s account to use for healthcare and other benefits like time off. These accounts would then stay with the worker throughout the rest of their gigs, accumulating money from different sources, and as such are known as portable benefits.

This could have enormous potential for freelancers who struggle to build a safety net — but they must be designed with workers’ needs put first.

Take our survey to share your experiences with health insurance, retirement savings, and other benefits, building on the previous survey we circulated at the end of 2025. Your answers will directly shape a solution designed by freelancers, for freelancers.

Interested in going deeper? You can opt in for a follow-up interview at the end of the survey.

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For many business owners, bookkeeping is one of those things you know you need, but may not fully understand until something goes wrong. Late invoices, confusing bank balances, missed deductions, or surprise tax bills often trace back to one issue: poor bookkeeping.

Whether you’re launching a new company or running an established business that’s never had consistent financial tracking, understanding the basics of bookkeeping is essential.

What Is Business Bookkeeping?
At its core, bookkeeping is the process of recording and organizing your business’s financial transactions. Every dollar coming in and going out of your business needs to be tracked properly. This includes:

• Sales and customer payments
• Business expenses
• Vendor bills
• Payroll transactions
• Bank and credit card activity

Bookkeeping creates the foundation for everything else in your financial world. Without accurate books, it’s nearly impossible to understand your profitability, prepare taxes correctly, or make informed decisions about your business.

Why Bookkeeping Matters More Than You Think

Many business owners view bookkeeping as a basic administrative task. In reality, it plays a much bigger role in your success. Accurate bookkeeping helps you:

• Understand cash flow
• Track profitability by month or quarter
• Identify unnecessary expenses
• Prepare for tax season without stress
• Support loan or financing applications
• Make confident business decisions

When bookkeeping is inconsistent or incorrect, small problems can quickly turn into expensive ones. Clean books give you visibility into what’s working, what’s not, and where your business is headed.

Key Components of Business Bookkeeping

Understanding the main parts of bookkeeping helps you see what’s happening behind the scenes and why accurate records matter so much. Each piece plays a role in keeping your financial picture clear and reliable.

1. Accounting System Setup
   Most businesses benefit from having a solid accounting system from the start. This usually means choosing reliable software such as QuickBooks or Xero and setting it up correctly for your specific business structure.
   
   A proper setup includes creating the right chart of accounts, connecting bank and credit card accounts, and configuring categories that reflect how your business actually operates. When your system is set up the right way, transactions are easier to record, reports are more accurate, and your books can grow with your business instead of becoming messy over time.
2. General Ledger Maintenance
   The general ledger is the backbone of your bookkeeping. It’s where all income, expenses, assets, and liabilities are recorded.
   
   Maintaining an accurate general ledger means consistently reviewing transactions, correcting errors, and ensuring everything is categorized properly. When this is done well, your financial reports reflect reality. When it’s not, even small mistakes can distort your numbers and lead to poor decisions. Clean, well-maintained ledgers are essential for reliable reporting and tax preparation.
3. Accounts Receivable
   Accounts receivable tracks the money your customers owe you. This includes creating invoices, recording payments, and following up on outstanding balances.
   
   The best bookkeeping systems keep accounts receivable up to date at all times, making it easy to see who has paid and who hasn’t. Timely invoicing and accurate tracking help improve cash flow and reduce the risk of unpaid invoices. When records are current, addressing late payments becomes much simpler and less uncomfortable.
4. Accounts Payable
   Accounts payable covers everything you owe to vendors, suppliers, and service providers. This includes recording bills, scheduling payments, and tracking due dates.
   
   Strong accounts payable management ensures bills are paid on time without disrupting cash flow. It also helps prevent duplicate payments, missed expenses, or strained vendor relationships. When handled properly, accounts payable gives you a clear picture of upcoming obligations so there are no surprises.
5. Bank and Credit Card Reconciliations
   Reconciliations compare your bookkeeping records to your bank and credit card statements to make sure everything matches.
   
   This step is one of the most important parts of accurate bookkeeping. Reconciliations catch missing transactions, duplicate entries, and errors before they become larger problems. Done consistently, usually monthly, they ensure your books reflect actual cash balances and help maintain trust in your financial data.
6. Financial Reporting
   Financial reporting turns raw data into meaningful insight. Monthly reports such as profit and loss statements and balance sheets show how your business is performing over time. They allow business owners to track trends, measure profitability, and make informed decisions.

Common Bookkeeping Mistakes Beginners Make

These are some of the most common issues we see when businesses try to manage their books on their own.

1. Mixing Personal and Business Finances
   Using one bank account or credit card for everything makes it very difficult to track business expenses accurately. It can also potentially raise red flags during tax preparation.
2. Falling Behind on Transactions
   Bookkeeping works best when it’s done consistently. Waiting months to update your books often leads to missing transactions and inaccurate reports.
3. Skipping Reconciliations
   Reconciling your bank and credit card accounts ensures your records match reality. Without this step, errors can go unnoticed.
4. Guessing Instead of Tracking
   Relying on estimates instead of real financial data can lead to poor decisions and cash flow issues.

Professional business bookkeeping services help eliminate these issues before they become problems.

How Often Should Bookkeeping Be Done?

Bookkeeping is an ongoing process. Most businesses benefit from:

• Ongoing transaction tracking during the month
• Monthly bank and credit card reconciliations
• Monthly financial statements

This approach ensures your records are always current and reliable. Business bookkeeping services typically operate this way, combining regular activity tracking with monthly reporting.

DIY Bookkeeping vs Professional Bookkeeping Services

Many business owners start out handling bookkeeping themselves. While this can work in the early stages, it often becomes overwhelming as the business grows.

DIY Bookkeeping

Pros:

• Lower upfront cost
• Direct control over records

Cons:

• Time-consuming
• Higher risk of errors
• Limited financial insight
• Stress during tax season

Professional Business Bookkeeping Services

Pros:

• Accurate, up-to-date books
• Time savings
• Clear financial reports
• Fewer errors
• Better tax preparation

Cons:

• Monthly service cost

For many business owners, outsourcing bookkeeping allows them to focus on running and growing their business instead of managing spreadsheets.

How Business Bookkeeping Services Support Growth

Bookkeeping is not just about compliance. When done correctly, it becomes a powerful tool for growth. With accurate bookkeeping, you can:

• Identify your most profitable products or services
• Monitor cash flow trends
• Plan for hiring or expansion
• Set realistic budgets
• Make strategic decisions with confidence

At RMP Accounting, we focus on making financial data useful, not just accurate. Our business bookkeeping services are designed to give owners clarity, not confusion.

Choosing the Right Bookkeeping Partner

Not all bookkeeping services are the same. When choosing a provider, look for a team that understands small businesses and offers more than basic data entry.

