Driving for rideshare companies is a popular way to earn side income. It’s easy to get started, and you can work on your own schedule. But one thing many drivers overlook is expenses.
From gas to maintenance, taxes and “perks,” it costs money to be a rideshare driver. The key is to learn how to calculate your expenses, so you can ensure that you’re making a profit.
1. Keep a Log of Your Gas Expenses for One Month
Keep a log book in your glove box, and write down the cost of filling up each time you hit the pump when you’re on the clock. Do this for one month. At the end of the month, add up the numbers and see how much you spent on fuel.
If you’d rather take the high-tech approach, you can also use a tracker app, like fuelio, to keep track of your fuel expenses.
Use this figure to estimate how much you’ll spend on gas each month. You may spend more or less some months, but you’ll have a general idea of how much you spend on gas and can account for this when figuring out how many rides you’ll need to pick up.
2. Estimate Vehicle Maintenance
Driving more means putting more wear and tear on your vehicle. More wear and tear will mean higher maintenance costs.
Estimate vehicle maintenance costs at the start of each month so that you have an idea of how much you’ll need to set aside to keep your car up and running. Maybe it’s time to get the brakes done, or maybe you need an oil change next month.
You’ll certainly have unexpected car repairs, but if you’re prepared to cover routine maintenance, it makes it easier to handle the unexpected repairs when they arise.
3. Shop Around for Your Rideshare Insurance
Many rideshare drivers overlook the importance of having rideshare insurance. But if you get into an accident while waiting for a ride request, your insurance company probably won’t cover the damages because you were driving your vehicle for commercial purposes. The rideshare company’s insurance may not cover it either.
Rideshare insurance is affordable. It’s worth having the peace of mind and protection in case the worst happens.
While the coverage is affordable, it’s still important to shop around to find the best price. Don’t forget to factor this cost into your estimated monthly expenses.
4. Estimate Your Taxes
As a rideshare driver, you are considered an independent contractor. That means you are responsible for withholding taxes. Come tax season, you won’t be getting a return – you’ll be sending a check.
If you don’t keep track of your estimated taxes, you’ll be in for a surprise at the end of the year.
At the end of each month, calculate your earnings and estimate your taxes. You can use a tax calculator, or you can do it the old-fashioned way.
Understanding your expenses as a rideshare driver will help you ensure that your time spent on the road is worth your while. If you’re not earning enough to even cover the cost of the wear and tear on your vehicle, you’re wasting your time – and money.