When you signed up to become a rideshare driver, there were things you didn’t consider. Oh sure, you thought to yourself, I’m now a gig driver. What you probably didn’t realize is that you are now also self-employed. You’re running your own company. As the boss, there are some things which you need to pay attention to.
That you’re reading this blog post means you’re thinking ahead. Your job is not just about driving someone from point A to point B or delivering food. In this post, we bring you the top financial tips for working in the gig economy. These bits of wisdom make you a smarter businessperson.
We cover the following topics:
- Keep up on what’s happening in your selected gig.
- Always be evaluating.
- Set up a schedule.
- Track business expenses.
- Set up bookkeeping and get tax help.
- Protect yourself with insurance, or set up an LLC.
- Save for retirement.
- Prepare for the unknown.
- Always look behind and always look ahead.
- Use tools to drive smarter
Know the world is constantly changing
We see some of these changes coming, like the gradual transition to electric cars. There are others we don’t see, like in March of 2020 when the pandemic hit and the whole world screeched to a stop.
But you can train yourself to be prepared for the obvious, as well as the not-so-obvious.
1. Keep up on what’s happening in your selected gig
There are numerous blogs and YouTube channels devoted to gig driving. What are the latest developments? Are the rideshare companies releasing new incentive programs? What about the cost of fuel? How do you develop a driving strategy? Believe it or not, it isn’t all willy-nilly out there. The more you know about your business (remember, you are self-employed), the more profitable you can be.
Check out Airport Pickups: Rules for Uber and Lyft Drivers, or 13 Tricks to Earn More as an Amazon Flex Driver. Another blog worth checking out is FinancialPanther.com. Creator Kevin Ha is a gig-driving enthusiast, among other things, and he writes honest reviews. Kevin is also full of money tips to thrive in the gig economy.
2. Always be evaluating
This is closely related to no.1. There are a lot of gig driving jobs, and you should at least be familiar with the opportunities. As a driver, you might get burned out on food delivery, so having a familiarity with rideshare or package delivery gives you options for something else to do. Many drivers maintain a selection of three or four gig driving apps so that if they need to make a change, it’s seamless. They are already approved to drive that app, have the necessary inspections and paperwork, and know how it works.
3. Set up a driving schedule
Part of developing a strategy for gig driving is identifying the most profitable times to be on the road. This can vary depending on your particular gig, the region you drive in, and the kind of driver you are. A flexible schedule allows you to set up time for office hours when you can look after the business of rideshare driving, which includes bookkeeping, reviewing blogs and YouTube videos, and monitoring sites like Reddit and Quora. You can also check trends through the Gridwise app and study your gig activity for patterns that might warrant a change in strategy.
“I used to drive on Thursdays during the daytime in Los Angeles,” said one driver, “but then I noticed that Thursday evening business, when I was going home, was brisk. I checked around and discovered ‘thirsty Thursdays.’ Many people don’t work on Fridays, or they start their weekend on Thursday, and no self-respecting college student ever signs up for a Friday class. After a few weeks of reviewing the numbers, I found Thursday nights were far more profitable than Thursday daytime.”
Check out 3 Steps to Making More Money as a Gig Driver: Track Your Metrics, Set Goals, and Stash the Cash! to learn more.
4. Track business expenses
Everything you purchase in furtherance of your gig driving business is tax deductible. Everything. This includes seat covers, snacks for passengers, and a flashlight for checking early morning or nighttime addresses. Become a hoarder of receipts and don’t forget mileage. Track it mercilessly. The best way to do it is with the mileage tracking feature on the Gridwise app. It is the best Lyft and Uber mileage tracker, and it works for delivery drivers, too. Constantly evaluate your expenditures and look for less expensive alternatives.
5. Set up bookkeeping and get tax help
If your financial control consists of going online every other day to see if you have money in your checking account, then you’re headed for trouble. The key to operating any successful business is keeping track of your dollars. If you check your records and see you have a scheduled car service coming up, that can affect your decision whether you want to take the weekend off or purchase that spiffy 360-degree dashcam—or maybe put it off for a while. Keeping track of expenses and income helps prevent those problems.