Key qualities to look for:

• Experience with businesses of your size and industry
• Clear communication
• Monthly reporting
• CPA-level oversight
• Scalable services as you grow

A good bookkeeping partner becomes an extension of your business, not just a vendor.

Bookkeeping and Taxes: How They Work Together

Clean bookkeeping makes tax preparation significantly easier. When your books are accurate and organized, your accountant can:

• Maximize deductions
• Reduce filing errors
• Avoid last-minute surprises
• Ensure compliance

Many tax issues stem from poor bookkeeping throughout the year. Business bookkeeping services help prevent these problems before they arise.

When It’s Time to Get Help

If any of the following sound familiar, it may be time to bring in professional support:

• You’re unsure if your books are accurate
• You’re behind on bookkeeping
• You don’t review financial reports regularly
• Tax season feels stressful every year
• You want clearer insight into your business performance

Business owners don’t need to do everything themselves. Delegating bookkeeping often leads to better results and peace of mind.

If you’re ready for organized books, clearer financials, and less stress, RMP Accounting is here to help.

The information provided in this article is for general educational purposes only and should not be considered accounting, tax, or financial advice. Every business situation is unique. Please consult a qualified professional regarding your specific circumstances.

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Deductions are a key part of the tax preparation process for freelancers. It’s important than freelancers consider all of the potential deductions available to them, as to ensure they don’t inadvertently pay more in taxes than needed.

To that end, we’ve put together some career-specific tax deductions, to help you brainstorm as you look to capture all possible expenses for your records. Keep in mind that the lists below are not necessarily meant to be exhaustive, and that many of the deductions can apply to multiple professions. 

Writer

Website hosting fees
Writing competition fees
Lit journal submission fees
Business cards
Printing

Actor

Headshots 
Printing headshots
Tickets to plays and movies
Acting classes
Backstage and Actors Access subscriptions

Podcaster

Ring light
Editing software
Podcast microphone
Transcription services

Musician

Rehearsal space
Concert tickets
Recording equipment
Music streamer subscriptions
Meals + lodging on tour

Photographer

Studio space
Rolls of film
Cameras + photography equipment
Crafty for shoots
Payment for models

Graphic Designer

Adobe + Figma subscriptions
Apple pencil
Canva subscription
Art classes

Video Editor

FinalCut + editing software
Second desktop screen
Music licensing 
Stock footage and photo library fees

Software Engineer

Data storage fees
Advertising fees for services
Fees associated with paying subcontractors
Any tax and legal fees

Chef

Cooking equipment and supplies
Uniforms
Dry cleaning for uniforms
Protective gear (goggles, gloves)
Transportation fees to client events and meetings

If you have any questions about your taxes, be sure to consult an accountant — and visit our Tax Center for more guidance.

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I was speaking to a new client yesterday and she shared that her overwhelming wish for her business this year was to approach it with more intention.  

Can you relate?

I know I can! Being a creative freelancer or business owner often feels like reacting to things in the moment and doing the best you can. It reminds me of a “fun” game my kids played for a while. It involved them tossing something to me unexpectedly (like an egg!) and triumphantly shouting “too slow” when I didn't react and catch it in time. 

Basically, 2025 was like an eight-year-old boy tossing an egg and expecting you to catch it!

Reactivity is an easy habit to fall into and an especially hard one to break because the more reactive we become, the less we plan, and so the need for reactivity increases. I don’t know about you, but that’s not a cycle I want to be stuck in.

What if being more intentional (and therefore less reactive) was something you could master in your freelance career or creative business? How would it positively impact your emotional, mental, physical, and financial health?

If the answer is “a lot!” keep reading. We’re going to break down what intentionality means, how it’s different from goal setting, and three actionable ways to bring more intentionality into your creative business or career and life.

1) Make a plan (your way)

In my experience as a business coach and business owner myself, having some kind of plan leads to better results than winging it (big surprise!). Why? Because a plan, no matter how loosely formulated, provides us with something clear to focus on. And what you focus on grows.

How you plan is entirely up to you. As a neurotypical Virgo-rising, I love checking things off a list. Also, as a certified ADHD coach and parent of a kid with ADHD, I understand that planning and executing looks different for a neurodivergent brain. Choose your own adventure, it just has to work for you.

Suggested action:
Brain dump all the things you’d like to be, do, or have in 2026. I love using the mindmapping technique for this because it’s visual and works for many neurocognitive presentations.

Simply take a piece of paper and write your goal, e.g. Your Business Name, at the center.  As thoughts come to mind, draw branches from the central point and write them down (in as few words as possible).  You can create sub-branches for additional thoughts/action items.

Your first draft will probably be all over the place, so review, refine and consolidate your ideas. Feel free to keep this analog or use one of the many tools on-line like Miro or Canva.

2) Get guidance where you need it

One of the common traits I’ve observed in successful entrepreneurs is their curiosity, hunger for knowledge, and willingness to have a beginner's mind. They are always learning. As a business owner since 2006, I can directly track my higher revenue business years to the years I hired a coach, invested in a mastermind, or attended a business retreat with a high-level leader. Interestingly, the years I invested in attending conferences did not have any impact on my bottom line. Your observations may be different, so play around and see what works for you..

Whenever I want to grow my business (which is always!) I look for someone who is an expert in that area to guide me. For example, in 2024, I invested in an operations coach to help me level up my operations, systems, and tools game. In 2023, I invested in a high-ticket business retreat in Bend Oregon where I got to spend 5 days with high-level business leaders and owners. From 2020-2023, I was in a group coaching program. You get the picture. If you want to move your business forward in the most effective, joyful, and confident way, getting the right guidance is key.

Suggested action:

Review the different areas of your business — from positioning, branding, and messaging, marketing, to operations and finances — and see where the most pressing gap in your knowledge or expertise is. Do you need a financial coach to help you whip your money mindset, habits, and strategy into shape? Maybe you need to re-brand and are looking for a copywriter, branding expert, or website designer. Or maybe you realize you need to focus on new business development and need a business coach to help you (psst, I can help!). Here’s a checklist to help you figure out what YOU need.

• Identify the type of support you need
• Research vendors, ask friends who they’ve worked with etc.
• Schedule an introductory call to find out how they work
• Set a target date you’d like to get started
• Review your finances and figure out how you’ll make the investment.  List the things you can do to make it happen (most folks don’t have 5, 10, or 20K just sitting around, you’re going to have to call it in and take inspired action)

3) Seek peer support 

One of the big themes I’m predicting for 2026 is an even-greater need for community. We’re dealing with a lot right now and, in my experience, things are much more manageable and a lot less scary when you have like-minded people who are as committed to communal support as you are.

