When you run your freelance business, you’ll often hire people to help with your projects — like photographers, editors, or developers. These folks are called contractors because they work independently for you, not as employees.
This means they handle their own taxes and work with multiple clients, including you.
Why does this matter? Because hiring contractors means certain tax rules apply — and knowing these rules can help you avoid surprises, save money, and keep your business legit.
Common mistake: Not reporting contractor payments properly. For example, imagine you’re a photographer who earned $10,000 for a project but paid an editor $3,500 and a second shooter $1,000.
If you don’t report those contractor payments, the IRS sees the full $10,000 as your income — ignoring the $4,500 you spent on help. This can cause you to pay way more taxes than you owe.
Tracking and reporting contractor payments correctly lowers your taxable income and keeps you safe.