Keeping track of your money also means maintaining records for taxes. If you are knowledgeable about taxes, or you catch on quickly, entertain doing it yourself, but it might be a good idea to employ a competent tax person. You can also check the Gridwise app for tax help. It is designed specifically for gig drivers.
Check out Taxes for Rideshare Drivers, and How to Set and Achieve Goals as a Rideshare or Delivery Driver. Tip no. 3 in that blog post is particularly pertinent.
6. Protect yourself with insurance, or set up an LLC
It’s a litigious world. That’s a fact, and it is often unfortunate. Astute business owners make sure they have insurance coverage that is as all-encompassing as possible, without crossing the line into unneeded expenses. Although the rideshare companies cover drivers in the case of an accident, you need to read the fine print. You are not covered all the time when you are on the app. Car insurance for gig workers is important.
Most people carry the minimum coverage limits (it differs from state to state) for automobile insurance . You should consider increasing those limits, especially if you have set aside savings for retirement, you own a home, or your name is attached to an asset of considerable size. Some people are committed to the gig economy and have several different activities underway at once. It takes discipline and commitment. If you are as committed to gig work, you might consider setting up an LLC to further protect yourself and your assets.
7. Save for retirement
It comes quicker than you think. Somebody has told you this before, and you didn’t believe it, but we are reinforcing it. Yes, the inheritance business is very profitable, but it is difficult to break into, and the work is not steady. The key to saving for retirement is to start, regardless of how old you are, and keep at it. While you are saving for retirement, you might also consider having a separate fund in the event you get sick and another fund for planning a vacation.
8. Prepare for the unknown
This is a big one. You don’t know what you don’t know. Three years ago, only a few people knew the word pandemic. Now everyone knows it. If you were a rideshare driver in March 2020, you know that business dried up overnight. Rental companies recalled cars. The few drivers that went out installed shields between the front and back seats. It took a lot of fun out of rideshare. But for those eager and entrepreneurial drivers, opportunities such as Instacart became very profitable. The same with Uber Eats, DoorDash, and others.
The other catastrophe that could impact you is, if for some reason, you get suspended from the app you work for. This is the best argument for multi-apping and evaluating the viability of other gig driving opportunities. You can appeal your suspension if you think it is unreasonable, but in the meantime, you want your ability to transfer to another app to be as seamless as possible.
9. Always look behind and always look ahead
Any savvy business person is looking ahead. What’s the next trend over the horizon? A lot has been made of driverless vehicles. That could devastate the rideshare business, or maybe not. You never know. In 2019 there was a teachers’ strike in the Los Angeles Unified School District. Concern grew that 30,000 out-of-work teachers would oversaturate the ranks of gig drivers. We’ll never know because the strike ended six days later. You always need to look toward diversification. Some people believe strongly in multiple streams of income. Remember, you are self-employed and many of you work multiple gigs. That makes you an entrepreneur.
Review the last year. What did you do last year as a gig driver that worked? What didn’t work? When you worked on your taxes, did you catch yourself saying, “Geez, I wish I’d kept better track of my mileage” or “I wish I’d been more organized”?
10. Use tools to drive smarter
One of the best business moves you can make is to use Gridwise. Gridwise’s free app keeps gig drivers organized with its free mileage and automatic earning trackers. It also offers essential resources for gig workers, no matter what gig app you drive for!
Drivers are also earning more and improving their driving strategy by using Gridwise to see peak times and locations to do rideshare or delivery.
Being a gig driver often means you don’t have time to research the best benefits available – and even if you find health insurance for 1099 workers, it can be expensive. That’s why Gridwise provides drivers with a carefully curated list of affordable gig driver benefits like roadside assistance, dental and vision insurance opportunities, and – gas discounts. Rideshare and delivery drivers save up to $50/month with the Gridwise Gas program!
Don’t wait to make your business more profitable.
And have fun out there.