Suggested action:

Review your social connections — both personally and professionally. How can you bring more intentionality to those connections, both online and IRL? For example, I have regular walk and talk dates with my friends, joined a local IRL business networking group, and set myself reminders to check in with folks by text to see how they’re doing. None of these things are monumental actions, but all of them provide outsize benefits for my emotional and social wellbeing.

• List your people
• Set an intention to reach out and check in. When will you do that? 
• Research communities, clubs, or programs you’d like to join. 
• Set the intention to join one group

Now, I know I covered a lot in this post, so choose ONE thing you’ll take action on in the next 48 hours. You got this!

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This post is brought to you by our partners at TaxAct. It initially appeared on their blog.

There are many similarities between being self-employed and being a small business owner. Both allow you to be your own boss, for one thing! But in the eyes of the IRS, your formal business classification can mean very different things when it comes to filing your taxes and reporting your business income.

Here’s how to determine which category you fall under as an entrepreneur and how it will impact your taxes.

Self-employed vs small business owner: Understanding the difference

The simplest way to differentiate between being self-employed and being a small business owner is to look at how you run your business. If you’re a small business owner, you run a business and often have other people working for you. If you’re self-employed, you are the business.

Examples of being self-employed:

• Sole proprietor: As a sole proprietor, you are your business. You call the shots, work for yourself, and take your business profits as personal income.
• Independent contractor: As an independent contractor, often called freelancers, you produce work for others, but you are still your own boss. You work on a contractual basis with clients of your choosing, but you are not their employee.
• Partnership: As a partnership, you have all the qualities of a sole proprietorship, but you share ownership of the business with two or more people who are your “partners.”

Characteristics of being a small business owner:

• You hire employees or have other self-employed workers working for you as independent contractors.
• Your business can be classified as a separate entity, meaning you have less personal liability.
• If you have part-time or full-time employees, you are responsible for collecting their taxes and obtaining workers’ compensation insurance.

How are taxes handled differently?

The most significant difference between small business owners and self-employed individuals is how you pay yourself. Naturally, this also affects how each pays its taxes.

If you are self-employed:

• Your business tax deductions, profits, and losses are reported on your personal income tax return using Schedule C.
• If you make more than $400 per year, you are responsible for paying self-employment tax to cover your Medicare tax and Social Security contributions.
• You might pay quarterly estimated taxes throughout the year to avoid any penalties or a large tax bill at the end of the year.

If you are a small business owner:

• Small businesses are taxed differently based on your business type — for example, limited liability company (LLC) taxes can be passed through to the owners, or you can elect to be taxed as a corporation.
• If you are taxed as a corporation, you will pay corporate taxes, which is a tax on your profits (your revenue minus the cost of goods sold and other business operating costs).
• You use Form W-2 to report your employees’ incomes and how much federal, state, or local income tax they had withheld.
• If you hire independent contractors, you must report any payments of $600 or more using Form 1099-NEC. Starting in tax year 2026, this threshold will increase to $2,000 or more.

When should I transition from being self-employed to being a small business owner?

As your business grows, many self-employed people start wondering when they should create a formal business entity.

You might want to consider changing your business structure if:

1. You want to lessen your personal liability.
   Let’s say you are a sole proprietor who reports your business expenses using Schedule C. Lately, your business expenses have been growing. You find yourself adding more assets to Schedule C when filing.
   
   In this case, it might be a good idea to limit your personal liability by structuring your business as a single-member LLC for tax purposes. In doing so, you are forming a business entity separate from yourself, offering more liability protection.
   
   Once you’ve done this, you can also elect to tax your business as an S corporation and start using Form 1120-S to report business profits and losses.
2. You are adding additional owners or employees.
   Maybe you’ve been riding solo as a sole proprietor and are considering adding more owners to become a partnership or LLC. Or perhaps you’ve been in a partnership with someone else who has decided they want to leave. Whatever the case, a change in ownership can often lead to a change in business structure.
   
   Likewise, adding employees can mean more liability, providing you with another good reason to switch your business type.
   
   In the end, deciding to change your business structure comes down to what is best for you — and your business!

The bottom line

Understanding the distinction between being self-employed and being a small business owner is key to ensuring you’re on the right track with your taxes and business structure. While both paths offer the freedom of being your own boss, they come with different responsibilities and tax obligations. As your business grows, it’s a good idea to reevaluate your classification to ensure you’re optimizing for liability protection and tax efficiency. Whether you remain self-employed or transition to a small business owner, the choice ultimately depends on your unique circumstances and long-term goals.

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Sales tax: What is it and do freelancers have to pay it?

Sales tax is a state-level tax imposed on the sale of goods and, in many states, certain services. Unlike income tax, which you pay out of your own earnings, sales tax is something you collect from your customer and then pass along to the state. In other words, you’re acting as a temporary steward of the state’s money, not paying a tax out of your own pocket.

However, not every freelancer is required to collect sales tax. Whether you need to collect sales tax depends on what you sell, where you sell it, and whether your state taxes the type of service or product you offer. Sales tax rules vary dramatically from state to state, and the rise of online services has only made things more complicated. This is why two freelancers doing similar work in different states can have completely different tax obligations.

Do freelance business owners need to collect sales tax?

The short answer is: sometimes. The long answer depends on the nature of your business and the rules in your state. Some examples of when you need to pay and when you don’t are below:

1.  If you sell physical products you will likely need to pay sales tax. Most states require sales tax on tangible goods. This includes items like books, prints, merchandise, or anything a customer can physically hold. If you sell these items, whether online, at events, or in person, you’re likely required to collect sales tax. States generally treat physical goods as taxable by default, so freelancers who sell products often have the clearest obligations.
2. If you provide services you may need to pay sales tax. This is where the confusion for many freelancers in regard to sales tax begins. Some states tax services, others don’t, and some only tax specific types of services. 

For example, creative services such as writing, graphic design, or consulting are usually not taxed. However, digital products like templates, downloadable guides, or stock photos are increasingly being taxed as states update their laws to reflect the digital economy. Services like photography, beauty services, fitness instruction, and repair or installation work are frequently taxable as well. 

The rules vary widely, so it’s important to check your state’s specific guidelines and be cognizant of which states you are doing business in so you can track accordingly.

If you sell to clients in other states beware that you may owe sales tax in multiple states. The 2018 South Dakota v. Wayfair decision changed the landscape of online commerce. States can now require out-of-state sellers to collect sales tax if they meet certain thresholds, usually based on revenue or number of transactions. This concept is known as economic nexus. While most freelancers won’t hit these thresholds unless they sell digital products at scale, it’s still worth understanding the sales tax rules in the states where you do business so you can be sure to comply as needed and file sales tax returns as required.

How do freelance business owners calculate sales tax obligations?

To figure out your freelance sales tax obligations, you’ll need to look at several factors. 

First, check your state’s rules on taxable services. Some states publish clear lists of which services are taxable and which are exempt.

