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To handle childcare needs, many families choose to hire a nanny. However, doing so comes with a variety of financial implications, such as managing payroll and taxes. Nanny payroll services handle all relevant taxes, including income, Medicare, Social Security, and federal unemployment taxes. In addition, some localities require state and local taxes. Payroll services also assist with annual and quarterly tax forms for both state and federal agencies.
Here we explain the benefits, what to look for, and what you can expect to pay for a nanny payroll service.
Pros of Nanny Payroll Services
There are numerous advantages in using a nanny payroll service. First, they help you avoid problems with state and federal tax agencies. Failure to pay taxes may result in penalties, fines, interest, and possibly back taxes of up to $25,000. With a payroll service, you easily remain compliant with local tax regulations.
Many services also include online payroll processing. Simply enter the number of hours your nanny worked and the program calculates the nanny's pay, automatically deducting that amount from your account on payday. This makes it easy for both you and your nanny to see exactly what's being paid and when, and allows easy monitoring of work hours.
Points to Consider when Choosing Nanny Payroll Services
- Services offered: It is essential to ensure that the payroll service provider offers features that allow you to eliminate deposits and paperwork, ensure compliance with state and federal tax laws, and let you to pay your nanny via check or direct deposit at no extra charge. This helps reduce extra charges and unnecessary costs.
- Online service: Consider a payroll service provider that offers a web interface. This allows you to pay and file all federal and state taxes, create pay stubs, set reminders for payment deadlines, and withhold Medicare and Social Security taxes.
- Customer support: Ensure that the provider offers customer support that is always available, whether online or over the phone.
- Requirements: Look for a service that offers the features you need but that doesn't charge you for a variety of extras you don't need. Talk to your vendor rep about your options, but also consider talking to other people who you know use a nanny payroll service or reading online reviews (or both).
Sample Prices of Nanny Payroll Services
Prices differ based on a variety factors. When determining prices, it is important to consider what you actually need the company to do for you. Also, determine whether you need to make weekly or monthly pay slips, as most providers include this with pricing. The factors that influence cost include:
- 1.The specific company
- 2.The service package
- 3.The number of nannies
- 4.The area where you live
- 5.Monthly or yearly payout
Although it is difficult to come up with an exact payment, the following estimates help budget for nanny payroll services:
- If you have four nannies, expect to pay between $25 and $35 per month
- Yearly rates vary widely and start at around $250 per nanny, maxing out at around $500
- Services like Super Payroll charge between $50 and $100 per month per employee
- Additional employees add between $10 and $20 per month to the initial package cost
- Registration fees carry a one-time price between $100 and $150
- There is also a year-end tax packet, which costs around $80 to $100