ABSTRACT
This chapters allows the reader to discover that being a freelancer requires far more than the ability to create images, operate an efficient workflow, maintain an archive and develop clients. It takes a strong understanding and adherence to state and federal tax law governing independent contractors as well as a keen awareness of a myriad of accounting practices. Understanding the key difference in tax responsibilities between freelancers and employees is important for several reasons, one being that royalty income is often not subject to the Self Employment Tax. Therefore, it’s imperative that royalty income and assignment income be clearly defined to one's accountant so necessary adjustments can be made to avoid paying taxes when it’s not required. California-based freelancers were jolted awake in 2019 when Assembly-woman Lorena Gonzalez authored and steered Assembly Bill 5 through the state legislature and ushered in a new benchmark for determining a worker’s employment status.
