What To Know About Driving for Uber

The concept of Uber is one of the best technological advancements that has shaped the taxi business for the last five years. Basically, Uber is an application that can enable anyone to become a taxi driver using their own vehicle. This concept can make a great side hustle, as you get to make money while driving around town.However, before starting, here are five things you need to know:

1. Don’t expect to make a lot of money

There is a general misconception that Uber is a get rich quick scheme if the adverts by Uber are anything to go by. According to Uber commercials, you stand to earn at least 40 dollars per hour averaging to 90,000 dollars per annum. However, the truth is you don’t earn as much, except for special occasions like New Year’s Eve or when there is an evidenced surge in pricing.

There are two factors that determine how much you make on Uber, your location and the number of Uber drivers in your area. If there is a huge competition for customers in your area, then you won’t make as much money because this will limit the number of rides at any particular time. However, if you stay in a busy area, with a few drivers, then you can make more money because you will be constantly on the move. If you stay in a rural area, then there is no reason to even sign-up, you are likely to make no money due to little traffic.

2. You are in Self-employment

As an Uber driver, you are not an employee of Uber, but rather an independent contractor. This implies that Uber is not obligated to pay your taxes, any statutory deductions like a student loan or file your returns as normal employers do, but rather, that is your responsibility. Thus, make an effort to understand your tax obligation. For instance, there is a specific limit above which you might be required to pay your taxes quarterly instead of annually. This is the case particularly if you owe anything above 1000 dollars in one year, well its nothing to worry about, but something to keep in mind.

3. Think insurance

Am sure you already know that your car needs an insurance, but as an Uber driver which insurance specifically do you need? Comprehensive, third party or which one? Remember your personal cover does not include “for-hire”, implying that a lot of things are excluded when you are driving your car for commercial purposes. This complicates things, particularly for drivers who want to use Uber part-time.

For full time-drivers, the challenge arises from the fact that most insurance policies exclude public conveyance, implying that if you got involved in an accident while carrying a passenger, you will meet the medical costs and other damages from your own pocket. In most countries, Uber drivers are treated as Public service vehicles (PSV) and thus are required to take third-party insurance policies. This not exposes the car to the risk of loss, but also the driver.

According to the Uber website, the company provides a supplementary insurance for the drivers, the passenger’ and other third-parties, but only when the application is on. This implies that while offline, your car and you are left exposed. Thus, conduct a thorough research on the most appropriate insurance policy in your locality.

4. Understand the tax deductibles particularly mileage

In every business, the government gives you an allowable expense for all expenses that are directly involved in the production of a product or a service. In the case of an Uber driver, your most important business expense is mileage.The standard rate mileage which is the most applicable for Uber drivers and this refers to the national mileage rate that you can claim for every mile that you drive for your business.

In 2017, the rate was 53.3 cents for every mile covered with the Uber app on. The trick is to master how to keep track of this millage accurately as in most cases, Uber gives a lower figure meaning you will make the less mileage deduction. This mileage can also include rides you make between dropping off a passenger and picking the next one. Some drivers even include their ride to and from home, thus making almost every ride a tax-deductible expense.

5. Watch out for Surge price to make more money

Like every business, Uber is by the forces of demand and supply,with prices being higher when the demand is high and lower when the demand is low. Thus, watch out for major holidays, weekends and Fridays when most people are out partying as that is when the prices seem to be highest and you are likely to make double what you can make on an ordinary day.

For instance, in New York on New Year’s eve, passengers reported paying up to 10 times more than they would pay on an ordinary night. Well, the jury is out on whether this is ethical or not, but as a driver, there is no harm in making an extra dollar on a weekend to make up for a slow day during the week.

Thus, Uber is a great side-hustle with an opportunity to transition to a full-time job. With a good functional car, the right insurance in place and a willingness to work more hours than the normal 8-5, then you can earn some good money. These tips can help point you in the right direction.