Next, determine whether your products (physical or digital) are considered taxable. Then, evaluate whether you have an economic nexus in any other states, either through physical presence or economic activity. 

Finally, review your sales volume to see whether you’ve triggered economic nexus thresholds elsewhere.

Most state revenue departments offer online guides, and a quick check with a tax professional can also clear up any confusion. It’s far better to ask early than to discover years later that you should have been collecting tax all along and then be faced with a sales tax bill.

What state-specific rules should freelancers know?

While the general principles of sales tax apply across the country, the details vary dramatically from state to state. Two freelancers doing the same work can have completely different obligations depending on where they live. To illustrate how different the sales tax rules can be, let’s look at two states: New York and California.

New York sales tax: Services are mostly exempt, but digital goods may not be.

In New York, most professional services are not subject to sales tax. This includes services like writing, consulting, graphic design, coaching, and other creative or advisory work. If your freelance business is service-based and you don’t sell physical products, you may never need to collect sales tax in New York. You can check New York State sales tax rules here. 

However, New York does tax certain categories that freelancers often overlook:

• Digital products such as downloadable software or prewritten digital content may be taxable. This means if you sell templates, stock photos, or digital guides, you may need to collect sales tax depending on how the product is classified.
• Photography services are taxable when the final product is delivered in a tangible form. If you deliver only digital files, the rules can vary, so photographers need to pay close attention and check
• Physical goods are always taxable. If you sell books, prints, or merchandise, you must collect sales tax from New York customers.

New York also has local tax rates that vary by county and city, so freelancers must charge the correct combined rate based on the customer’s location, again contacting a tax professional specializing in state and local sales tax now, may save you future sales tax issues.

California: Services are mostly exempt, but physical goods are taxable.

California takes a similar approach to New York in that most services are not subject to sales tax. Freelancers who provide writing, design, consulting, coaching, or other professional services generally do not need to collect sales tax in California. You can check the rules here. 

However, California is strict about taxing physical goods:

• Physical products such as books, artwork, merchandise, or printed materials are taxable. If you sell these items, you must collect sales tax from California customers.
• Digital products are generally not taxable if delivered electronically. This is good news for freelancers who sell digital downloads, templates, or online courses. However, if you provide a physical component, like a printed workbook, tax may apply.
• Photography services are taxable when the final product is delivered in a physical format. Digital-only delivery is usually exempt, but photographers should confirm the state and local sales tax specifics.

California also has one of the most complex local tax systems in the country. Rates vary widely by district, and freelancers must charge the rate based on their business location, not the customer’s location which is a key difference from many other states.

How do you collect sales tax for your freelance business?

Once you determine that you’re required to collect sales tax, there are several steps you must follow:

1. You need to register for a sales tax permit. This is essential because you cannot legally collect sales tax without one. 
2. After registering, you must charge the correct rate, which can vary not only by state but also by county and city. 
3. Then, you’ll need to track the tax you collect. It’s important to remember that this money is not income; it’s simply being held until you remit it to the state.
4. You’ll also need to file sales tax returns, which may be due monthly, quarterly, or annually depending on your state and your sales volume. 
5. Finally, you must remit the tax you collected. This process is entirely separate from your income tax obligations, and it requires its own system of record-keeping.

Keep in mind that sales tax does not appear on your federal income tax return. This is because sales tax is not income; it should not be included in your gross revenue. You’re collecting it on behalf of the state, and you don’t keep it, so it’s not taxable. Make sure any sales tax owed is tracked separately so it doesn’t inflate your reported income.

Does sales tax go on your freelance business state income tax return?

Generally, no. Sales tax is not part of your taxable income at the state level either. Instead, you report sales tax on your state sales tax return, which is completely separate from your state income tax return. Your state income tax return reports your earnings, while your sales tax return reports the tax you collected from customers. These are two different filings with two different purposes.

Educate yourself as a freelance business owner to avoid sales tax penalties. 

Sales tax can feel intimidating for freelance businesses, but once you understand the basics, it becomes much more manageable. Not all freelancers need to collect sales tax, and whether you do depends on your state and the nature of your work. 

Remember sales tax is never reported on your federal or state income tax return; instead, it’s handled through a separate state sales tax return and sometimes on a city-level return. Be sure to know your true sales tax nexus based on where and how you do business and always check with a tax professional if you have questions. This step alone can save you from owing sales tax that you were not aware of.

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Did you know that you have free access to the Freelancers Union Legal Clinic? 

If this is the first you’re hearing about our Legal Clinic, we are excited to share some details with you! 

The clinic provides free legal support to all independent workers across the country. If you’re a freelancer, that means you. After you submit a complaint form on our website, our legal team will reach out directly to you and provide direct, specialized guidance based on your legal questions and concerns. Even if you have already sought every option for recourse without legal assistance (i.e. direct appeal to the client, demand letters, attempted mediation), the clinic can provide advice through consultation with our pro bono legal counsel, and if necessary – steps you could consider for pursuing legal action.

As freelancers, we know that you value your ability to decide what work you take on and your ownership over your creative output. Working independently, you make the decisions that govern how you spend your time without the constraints of a boss. However, it can feel especially isolating when your rights are not respected. Without coworkers to commiserate with about potential legal violations, it can be difficult to know where to turn. All too often freelance labor is taken for granted and clients cut corners – jeopardizing your livelihood, your rights, and your future.

Every day, freelancers with explicit agreements outlining scopes of work and payment do not receive timely payment for their work. Three-quarters of freelancers nationwide report not being paid on time. When clients delay, contest, and refuse payment for freelancers’ work it can feel overwhelming and unclear about where to turn for help. We, at the Freelancers Union, are here to tell you that you do have recourse to resolve these violations of your rights.

The Freelancers Union is proud to have both sponsored the adoption of the Freelancers Isn’t Free Act for New York City in 2017, statewide across New York in 2024, and supported the growth of freelancer rights’ laws across the country. The Freelance Isn’t Free laws mandate that freelancers must be provided with a written contract, paid within 30-days unless otherwise stipulated, and will not be subject to retaliation. The laws provide double damages for freelancers who prevail on their claims in court. 

If you are experiencing issues including: nonpayment or delayed payment, employer misclassification, harassment, retaliation, unsafe working conditions of any kind, or other forms of abuse – please reach out to our legal clinic through our complaint form. And if you know of other freelancers facing similar issues with a specific client of yours, please share the complaint form with them so that we can speak with them too. The Freelancers Union Legal Clinic will be with you every step of the way to make sure that your voice is heard and that your rights are respected.

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I’m an artist, so I can say this: Us artists, we can be super weird sometimes. And when we’re around gallerists, we get even weirder.

