Anyone have recommendations on companies that handle payroll for household employers? (insurance, attorney)

[vthok]

Going to have a nanny starting in January and I am thinking about hiring a company to do the w2, paying the state, direct depositing the paycheck to the nanny, etc.


Anyone know of any companies that offer reasonable rates for this?

[twingles]

My DH owns his own business and uses a service to pay himself, so he can generate a W2 and not have to worry about calculating taxes etc. He used to use Paychex, but now he does it through his business banking account. See if your bank offers it.

[RDUBiker]

You can do it yourself. It's not hard.

You have to file for an ESC (employment security commission) of NC account number, as well as a state tax number. Then you'll file quarterly payments with both of those while deducting social security, medicare, state, and federal tax from each of the nanny's checks. You'll keep track of the SS and medicare and federal deductions and pay those with your yearly 1040 return, but the state and ESC are filed quarterly. You do not need to file for a federal EIN as you can use your social security number instead. Make sure to get the nanny's employment forms - I-9 is federal employment verification, NC-4 is state withholding, and W-4 is federal withholding. I suggest a quality employment contract as well. Also be sure to check with your homeowner's insurance and umbrella if you have one to ensure they cover any injuries the nanny may sustain while on your property.

I've been doing it myself for years and it really takes only a few minutes of time. I don't find it worthwhile to pay someone else hundreds of dollars for what takes me maybe 15 minutes every quarter, but you might be much busier or wealthier than I and it makes sense for you to do it, so I'm not judging, just telling you it's easy and you can probably do it yourself without a problem.

In fact, both the NC-5 (state tax) and NCUI-101 (ESC) forms can be done and paid for online without ever mailing any paperwork in.

[sacredgrooves]

Maybe you can pay the $30 or so for her to become an LLC and just 1099 the wages to her company. Tax benefits to her, payroll tax savings for you, and a lot less paperwork. The structure may not allow it legally though, but worth looking into.

[RDUBiker]

Originally Posted by sacredgrooves

Maybe you can pay the $30 or so for her to become an LLC and just 1099 the wages to her company. Tax benefits to her, payroll tax savings for you, and a lot less paperwork. The structure may not allow it legally though, but worth looking into.

I don't think this is legal per federal law, but I could be wrong, since I'm not an attorney.

[CHTransplant]

The IRS has a 20-factor test for determining whether someone is an employee or an independent contractor. A Google search will turn up much information. My hunch is that having her incorporate won't prevent her from being classified as an employee (and you as an employer).

[RDUBiker]

Publication 926 (2011), Household Employer's Tax Guide

[twingles]

Originally Posted by RDUBiker

I don't think this is legal per federal law, but I could be wrong, since I'm not an attorney.

Yeah....I doubt you can get away with calling a nanny an independent contractor who basically makes her own rules. That screams "audit me" IMHO.