Freelance musicians are considered sole proprietors or owners of a small business. But, unlike the typical small businesses, it may take them many years before they actually show a business profit. The IRS presumes that if you show a loss for more than two out of five years, that this is a hobby loss and not a true business loss and they may audit you. The burden of proof is on you, as the freelancer, to prove you are operating a business and not a hobby.
-a tax preparer who specializes in working with musicians