Driving For Money? Here's How To Make It Legal
The sharing economy has presented many private citizens with the ability to rent out their time, homes, or possessions to make a few extra dollars. Arguably, this is great for both buyers and sellers, since it allows for a greater range of options to make and spend money. But if you find yourself selling services in the sharing economy, you may wonder what the legal implications are. For rideshare drivers, that is a reasonable concern. Here are some things to know about the legalities of driving for a rideshare program.
Technically, You Should Have a Business License
You might not know many ride share drivers who have a business license. But technically, you are operating a business if you are contracting out your labor to provide transportation. The likelihood of being caught or prosecuted for this is small, but it's something to be aware of before you get started.
You'll Be Paying Social Security Taxes
Note that you will be obligated to pay self employment taxes as a contractor, which includes the social security tax. Most full-time employers pay this for you, but contractors must set aside a portion of their own income to pay on a quarterly basis. Some people aren't aware of this additional tax for self-employed people, and they get a big surprise when it comes time to pay taxes. In general, setting aside 12.5% of your earnings and paying your estimated taxes every 3 months will alleviate the burden of paying these additional taxes.
You'll Need to Be Authorized to Work
Also consider that, since you will be paid as a contractor, your income will still be reported to the government. That means that you must be able to legally work in the country; collecting the income without the appropriate authorization could put you at risk of legal repercussions.
You Need Commercial Car Insurance
And finally, and perhaps most importantly, be sure that your car insurance will cover you in case there is an accident involving your vehicle. You wouldn't want to be responsible for the injuries of your passengers when you're driving as a part-time driver. If your insurance company finds out that a wreck is related to a ride share activity, they may not cover you unless you have commercial auto insurance from a company like Kuresman Insurance. So be sure to speak with your car insurance carrier and protect yourself from financial repercussions. At the same time, spend money on auto services to make sure your car is in good shape to drive. That will help you stay safe on the road and prevent an at-fault accident.