Sharing Your Life: Understanding the Legal Implications of Generating Income from Uber or AirBnB

The sharing economy is here, giving consumers a way to earn money while sharing their home, vehicle, or items with other people. While some simply choose to earn a little extra money by occasionally renting out their home or picking up passengers in their vehicle, for others it’s a primary source of income. However, since this way of earning money is relatively new, there are legal and financial implications to consider. Before listing your home on a house-sharing site or downloading an app to pick up riders, make sure you know what to expect.

Gaps in Insurance Coverage

Many people need to get additional insurance before participating in house-sharing or ride-sharing programs. If you list your home on a house-sharing site like Airbnb, it’s likely that your home insurance policy will not cover any damage that occurs while the home is occupied by someone else. Renting out your home constitutes commercial use, which is usually not covered by home insurance policies. You may need to obtain a commercial or business insurance policy to keep your property safe and protect renters.

The same is true for those offering ridesharing services. Uber and Lyft, two of the most popular ridesharing apps, both offer insurance coverage. However, they only offer protection after you have accepted a ride request and when you are transporting a passenger. When you have the app on and haven’t yet accepted a passenger, you do not have insurance coverage through the company. Since you’re using your vehicle to offer commercial services, a standard auto insurance policy likely won’t offer the coverage you need. You need a suitable ridesharing or commercial insurance policy.

Note that most sharing apps and websites do offer some type of coverage to hosts and drivers. For example, Airbnb offers Host Protection Insurance that includes liability coverage and protection against lawsuits filed against hosts. Uber and Lyft both offer collision coverage.

Income and Taxes

Earning income from short-term rentals or ridesharing can also impact your tax situation. You must file a Schedule C to claim your earnings from a home or ridesharing business. Unlike conventional employees, independent contractors do not have state or federal taxes taken out of their earnings. You should be prepared to set aside money for taxes throughout the year and pay quarterly taxes. You may be able to use certain business deductions to minimize your tax burden, but much depends on the specific details of your situation. If you receive social security or disability income, your ridesharing or house-sharing income could affect your benefits.

Whether you choose to earn extra spending money or a full-time income with your home or car, you must protect your financial and legal interests. Get help with your business needs and reach out to Wilson Law Group, PLC at (804) 864-5268.

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Wilson Law Group

Jim Wilson is the founder and principal attorney of the Wilson Law Group. For the past 25 years he has been combining legal dexterity with an entrepreneurial mindset to help aspiring and established business owners start, finance, buy, sell, and run their companies.

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