Part-time gig driving: Is it a good side hustle?

Gig driving has become an incredibly popular side hustle in recent years due to the flexibility and ease of starting. Part-time gig drivers praise it for the freedom of starting and stopping whenever they like, which helps with managing tricky lifestyle circumstances, as well as restrictions such as mental disabilities. 

 But like any other side hustle, if you’re not careful, you could end up doing a lot of work for low wages. 

We believe you can make decent money driving for Uber, Lyft, DoorDash, or Instacart — if you can keep your expenses down and take advantage of available tax deductions. This guide will show you how to do both of those things and ways to boost your earnings as a gig driver. 

Benefits of gig driving as a side hustle

Gig driving offers many benefits as a side hustle, including the following: 

Flexible work schedule: The flexibility is one of the best things about side gigs like Uber or Instacart. You decide when and how often you want to work, and you get to manage your own schedule.

Low barrier of entry: It’s also an easy side hustle to start. If you meet the age requirement, have a reliable, insured vehicle, and a valid driver's license, you can usually be up and running in about a week. 

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Gig driving drawbacks

Like any side hustle, you’ll want to consider the following drawbacks before becoming a gig driver: 

Lack of employee benefits and other perks: As a self-employed contractor, you aren’t likely to receive benefits or other company perks, such as medical or dental coverage, paid time off, or an employer-matching RRSP plan. 

Fluctuating income: While you can work as many hours as you would like, you have no control over how busy you will be during any shift. This means that your income will vary, unlike a traditional hourly or salaried job.

How much can you make as a part-time gig driver?

Based on publicly available data from gig drivers in Canada and the gig driving expert we’ve interviewed, we’ve estimated the average hourly rates for various top gig app platforms.

Factors that will impact your part-time gig driver earnings

Vehicle expenses

When gig driving, you will incur various vehicle expenses you’ll have to calculate into your actual earnings. That can be gas, maintenance, repairs, car financing or leasing, etc. For example, a full 5 days of gig work in Canada would cost $60 in gas alone, our gig driving expert reports.

Taxable income

First, remember that you must report any gig app earnings as income on your tax return. That means you’ll pay tax on your earnings, which reduces your take-home pay. 

If gig driving is added to a full-time job

The tax implications could be significant if your part-time Uber driver income is in addition to your income from a regular day job. Of course, you can write off some of your expenses, which can lower your taxable income. 

Tips to increase your earnings as a gig driver

Focus on customer service

Providing excellent service can increase earnings through bigger tips, better ratings, and even repeat business. Focus on creating a great experience by ensuring a clean vehicle, arriving at your destination promptly, displaying a friendly, positive demeanor, and communicating clearly. Delivery drivers might want to incorporate communication with the client (for example when running late) and thermal delivery bags for a better experience.

Drive during peak hours

Try to work during peak hours to attract additional business and experience less downtime between rides or deliveries. Peak hours can vary by location and time of day. For example, peak periods for ridesharing apps are typically Thursday to Saturday evenings, although weekday mornings can also be busy. 

Try multi-apping

Because peak periods can vary for different gig apps, consider joining multiple apps to boost earnings. Working a slow rideshare shift? While you wait, take some food delivery orders for another app. Multi-apping can also help you oversee offers coming in from multiple delivery apps, so you can pick the most lucrative for you. Remember to cancel one of the orders - if you fulfil orders for two apps at a time, it’s considered “dirty-apping” and can disqualify you from the apps. 

Opt for a fuel-efficient vehicle

It can help you keep more of your hard-earned money. For example, a large pickup truck or SUV will require a lot more fuel than a compact sedan. 

Use a navigation app to optimize your routes

Taking the optimal path between destinations will save time, allowing you to take more gigs. You’ll drive fewer kilometres, reduce fuel costs and save money.

Watch your spending

You spend hours in your vehicle, and you’re bound to get hungry. It can be tempting and convenient to hit the nearest drive-thru for a meal or to grab a coffee on the go. But making it a habit will eat into your profits. To save money, limit eating out. Instead, bring food or coffee from home. 

Keep safety in mind

It might sound like a no-brainer, but always follow the rules of the road, even when you’re in a rush. This will reduce your chances of getting into an accident or getting speeding or parking tickets, all of which can be costly. 

How to optimize expenses and tax deductions

To maximize the money you make from side jobs like Uber, DoorDash, or SkipTheDishes, you must find ways to boost your earnings and cut costs. Here are some ways to reduce your vehicle expenses and increase your net income as a gig driver. 

Tip: As a part-time gig driver, you can only claim the percentage of your vehicle expenses used for business purposes. 

For example, if you drove 75% for personal reasons and 25% for business, you can claim 25% of your vehicle expenses. 

Mileage tracking

As a rideshare or delivery driver in Canada, you are entitled to a tax deduction when using your personal vehicle for work. To qualify, you must provide proof to the Canada Revenue Agency (CRA). 

You can keep track of your mileage and motor vehicle expenses using a logbook or spreadsheet. However, many gig drivers use mileage tracker apps to ensure accuracy and automate the process. Whichever method you choose, the bottom line is that you can claim vehicle expenses on your tax return. 

Gasoline

If you drive a vehicle, you know how expensive keeping the gas tank filled is. This is especially true if you log extra miles as a gig driver. Many gas retailers have loyalty programs that offer discounts on fuel. You can also consider getting a cash back credit card or one that provides gasoline discounts at specific retailers.

Using an electric vehicle (EV) can help you avoid paying for gas altogether, but there are drawbacks. EVs are generally more expensive than their gas-powered equivalents, and you need to consider driving distance restrictions, lengthy recharging times, and the availability of charging stations. 

Car insurance

If you’re purchasing a vehicle to start a gig driving side hustle, car insurance is another expense you must account for. Some gig apps provide insurance through commercial policies to cover you while operating your vehicle for work, but you’re still responsible for maintaining personal car insurance. 

Also, always inform your auto insurance company that you plan to use your vehicle for gig driving, as some may expect you to purchase a special policy that covers your work activities. Even if they don’t, you don’t want to risk not being covered in an accident because you didn’t disclose your gig work. 

Repairs and maintenance

As a rideshare driver, there’s a good chance you’re logging plenty of kilometres. As a result, you’ll likely spend more money on repairs. Even routine maintenance, such as oil and filter changes or tire rotations, can become more frequent. Factor these costs into your budget, and don’t avoid necessary vehicle maintenance.