Rideshare drivers are perhaps the best-known members of the gig economy. Uber has become a household name. Lyft is quickly catching up. More awareness means more customers, which means more business for drivers. However, driving for the rideshare economy also comes with its own hidden fees.
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Taxes
Being your own boss doesn’t mean you don’t still answer to Uncle Sam. Gig economy workers are required to file their own taxes. The price tag can often come in at around 25 percent of your income. The IRS also has different rules for the self-employed, including one that requires you to pay a portion of your estimated total annual taxes each quarter.
While there are lots of apps and programs to help you keep track of business expenses and other items necessary at tax time, figuring out taxes as your own boss can be a hassle. Even if you’re a tax expert, coughing up 25 percent of your income is bound to sting at least a little.
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Insurance
Your regular auto insurance will not cover you if you get in an accident on the job. Uber offers insurance to drivers while they are online, but it only covers personal liability, up to $100,000. This insurance covers damages to another person, vehicle, or piece of property, accidents where another person (besides the driver) is at fault, and damages to the driver’s vehicle (with a $1,000 deductible). Lyft has a similar limit, but a $2,500 deductible for contingent collision, $1,000,000 for primary liability and Uninsured/Underinsured Motorist.
If you want to be covered, you’ll need to purchase specific rideshare insurance, but that carries a price tag as well—usually around $10 per month.
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Car upgrade or rental
Uber’s age requirements for vehicles varies from area to area. Meanwhile, Lyft comes in at 2005 or newer, with a few exceptions. So what if your car is too old to drive or falls out of compliance?
If you don’t want to upgrade, drivers have the option to rent through both Uber and Lyft. Courier Hacker also ran a story last month about other companies that are tapping into the market of renting to on-demand economy workers.
However, renting comes with a price tag as well—in the range of $189 or more per week.
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Maintenance
This may be a regular part of being a car owner, but driving more miles each day means more wear and tear on your vehicle. Oil changes, tire replacement, and other standard maintenance work has to be done—and paid for—with greater frequency when you’re driving more miles for work every day.
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Extras
Various gig economy workers have proposed all sorts of items to keep stocked in your car as a part of customer service (and hopefully getting a great tip). Suggestions range from bottled water and gum or breath mints to first aid kits, vomit bags (yes, we all hope to never have that passenger), and hand sanitizer.
Having extras on hand for your passengers might make you stand out more and might even improve your tip. It also costs.
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Sleep
The average Uber driver is on the road over 16 hours per day. Since Uber doesn’t cap the number of hours, drivers are more tempted to drive long hours to take advantage of incentives to drive. Lyft caps their drivers’ hours at 14 hours per day—still nearly twice the normal American workday.
Driving for long periods can have many negative effects on your health. Perhaps most importantly, the lack of sleep makes you less healthy and also less attentive. Sleep deprivation can endanger your life and the lives of your passengers.