When I was Fine Art Chairperson of ASMP NY, I produced our annual Portfolio Review. My job was to find gallery owners to volunteer their time reviewing photographers’ portfolios. One afternoon I was sitting at a downtown gallery, chatting with the owner for what could not have been more than twenty minutes. In that time, seven different artists barged in trying to show her their work—one even pulled a painting out from under his arm. She replied as kindly as possible: “Sir, this is a photography gallery.” His answer: “Okay, I’ll email you.” Her response: “No. Don’t email me. Please, just… thank you, have a nice day.”

I asked her, “How often does this happen?” She sighed: “Every day, all day. Why do you think we hide in the back?”

Is this really how we occur to galleries? Relentless, slightly desperate, and unaware of what they actually need. It got me thinking: how do we stop being that guy and become the artist a gallery actually wants to work with?

Think Like a Gallerist

As artists we obsess: Is my work good enough? Is this framed right? Will they like me? But when you talk to gallerists, you realize they’re obsessing about something else: money. Can you blame them? Imagine renting a storefront in Chelsea, hiring staff, paying utilities, advertising, painting, installing, and covering personal expenses. You’re staring down $20–30K a month in costs before a single piece of art sells. With a 50% commission model, a gallery has to move $40–60K of art every month just to survive.

So when you ask, “Why is it so hard to get a solo show in New York?” The answer isn’t mysterious—it’s math. If you’re already selling $60K a month, you’re in. If not, you need to prove you can “move units”, and that means building an exhibition and sales history. Which leads us to…

The Artist’s Catch-22

Galleries want artists who are going to sell work. To prove that, you have to have an exhibition and sales history. But to get that you need a gallery. It’s a Catch-22, right? 

Well, not necessarily. Yes, it is a closed loop. And yes, it's not easy to break into it, but there is a way. And this is part of your job as an emerging artist. In addition to making great art, it's to build momentum and connections with the right people —people who want to champion you.

And this is a long game. Let's talk about where to begin. Here’s where I detour into two silly but useful analogies.

Relationships, Not One-Night Stands

Working with a gallery is like a marriage. You’re contractually bound, you see each other constantly, and ideally you grow together for years. So when you’re looking for a gallery, you’re not looking for a one-night stand. You’re looking for love.

And like dating, finding a gallery can be awkward, emotional, and full of false starts. And if you don’t put yourself out there, you’ll never meet anyone.

So how do you meet someone and fall in love? 

The Meet Cute
A “Meet Cute” is that perfect, quirky first encounter between our two main characters that sets them off on their rom-com adventure. And yes, this does happen in real life. Don’t laugh! I pride myself on meeting both my wife, and my first gallery in two separate and unrelated meet cutes.  

You can’t engineer a meet cute, it would be weird and slightly unethical. But what you can do is make sure you are in the right place, at the right time, with the right people so that it can happen. 

Step 1: Identify Your Entry Point
Start by organizing your understanding of the marketplace. It’s helpful to think of the art world having these four categories:  

• Artist-run galleries: These are often cool, and great if you’re already part of the community. If you are not, don’t spend time trying to break in unless you genuinely want to connect with that specific group of artists, and be a part of their crew. 
• Blue chip galleries: The big names (think Gagosian, Mary Boone) are not entry points for new artists. Don’t waste time here; when you’re ready, they’ll come to you.
• Low-to-mid tier galleries: Your best bet. Especially the scrappy, lower-end ones. 
• Honorable Mention** Non Traditional Spaces:  Also consider coffee shops, bookstores, salons, etc. These venues offer valuable exposure and a chance to build your exhibition history.—better your work be on a wall than under your bed.

Step 2: Research and Organize

1. Start with a list of gallery openings. This will give you specific events to target, and shows you active galleries that are actively showing work right now. Use resources like artcards.cc to find ALL of the weekly gallery openings in your city. 
2. Second: you need to narrow that list down to only the galleries that might want to see YOU. 
   1. Only focus on identifying low to mid-tier galleries. Our instinct is often to try and “shoot for the stars and hit the moon,” however this does not apply when you are trying to infiltrate a closed loop system. The only way to do that is by targeting the “weak points” in that closed system. Which is not to say these galleries are “weak.” These galleries are an extraordinary opportunity for you to show and sell your work. And once you show and sell there, the larger operations can take notice. 
   2. Look for: Recent year of establishment, younger owners, short exhibition history, or any other “questionable” aspects.
3. Third: Find out where your work MIGHT fit in. Pull up your personal website and pull up a gallery's website on the same screen. Look at them and ask “Does my artwork look like it fits in with this artwork?

Step 3: Go in Person
You must go in person. Art (and love) happens in real life! Once you’ve identified promising galleries, attend their openings. This is crucial. This is the opportunity for you to: 

• See the gallery, see the work, and see what kind of “vibe” the place has. Is it what you thought when you saw it online? 
• Remember a gallery relationship is like a marriage, we spend a lot of time thinking about “will they like me?” But what if you don’t like them? You certainly don't want to get married! 
• The best time to find out what a gallery and its community is like, is during their opening. 

TIP: Bring friends, make it a social event, maybe make it a date! Make it fun— this is your life, you are an artist, grab some artists friends and make a night out of it. 

Step 4: When You Find Your People
When you walk into a gallery and you feel at home, you will know it immediately. Subscribe to their newsletter, attend all their events. Galleries are community hubs, and being present is the best way to become part of the inner circle. 

NOTE: all of the hard work is in qualifying the galleries. There are thousands of galleries, almost none of them are right for you. But when you do the work to qualify the galleries before you go based on the tier of gallery they are, and how the work looks, I promise you you will walk in and you will quickly find your people.

Step 5: The Meet Cute
Don’t force introductions or bring your portfolio to openings. Instead, be open, available, and authentic. If you are open and available, your “meet cute” will naturally happen. It might be with a gallery owner or curator, or even one of the artists represented by the gallery. If you stay open and available, good things will come your way. 

Turning Connections Into Long Term Relationships

Once you meet some folks, and you are invited into the gallery community, these are the next steps to find success. 

Step 6: Get Into Group Shows
Once you’re part of a gallery’s community, you’ll hear about these and meet people and get opportunities to be a part of group shows. These are your auditions—your chance to show your work, demonstrate professionalism, and even sell your work. If you do well at a group show, the gallery will want to go further with you. 

Step 7: Sell Your Work
Group shows are tests for both your art and your ability to engage an audience. Bring supportive friends, encourage sales, and make your work accessible. Selling work at a group show is the next major step toward a three-person show or solo exhibitions and deeper gallery relationships. 

Final Thoughts

At the end of the day, breaking into the gallery world takes more than just producing great work. You’ve gotta be out in the world. It takes persistence, strategy, and a little magic. You can’t control when those magic moments will happen, but you can put yourself in the right place, at the right time, with the right people and when you do, just watch how much magic happens! 

