To say the pandemic has put all aspects of the Canadian economy to the test is probably an understatement. But one area of business that has experienced more of an ebb and flow is the sharing economy, which is defined as a system built around the sharing of assets. (Think: Uber, Airbnb, Taskrabbit.)
At first, the sharing economy was devasted by the pandemic and its associated health measures. But in short order, independent service workers were actually desperately needed and being relied upon for their skills and assets. So businesses within the sharing economy that offered home delivery of food, groceries, essentials, and other goods were suddenly thriving.
That’s good news for gig workers, whether already involved in the sharing economy or wanting to supplement their income. According to Statistics Canada, 8% to 10% of all Canadian workers in 2016 were self-employed freelancers, day labourers, or on-demand online workers. In addition to freelancing or solopreneuring, gig workers can also rent out their homes on Airbnb or use their cars and make deliveries for Uber Eats.
So, what exactly is the sharing economy, how do you join it, and is it really worth it? Read on for an introduction to a concept that relies on individual ownership and encourages using existing resources, including property, vehicles, tools, space, skills, and other resources to succeed.
Understanding the sharing economy
The sharing economy is quite simple when you think about it. You have a product or service that you’re willing to share with others. In most cases, you’ll use an online platform to market what you’re offering. Consumers who are looking for services would use the same platform, where they can see what’s available. If there’s a match, you’ll be able to make some money, while consumers get what they’re looking for.
The most common services you’ll find on the sharing economy are:
- Accommodations: Rent your home or a room to someone who’s looking for a place to stay short-term.
- Ridesharing: Drive passengers or make deliveries with your vehicle. You can even rent your bike, car, or boat on some platforms.
- Space rentals: Make your garden, workshop, or office available to others if you don’t need it all the time.
“The sharing economy allows you to earn extra income outside of your traditional employer or gig economy work,” says Gena Cole, Director of Small Business Banking for Coast Capital. “If you’re a full-time gig worker, then the sharing economy is just another revenue stream.”
What’s also appealing about the sharing economy is you don’t need to commit long-term. You can make your services available when you want and stop when you’re ready to move on. Traditionally, freelancers and part-time workers made up the bulk of the sharing economy. But as technology has improved, just about anyone can now take part from virtually anywhere.
How to join the sharing economy
Getting in on the sharing economy is surprisingly easy as there are multiple platforms that allow you to market what you have available.
Those who have a room to rent should list it on Airbnb and VRBO. For those who have a vehicle, you could sign up as a driver for Uber, Lyft, SkipTheDishes, and DoorDash. Even local sites such as Kijiji are a good place to advertise the resources you’re willing to share. Keep in mind that you don’t need to stick to one platform. Using multiple platforms is a great way to maximize your exposure and income.
The sign-up process is usually very simple. Every major digital platform available will offer a way to get your account set up quickly. That said, you may need to provide additional information before you can start making money. For instance, anyone who plans on renting out their home will need to upload images of what they have available. (The better it looks, the better you do.) If you’re going to become a rideshare driver, you’ll need to upload an image of your driver’s license, along with photos of your vehicle.
Managing your money in the sharing economy
Unfortunately, your income in a sharing economy doesn’t take care of itself. Aside from securing jobs, managing your money is often the most challenging thing about getting involved in this type of work. You should look to ensure your bookkeeping is accurate, as it’ll make your life easier when tax season rolls around.
One of the most important pieces of advice: Keep track of all the income you make. The best way to do this is to start a spreadsheet. You’ll likely be able to get a summary if you’ve found your gigs via an app platform. But, either way, you’ll still want to track things manually and list when you got paid and how much you made so you have immediate access to that data for your own business records. “As a gig worker, you can also deduct some of your expenses that would lower your taxable income,” says Cole. “Platform fees, insurance, motor vehicle expenses, utilities, and internet costs are some of the more common business expenses you can claim.”
You also need to factor in taxes that you’ll owe later. Any money you make by renting out your home is considered rental income. In the eyes of the CRA, rideshare drivers are considered to be a taxi. So you need to register for a GST/HST number and remit any taxes collected.
As a general rule, you should set aside at least 25% of your income in a savings account for tax purposes. However, if you’re collecting GST/HST, you’ll need to save more. How much you’ll actually owe depends on the province or territory where you reside, and what your income was for the year.
The pros and cons of joining the sharing economy
According to the Brookings Institute, within the next decade, the sharing economy is estimated to become a $335 billion industry. With more and more demand, getting in on the sharing economy seems like a smart thing to do. However, there are pros and cons you need to consider before jumping in:
Pros of working in the sharing economy:
- Flexibility in schedule
- More independence
- Potential for increased or extra income
- A variety of work
Cons of working in the sharing economy:
- Inconsistent income
- No benefits
- Detailed record keeping required
- Tax implications
Joining the sharing economy can be very rewarding. But, “it’s vital to be realistic about what your lifestyle will look like,” says Cole. “You can set your own hours, but you may need to hustle if you want to earn a decent income.”
Understanding the payoffs
If you’re looking to earn extra income and you have the resources available, then, yes, joining the sharing economy can be worth it. “It’s not like the sharing economy is some trend that will soon be forgotten,” says Cole. “It will continue to grow and always be an essential part of Canada’s economy.”
Also, by being part of the sharing economy, users can benefit from the satisfaction of helping others who need it, providing access to essential services, offering tools to take up a new hobby, providing transportation that opens up opportunities that otherwise might not be there, and, oftentimes, reducing the environmental footprint. And, during these trying times, the sharing economy has maintained connective points that we won’t soon forget. These are all things to feel pretty good about.