The Industry is Growing Rapidly, So There’s Something For Everybody
Pioneers of the sharing economy like Airbnb and Uber have become so popular that we’ve turned them into verbs, but they are far from the only ones out there. Last year, there were 17 billion-dollar companies using the sharing economy business model. So you can definitely make money by letting people use your belongings even if you’re not cool with a stranger sleeping over or driving them around. You can earn cash by pet-sitting for people with DogVacay, or if you have some time to kill, Task Rabbit can set you up to perform services people don’t want to do themselves, like painting an apartment, putting up shelves, and assembling furniture. There are even low maintenance ways to join in, like letting people use your parking space through Just Park or your Wi-Fi with Fon.
It’s Essentially Like Running Your Own Business
Sharing economy companies absorb a lot of the overhead costs you would incur or the time you would have to dedicate to launching if you decided any of this on your own. You don’t have to pay for advertising, there’s very little paperwork to fill out, you don’t have to research any laws or regulations in your city, but you get the benefit of being an entrepreneur. You decide your prices and your hours, which means you have a lot of control over how much money you can make and how often you want to deprive yourself of your stuff. It’s a pretty great way to get a side hustle moving.
Make Sure You Understand Your Legal Relationship to Sharing Economy Companies
Even though you’re using sharing economy companies to make money, you’re not an employee. (It’s in those terms we never read when we click “I Accept.”) Because of those benefits like deciding when you want to work and setting your own rates, you’re actually an independent contractor, and it’s important to know the difference. You won’t get the employment benefits that you’re used to from your full-time job, and you will probably have to incur the costs for the upkeep of what you offer, or any improvements you make. For example, Uber drivers have to pay for repairs and maintenance of their cars. Depending on the sharing economy sector, though, the company may pay for certain safety measures. Businesses that help you lend your cars to others will add additional insurance coverage, and Airbnb provides coverage for liability and accidental damage for hosts.
It Will Change How You Do Your Taxes
As an independent contractor, you’re responsible for making sure the government gets its cut of your earned income. Sharing economy companies won’t deduct taxes when they pay you, but you will still be on the hook for what’s called a “self-employment tax,” which consists of the Social Security and Medicare taxes your full-time job takes out of your paycheck. The IRS will also expect you to pay quarterly taxes from this income. If you don’t, you may get a big surprise come tax season when you realize how much you owe, which could include late fee penalties. On the flip side, you will likely be eligible for deductions that you weren’t before. Doing research on how to manage your new income source and even shelling out some cash for a tax professional can save you a lot of headaches.