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Freelancers Union is pleased to introduce Elle Toussi as Interim Executive Director. Elle first joined Freelancers Union as a member, helping to organize local LA Spark events that fostered community, collaboration, and connection among independent workers.

Her commitment to strengthening the freelancer community led her to serve as a Member Representative on the Board of Directors, after which she was elected as a permanent Board Member and, two years ago, chosen by her peers to serve as Chair of the Board.

With more than 15 years of experience in journalism and production, Elle has built her career around storytelling and advocacy for creative and independent professionals. She is also the founder of Boom Dia Media, a production company dedicated to producing impact-driven films and media projects that elevate stories designed to inspire change. Throughout her career, she has remained deeply committed to amplifying the voices of independent workers and advancing a more equitable future for the freelance workforce.

 Have questions? Email us at community@freelancersunion.org.

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Every year, freelancers unintentionally hand the IRS more money than they need to simply because they overlook deductions they’re fully entitled to claim. This breakdown of the 14 key business deductions to be aware of is designed to help you avoid revenue-boosting blind spots on your freelance business tax return before you file.

It’s easy to miss expenses that qualify as business deductions because the tax code is complex and constantly shifting. This is why it is important to be aware of changes that may affect your freelance return and work with a tax professional  who can help you identify additional opportunities to reduce your taxable income and maximize any refund you may be entitled to.

As a reminder, if your freelance business entity is an S-Corp, Partnership, Limited Liability Partnership or Multi-member Limited Liability Company your return is due on March 15, 2026. For C-corporations the deadline is April 15, 2026. 

Here are the key freelance business deductions to be aware of, including updates from the One Big Beautiful Bill Act (OBBBA) legislation from 2025.

1) Home office expenses

Deducting your home office remains one of the most reliable business deductions available to freelancers. While you do not need a separate office in your home to claim a deduction, you do need a clearly defined workspace that you use regularly and exclusively for business. 

There are two ways to calculate the home office deduction:

1. Claim the standard office deduction is $1500 which is a topline deduction on your return.
2. Alternatively, you can take the deduction by calculating the actual square footage that is used exclusively for business in your home and multiplying it by $5.00 per square foot (up to 300 square feet) as well as deducting a proportional amount. 

2) Health insurance premiums

Freelancers often overlook the health insurance deduction even though it can offset a significant portion of annual expenses. If you pay for your own coverage and are not eligible for employer‑sponsored insurance, you may be able to deduct 100 percent of your premiums. 

This includes medical, dental, and long‑term care coverage for you, your spouse, and your dependents such as premiums for medical, dental, and long‑term care insurance provided you have a net profit for the year and are not eligible for an employer-subsidized plan. 

3) Professional development

Freelancers invest heavily in staying current, and the bill continues to support deductions for training that maintains or improves skills in your existing line of work. The key is that education must relate directly to the services you already provide. When it does, these costs are recognized as legitimate business expenses.

• Courses, workshops, and certifications tied to your current services
• Books, online programs, and industry publications
• Conferences and seminars that support skill development

Professional development may increase your earning potential significantly and it may also reduce your tax bill if the cost of the course/written materials, etc., qualify for these deductions. 

4) Software and subscriptions

Digital tools are essential to running a freelance business, and the bill maintains clear deductibility for software and subscription services. These recurring charges may seem small, but they add up quickly over the course of a year.

• Software subscriptions and cloud storage
• Design tools, accounting platforms, and project management systems
• Email marketing services and paid newsletters
• Documentation of business purpose for mixed‑use tools

Tracking these expenses ensures your tax return reflects the actual cost of keeping your business operational. Subscriptions can be deducted immediately in the year paid. One-time, long-term software purchases might need to be depreciated over 36 months if they last more than one year.

5) Phone and internet expenses

For phone and internet services, you can deduct the business portion. The expectation is a reasonable estimate supported by your usage patterns. You can generally deduct:

• A percentage of your phone bill based on business use.
• A percentage of your internet bill based on business use.

Be sure that you have documentation of your business activities conducted through these services such as your meeting calendar, activities requiring internet to run your business and itemized phone bills. 

These services are essential to client communication, and deducting the business portion is both allowed and expected.

6) Business meals

Business meals remain deductible at 50 percent when they are directly tied to your work. The rules emphasize that documentation is a must which means that you must keep itemized receipts and state the client name, business purpose for the meeting over which you ate the meal and the date on which it occurred. 

You can also deduct your own meals when traveling for work as long as the food is purchased at an eating establishment rather than a convenience store or grocery store. 

7) Mileage and transportation

Even if you only make short trips for work, tracking your mileage throughout the year can add up to significant deductions. You can deduct mileage (The 2025 tax year mileage rate deduction is 70 cents per mile) and transportation costs for business activities such as:

• Mileage for client meetings, conferences, and project work. 
• Parking fees, tolls, and ride share costs for business travel.
• Short trips for supplies, shipping, or errands.

Whether you use the standard mileage rate or actual expenses, consistency matters in tracking your mileage so consider using an app to track it accurately and make it easier to have the data at hand when you need it for filing your return.

8) Equipment and depreciation

Freelancer business owners often remember to deduct major purchases but overlook smaller tools that are essential to their work. Under the One Big Beautiful Bill Act (OBBBA) 100% bonus depreciation for qualifying assets placed in service after January 19, 2025. While bonus depreciation has no limit, the OBBBA also enhanced Section 179 deductions, allowing up to $2.5 million in immediate expensing for 2025, with a phase-out starting if purchases exceed $4 million. 

Some examples of items considered necessary business assets include:

• Laptops, cameras, microphones, and lighting equipment.
• Office chairs, desks, and ergonomic accessories.
• Printers, scanners, and related tools.
• Vehicles that exceed 50% business use and are greater than 6,000 pounds. Heavy SUVs and trucks are eligible for up to $31,300 and cars are eligible for up to $20,200 in the first year. 

Recognizing these items as business assets helps you reflect the true investment required to deliver your services and may equal substantial tax deductions.

9) Bank fees and payment processing costs

Payment platforms make it easy to get paid, but the associated fees reduce your income, however you can offset some of this with deductions for these costs such as:

• Payment processing fees from PayPal, Stripe, or Square 
• Monthly bank charges for business accounts
• Credit card interest on business purchases
• Fees tied to business transactions

These small amounts accumulate over time and deducting them ensures your taxable income reflects your actual earnings. Be sure to track these expenses and if available, use the statements and tax documentation provided by these platforms. 

Please note that these fees are tax-deductible only if they are incurred for business purposes, acting as an "ordinary and necessary" cost of operation, incurred in business accounts. Maintenance fees, wire transfer fees, overdraft fees, and returned item fees are generally deductible. Please maintain detailed records of all banking fees to support your deductions. Please keep detailed records, such as transaction reports from your PayPal account, for at least three years to support the deductions in case of an audit.

