In today’s gig economy, driving for Uber or Lyft could be a great side hustle. But can you really bring in a substantial amount of extra cash working as a rideshare driver? Yes, but only if you know how to do it right.
Working as a rideshare driver doesn’t necessarily correlate into direct profits immediately. In fact, there are often overlooked costs to consider. For one, the company you work for takes a share of your earnings. Lyft takes 20 percent of each fare, while Uber’s percentage varies depending on the city. For example, in New York City, Uber takes anywhere from 20 to 28 percent of each fare.
The city you’re working in also takes a sales tax cut, and since working as a rideshare driver is considered self-employment, you’ll also be responsible for self-employment taxes. Other costs, such as gas, insurance, car maintenance, tolls and car detailing can also eat into your profits. Some of these expenses can also vary depending on where you live, so not all rideshare drivers make the same kind of money across the board.
It’s All About Strategy
As with any business, making decent money as a rideshare driver is all about strategy. Those who minimize expenses and utilize tax write-offs to their advantage can position themselves well in a rideshare market. Additionally, taking advantage of surge pricing during peak periods can also help you maximize your profits and double or triple your average fare.
Tax deductions will lower your taxable income, meaning you’ll get to keep more of the money you earn from ridesharing. Make sure to keep track of tax deductions throughout the year, such as mileage. You can also deduct a portion of other car expenses, such as gas, insurance and the cost of repairs. Just make sure to keep a log of all expenses, and hang on to the receipts.
Ultimately what you earn as a rideshare driver depends on a host of factors, like the demand for rides in the city you’re working, as well as the cost of gas, insurance and taxes. While expenses will cut into your earnings, the right tools can help you mitigate expenses and maximize your profits. It is possible to make money as an Uber or Lyft driver, but as with any professional endeavor, the more practice and skill you bring to your business, the better.
~Here’s To Your Success!
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