From the outside, driving for a ridesharing company can seem like the best job in the world. You don’t have a boss, you get to meet a variety of people, and the road is your office, all while having a flexible way to earn extra cash. Who wouldn’t want to drive with Uber?
While these are all excellent perks, the allure of signing up to drive with Uber or Lyft can be so strong that it’s easy to get into the job without knowing all the details. If you aren’t aware of certain details that the job requires, you can be in for a rude surprise when it comes to things like filing your taxes or dealing with your insurance company in the aftermath of an accident.
To make sure that you go into the job with both eyes open, here are eight things you should know before you sign up to be an Uber driver.
1. You Are Not an Employee When You Drive with Uber
Although Uber handles all payment and logistics, Uber drivers are not (legally speaking) employees. When you drive with Uber, you are an independent contractor, or “driver partner,” as Uber puts it.
While this has benefits such as a flexible schedule and a lack of boss or hierarchy, working as an independent contractor has some financial ramifications that you need to be aware of.
First, as an independent contractor you are responsible for withholding and reporting all your own taxes. If you’ve never worked for yourself, this can be an adjustment, as you’re likely used to having an employer that handles tax withholding and reporting for you. Luckily, the process is not difficult, especially if you’re using automated tax filing software such as TurboTax. To learn everything you need to know about taxes as an Uber driver, check out our guide to self-employment taxes.
Second, working as an independent contractor means that you’ll need to make your own retirement contributions. You won’t have a company 401(k) or other company-sponsored retirement plan. Of course, by the time you’re ready to retire it’s likely that cars will all be self-driving, but that’s all the more reason to save up your extra money while you can.
Of course, if you’re just driving for Uber to earn make money on the side, then you may not have to worry about additional retirement contributions, as you already have an employer that has a program. But in all cases you’re still responsible for reporting (and paying taxes on) any extra income you earn.
2. Make Sure You Have Adequate Insurance Coverage
While your regular auto insurance is sufficient to meet the requirements to drive with Uber, we strongly recommend that you look into additional insurance coverage specifically for rideshare drivers. This will protect you from what’s known as the “gap”: the period of time when you have the Uber driver app on but aren’t accepting rides. In this situation, your regular insurance will not cover accidents or liability incidents, and Uber’s coverage will be minimal.
To learn more, check out our rideshare insurance guide.
3. Surge Pricing Is an Opportunity
There are a variety of ways to maximize your earnings when you drive with Uber, but one of the surest is to drive in areas that are experiencing a surge. Surges occur when the number of ride requests outnumber the available Uber drivers.
To help boost the number of rides available, Uber applies a multiplier to the final price that riders pay. This means that, during certain prime times like holidays, after events or even just rush hour, you have the opportunity to massively boost your driver earnings just by hanging out in an area that’s likely to receive a large number of trip requests. You’ll be able to see notifications of surges within the Uber Driver app. To learn more, check out our explanation of surge pricing.
4. You Need to Pass a Background Check
Before you can get approved to drive with Uber, you’ll need to pass a background check. During this process, Uber will look to see if you have a criminal record containing offenses that would disqualify you from driving for Uber. They’ll also examine your driving record for things that might disqualify you, such as major moving violations (or an excessive number of minor moving violations).
To learn more about the Uber background check requirements, check out our Uber background check guide.
5. You Can Diversify Your Uber Income
Driving for UberX is a nice way to get your feet wet and learn how the Uber platform works, but after you’ve been at it for a while, it’s worth looking into other opportunities that Uber provides to earn more money. Here are three of our favorite options:
Uber Eats is, quite literally, the “Uber of food delivery services.” It uses the same technology that powers the Uber rider app to allow people to order food at the touch of a button. As an existing Uber driver, it’s easy to get started delivering for Uber Eats. All you have to do is open the Uber partner app (that you already have) and enable delivery requests. To learn more about driving for Uber Eats, check out our guide.
If you’ve ever taken an Uber ride as a passenger, you may have noticed the option for UberBLACK below UberX in the Uber app. UberBLACK is the higher-end counterpart to UberX. As the name implies, all the cars are black, and the service caters to a more affluent crowd that insists on traveling in style. Consequently, the fares can be much higher (though also scarcer). To learn more about how to succeed as an UberBLACK driver, check out our Ultimate Guide to Driving for UberBLACK.
UberSUV is to UberXL as UberBLACK is to UberX. When a larger group of passengers wants to ride in luxury and style, UberSUV is what they choose. The requirements for UberSUV are fairly specific, with only certain black luxury SUVs that have leather seats qualifying (in addition to further requirements regarding cleanliness and condition). But just like UberBLACK, UberSUV fares are significantly higher, making it a worthwhile consideration if you have the right vehicle.
To learn more, check out our Complete Guide to UberSUV.
6. Ensure Your Vehicle Is in Top Condition
When you’re driving other people around for a living, you cannot afford (literally and figuratively) for your vehicle to break down. Therefore, in addition to meeting Uber’s vehicle requirements when you start driving, you should ensure that your vehicle remains in impeccable condition throughout your time as an Uber driver.
This means taking your car in for all regular vehicle maintenance, as well as addressing any suspicious sounds or smells before they become a serious issue. And it also means keeping your vehicle clean and smelling fresh. Passengers notice this little details, and they can affect your driver rating (not to mention tips!).
7. Uber Is a Cashless Experience
If you’re very new to the world of Uber, then it’s understandable to think that passengers can pay their ride fares in cash. After all, that’s the way it’s worked for taxis since they were invented.
One of the major selling points of rideshare apps like Uber, however, is that all payment occurs through the app using the credit card that the customer has on file. Therefore, you shouldn’t expect (or accept) any payment of fares in cash. You are welcome to accept cash tips, though passengers are under no obligation to tip in cash.
8. You Need a Smartphone with Cellular Data
In order to run and use the Uber driver app, you need an iPhone or Android smartphone with a cellular data connection. These are the technologies that make the Uber service possible to begin with, so make sure you have them before applying to drive with Uber. It’s also important that you have a phone running the latest operating system available, as out of date operating systems can interfere with the performance of the Uber app.
We hope this article has given you a better idea of some of the things to watch out for when you drive with Uber. Each idea is simple, but when you combine them together you’ll be well on your way to having a successful, profitable job as an Uber driver, whether it’s a weekend gig or your primary source of income.