10) Business-related insurance

Professional Liability Insurance premiums for coverage such as errors and omissions, business property insurance, and cybersecurity safeguards for your business are deductible. 

11) Expanded SALT Deduction Cap

The state and local tax (SALT) deduction cap has been increased from $10,000 to $40,000 for the 2025 tax year. This cap will increase by 1% annually by 2029 before reverting to its previous limit in 2030. However, this benefit is phased out for higher-income taxpayers, so not all freelancers will be able to take full advantage. For 2025, the full deduction is available for those with a modified adjusted gross income (MAGI) under $500,000. It phases out completely at $600,000 or more, where it reverts to a $10,000 limit.

The cap is reduced by 30% of the amount by which the taxpayer's modified adjusted gross income exceeds a threshold amount. That threshold amount is $500,000 for 2025, with a one percent increase each year through 2029. 

For those in high-tax states, this change could provide meaningful relief, but it is critical to also be aware of how the potential state-level workarounds mentioned below might impact you.

12) State-Level SALT Workaround for Businesses

In response to the SALT deduction cap noted above, several states have implemented workarounds to help businesses mitigate its impact. For example, New York State has introduced the Pass-Through Entity Tax (PTET), which allows businesses to pay state taxes at the entity level rather than the individual level. PTET allows partnerships and S-corps to pay state taxes at the entity level, which are fully deductible on federal returns.

This workaround enables businesses to bypass the SALT cap and potentially reduce their overall tax burden. The new federal bill has no impact on these state-level workarounds. However, freelancers operating pass-through entities should always monitor the specific developments related to SALT in the states where they do business closely.

13) Tip and Overtime Income Deductions

Two new deductions have been introduced for 2025 tax year that may benefit freelancers working in service-based industries:

1. The tip income deduction allows up to $25,000 in tip income to be deducted from taxable income without itemizing if married and filing a married filing jointly (MFJ) return, whereas the allowable deduction for a single person is up to $12,500. This is specifically beneficial for workers in occupations where tipping is standard (e.g., food service, hospitality, transportation).
2. This deduction phases out at $150,000 in income for single taxpayers, and at $300,000 for those who are married filing jointly. 
3. The overtime deduction permits employees (non-exempt, paid overtime employees based on the Fair Labor Standards Act (FLAS) who receive Form W-2) who receive overtime pay to deduct up to $12,500 annually for single filers, ($25,000 annually for married filing jointly), with a phaseout for those with a modified adjusted gross income (MAGI) over $150,000 for single filers ($300,000 for married filing joint filers).This deduction is not available to freelancers. Independent contractors, freelancers, and gig workers are generally considered self-employed, not W-2 employees, and are therefore not eligible for this specific deduction. Freelancers are responsible for 15.3% in self-employment taxes (Social Security and Medicare) on all income, including any "extra" hours worked. 

Those who receive Form W-2 as non-exempt employees and have qualified overtime pay (the "half" in "time-and-a-half") from their federal taxable income.  

This overtime deduction has Income limits and Phase-out begins as follows: the dededuction begins to phase out if your Modified Adjusted Gross Income (MAGI) exceeds $150,000 (single) or $300,000 (married filing jointly).

• Only the "premium" portion of overtime (the extra half of "time-and-a-half" pay) is deductible. If you earn $20/hr and $30/hr for overtime, only the $10/hr premium is deductible. While this reduces federal income tax, payroll taxes (Social Security and Medicare) still apply to all overtime earnings. While it is a deduction from income tax, overtime pay is still subject to payroll taxes (FICA). Qualified overtime will be listed in Box 14 of the W-2 with the code "FLSA OT Prem" starting in 2025. 

Overtime wages continue to be subject to federal income tax, Social Security, and Medicare taxes, just like regular wages. However, under the new federal “No Tax on Overtime” provisions, certain taxpayers may now qualify for a deduction on a portion of their overtime earnings. This deduction applies only to qualifying overtime wages and only for taxpayers who fall within specific income thresholds.

Amounts earned above those thresholds will continue to be taxed as usual. Overtime is not fully tax-free. Social Security and Medicare taxes still apply to all overtime earnings.

There is no special overtime tax rate; overtime continues to be taxed as ordinary income within your existing tax bracket so be sure to retain any documentation related to reporting of wages, including overtime. If you notice any discrepancies in your pay stubs or year-end documents, contact your employer (if you also have a W-2 position) and/or clients (if you receive a 1099) promptly to correct them.

These deductions are applicable to all tip and overtime income from 2025 and the provision is currently set to expire after 2028 so freelancers in eligible business industries should take advantage of them while they last.

Alternative for Freelancers

While freelancers cannot use the "No Tax on Overtime" deduction, they can still reduce their tax liability through other methods that we discuss in the 14 points, such as: 

• Business Expenses: Deduct legitimate business expenses, such as software, hardware, or home office costs, to lower taxable income.
• QBI Deduction: Eligible self-employed individuals may deduct up to 20% of their Qualified Business Income (QBI).
• Self-Employment Tax Deduction: You can deduct 50% of your self-employment tax when calculating your federal income tax. 

For 2025, employers are not required to break out overtime separately on W-2s, so you may need to use paystubs to calculate your eligible amount. 

14) Qualified Business Income (QBI) Deduction 

The OBBB made permanent the extension of the 20% Qualified Business Income (QBI) deduction (Section 199A deduction) for pass-through income. If you operate as a sole proprietor, LLC, or S-corporation, you can continue to deduct up to 20% of your qualified business income, plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income subject to income thresholds and business type. Income earned through a C corporation or by providing services as an employee is not eligible for the deduction. What qualifies as a trade or business, is specified in the instructions for Form 8995-A or Form 8995.

The deduction is available regardless of whether taxpayer itemizes on Schedule A or takes the standard deduction. There are two parts to this deduction: 

(1) QBI component – equal to 20% of QBI from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust or estate. It is subject to limitation, depending on taxable income which may include the type of trade or business, the amount of W-2 wages paid by the qualified trade or business, and the unadjusted basis immediately after acquisition (UBIA) of qualified property held by the trade or business. It may be reduced by the patron reduction if the taxpayer is a patron of an agricultural or horticultural cooperative.

(2) REIT/PTP component – equal to 20% of qualified REIT dividends and qualified PTP income and Is not limited by W-2 wages or UBIA of qualified property. Depending on taxable income, the amount of PTP income that qualifies may be limited depending on the type of the PTP’s trade or business. The deduction is limited to the lesser of the QBI component plus the REIT/PTP component or 20 percent of the taxpayers’ taxable income minus net capital gain.

