Payroll may not be the first thing on your mind when hiring a nanny. However, it is definitely something that you need to think about sooner rather than later.
Managing payroll for your nanny does not have to be a challenge. To avoid potential issues, it is essential to focus on several details including the hours the nanny will be working, how she will be paid and the contract agreement that is in place.
Here are several things to think about before hiring a nanny:
1. Become familiar with the nanny tax. If you think paying “under the table” will save time and money, consider the trouble it could lead to if it’s discovered by the IRS. It’s not worth taking the extra risk.
You should make sure you are paying the nanny tax on time and in full. Along with making you feel better and giving you peace of mind, it is advantageous to the nanny in many ways as well:
- Important for unemployment benefits
- Shows employment history
- Necessary to receive Social Security and Medicare benefits in the future
This could also help you retain a good nanny by helping to ensure they receive these benefits.
2. Report your nanny as an employee to the government at the time of the hire. Make sure you report this to both the federal and state governments.
3. Request that the nanny fill out Form W-4. This is necessary on your end for tax purposes. At the end of the year you will provide form W-2 that shows the number of hours worked and the total pay for the year.
Does all this sound intimidating? If so, it may be best to hire an online payroll service that can manage all of the financial details and complicated requirements for you. This way you don’t have to worry about making mistakes and staying current with the many laws and regulations.
Hiring a nanny can be a great help to family, making sure children are well taken care of while parents are busy working. It’s important to know your obligations as far as payroll is concerned when hiring these often essential employees in your household.