QBI is the net amount of qualified items of income, gain, deduction, and loss from any qualified trade or business, including income from partnerships, S corporations, sole proprietorships, and certain trusts. This includes the deductible part of self-employment tax, self-employed health-insurance, and deductions for contributions to qualified retirement plans such as SEP, SIMPLE and qualified plan deductions, just to list a few of items that are included in the calculation.

QBI does not include items that are: not property includable in taxable income, investments such as capital gains or losses, interest income that is not properly allocable to a trade or business, wage income, income that is not effectively connected with the conduct of business within the US, commodities transactions or foreign currency gains or losses, certain dividends and payments in lieu of dividends, income/loss or deductions from notional principal contracts, annuities (unless received in connection with the trade or business), amounts received as reasonable compensation from an S corporation, amounts received as guaranteed payments from a partnership, payments received by a partner for services other than in a capacity as a partner, qualified REIT dividends, and PTP income.

A safe harbor is available to individuals and owners of passthrough entities who seek to claim the deduction under section 199A with respect to a rental real estate enterprise. Under the safe harbor a rental real estate enterprise will be treated as a trade or business for purposes of the QBI deduction if certain criteria are met. For more information on the safe harbor, see News Release IR-2019-158

An interest in rental real estate that does not meet the requirements of the safe harbor may still be treated as a trade or business for purposes of the QBI deduction if it otherwise is a section 162 trade or business.

In addition, the rental or licensing of tangible or intangible property that does not rise to the level of a section 162 trade or business is nevertheless treated as a qualified trade or business for purposes of section 199A if the rental or licensing of property is to a commonly controlled trade or business operated by the individual or a passthrough entity as provided in Treas. Reg. § 1.199A-1(b)(14).

The QBI deduction has been a major benefit for freelancers since its introduction in 2018, and its permanence adds much-needed stability to long-term freelance business tax planning. 

Mitigate Your Tax Burden with Maximum Business Deductions

The key to maximizing your deductions is awareness and documentation. When you understand what qualifies and keep good records throughout the year, tax season becomes less stressful and more rewarding. 

A tax professional who understands the freelance landscape can also help you uncover deductions you may not realize you’re entitled to. With the right guidance and a little extra attention to detail, you can make sure you’re keeping more of what you earn and paying the IRS only what you legitimately owe.

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I remember it clearly: my first freelance gig, back in 2005. On the way there, I’d see Freelancers Union posters in the subway, and it felt like a lowkey way of seeing my future home — that’s exactly what I’m joining, once I get started on my career. I’d look around the train and wonder how many other passengers were also freelancers, building their lives quietly in parallel.

That day’s work was low wage street intercept — stopping people, showing them big studio movie trailers, and asking how likely they were to watch the film. It wasn’t the foot in the door I imagined for filmmaking, but like most freelancing, it built real skills: how to talk to strangers, how to translate creative ideas into language people can actually hear, and how to listen for what’s underneath their answers.

For more stable work, I took a “temporary” job as a writer and aide of a local city councilman. And that role taught me something harder - the difference between having a voice and having a say.

I didn’t have much of a say back then, and I knew too many people who didn’t either. Not because we were voiceless (there’s no such thing), but because we were strategically ignored — hierarchically hushed — kept outside the rooms where decisions were made. Whatever you call it, I didn’t like it. I couldn’t unsee it.

So I put some of my creative dreams on hold and went into public service. I was elected to the State Assembly and later to the City Council at 28, and the contrast was immediate. In government, you see what stability looks like up close: prestige, protections, flexible schedules, and influence that comes standard with the job. I watched colleagues get comfortable inside those luxuries. I fought to stay grounded in why I joined in the first place.

Representing East New York — one of the most underfunded communities in the city — taught me about power: who has it, who keeps it, who loses it, and why. It also taught me something stronger than power: advocacy, which can bend power toward the will of the people.

That belief shaped everything I did. I created the nation’s first Office of Nightlife because the city needed to stop treating nighttime workers like they were disposable or invisible. Bartenders, musicians, dancers, service workers — people dismissed by the 9-to-5 crowd as “creatures of the shadows” — were building a real economy, and they deserved real support.

Then in 2015, more than a decade after I first saw those posters, Freelancers Union came to my office and we got to work. Together, we passed the nation’s first Freelance Isn’t Free law, grounded in something basic: if you do the work, you deserve to get paid - without having to plead for your own paycheck.

After a decade of public service, I came home to Freelancers Union.

I started on March 2, 2020. Days later, New York became the global epicenter of COVID-19, and freelancers were hit immediately. Work vanished, anxiety spiked, and people needed support faster than systems were built to deliver it. We pushed hard for federal relief that included independent workers — especially Pandemic Unemployment Assistance (PUA) and PPP forgivable loans — and we built direct support through emergency cash grants and expanded free legal help, while continuing the long fight for portable benefits.

As the city reopened, we rebuilt community and infrastructure, not just services. We reestablished the Freelancers Hub in a post-pandemic world because independent work shouldn’t mean isolation. We launched the Photo Hub with our partners at ASMPNY because working creatives deserve access to professional tools without added costs and gatekeeping.

We’ve helped grow the Freelance Isn’t Free movement nationally with statewide wins in New York, California, and Illinois, and progress in cities like Seattle, Columbus, and Minneapolis. And most recently, launched the Freelancers Legal Hub, which has helped members collect over $250,000 in unpaid invoices in the past year alone. 

This job has also been deeply personal.

I’ve been moved by our gatherings — people of every background and belief showing up with the same hope: to build a life through what they can do. I’ve watched members find mentors, collaborators, and confidence here. I’ve seen people stand taller simply because they were finally in a room where they didn’t have to explain why their work is real.

Over these past six years, my role hasn’t just been to lobby or advocate. A big part of the job has been carrying you into rooms you weren’t in — making sure decision makers saw the full truth of freelance work and the value you create. This fight for dignity didn’t just build policy; it built community. And personally, it inspired me and reminded me who I am: last year I dusted off my filmmaking dreams and shot a movie.

To our members: thank you for trusting us, challenging us, and showing up when it counted. To our board: thank you for trusting my vision, especially when the path wasn’t obvious. To my team: thank you for punching above your weight, again and again, and keeping the work grounded in what members actually need. You carried this organization through its hardest period with discipline and heart.

Now I’m resigning to serve as the NYC Commissioner of Media and Entertainment in the Zohran Mamdani administration. I say “new role,” not “new mission,” because I’ll still be fighting for the same kinds of people: the independent workers and creatives who make New York feel alive and keep its culture moving.

I’m leaving Freelancers Union with gratitude and confidence. We are no longer strategically ignored because our unified voice is hard to miss. We laid a strong foundation, and I believe the union’s next era will be even stronger.

Thank you for letting me serve. 

With gratitude,
Rafael Espinal 

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