What are the Benefits of a Nanny Share?

benefits of a nanny shareFor families looking for ways to cut child care costs, a nanny share is one option. Families can hire a nanny to watch their respective children simultaneously, or a nanny can work part-time for two different families. In either case, the families share the cost and still enjoy the benefits a nanny provides.

The main benefit of a nanny share is affordability – between the cost of hiring a nanny and the cost of daycare, child care is not cheap. But with a nanny share, families pay a more reasonable amount, as each family pays only a portion of the nanny’s hourly rate instead of what you’d pay if you hired her on your own.

Example: if the going rate for a nanny in our area is $600 per week, then nanny share families would each pay a reduced rate of about $400 per week. That means each family is saving $200 per week over what they’d pay if they hired the nanny for just their own family. Over the course of a year, that adds up to a lot of savings.

It’s also great for the nanny, as she’s now making an extra $200 per week, which is very reasonable since caring for two families requires extra coordination and schedules.

NOTE: Household employers who participate in a nanny share must both be set up as employers and take care of the payroll, taxes, benefits, etc. It is illegal to have one family reimburse the other for their share of the nanny’s wages. When sharing a nanny, BOTH families must provide all the necessary payroll and tax paperwork. It would be the same as a person working for both McDonald’s and Burger King; the employee would receive separate paychecks, separate W-2’s, separate insurance coverage, etc.

Tips for Making a Nanny Share Work

  • The family with which you enter a nanny share should have a child-rearing style similar to your own, since the nanny will be caring for both family’s children at the same time.
  • The children in both your family and your nanny share family should be around the same age, so their progression stays consistent.
  • If your children and your nanny share family’s children don’t already know each other, make sure the kids all get along before starting a nanny share. You want to ensure the children are compatible and avoid any potential behavioral problems.
  • Make sure both families clearly communicate their expectations with the nanny. All parties should be involved in determining the nanny’s work schedule, when she will be off for holidays, and how much vacation time she receives.

For more information, read about Eight Steps to a Successful Nanny Share, then contact us if you have any questions.

Eight Steps to a Successful Nanny Share

steps to a successful nanny shareThinking about participating in a nanny share with another family? In a nanny share, the nanny cares for the children of two or more families at the same time.

This arrangement can help you save money and maintain your flexibility with child care. Your children will still receive individual attention from the nanny and get the added bonus of socialization with the other kids in your share.

Remember, a nanny share is a business relationship you enter with another family (or families) and the nanny. To ensure a successful nanny share — one that benefits you, your children, other families, and the nanny — make sure you follow these important steps.

1. Create a Work Agreement
Get together with the other family/families and create a work agreement to specify the nanny’s schedule, wages, benefits, and responsibilities.

2. Communicate throughout the Process
The key to any business relationship is communication. This means between you and the other family/families and with the nanny. Make sure any issues between the families are worked out BEFORE talking with the nanny. This makes sure your communication is clear and eliminates confusing or conflicting messages.

3. Register with the IRS
Each family must register with the IRS and the New York State revenue department. A tax identification number will be issues to each family.

4. Obtain Workers’ Compensation Insurance
New York requires workers’ compensation insurance for domestic employees who work 40 or more hours in any week. For nanny shares in New York, each family must obtain coverage for the nanny.

5. Provide Your Nanny with Employment Forms
Your nanny must complete an I-9 form and a W-4 form for each family.

6. Withhold Taxes from Your Nanny’s Pay
Each family must withhold federal and state taxes from each paycheck.

7. Complete a Schedule H
Each family must complete a Schedule H form when filing their personal income taxes. Schedule H accounts for the federal taxes withheld from your nanny’s pay.

8. Issue Form W-2 at End of Year
Each family must issue Form W-2 to the nanny at the end of the year.

The tax responsibilities and legal obligations for a nanny share can be complicated and time-consuming. Doing it incorrectly could mean fines and penalties from the IRS. Being non-compliant with the law — paying your nanny under the table — could lead to audits or employee lawsuits. Using a payroll company like our affiliate company GTM Payroll Services will remove the guesswork, ensure you are compliant, and free up your time for the things in life you enjoy.

Contact us at (518) 348-0400 for more information.

Nanny Sharing: What You Need to Know

nanny sharingMany families are still looking for ways to cut costs these days. For those that use nannies for their childcare, there is a trend that is becoming more and more popular: nanny sharing. Families can hire a nanny to watch their respective children simultaneously, or a nanny can work part-time for two different families. In either case, the families share the cost and still enjoy the benefits a nanny provides. But it’s important to remember that even though a family may be sharing a nanny, the legal obligations for all involved families remain the same as if it were a one-family, one-nanny relationship.

Household employers who participate in a nanny share must both be set up as employers and take care of the payroll, taxes, benefits, etc. It is illegal to have one family reimburse the other for their share of the nanny’s wages. When sharing a nanny, BOTH families must provide all the necessary payroll and tax paperwork. To illustrate this more clearly, it would be the same as a person working for both McDonald’s and Burger King; the employee will receive separate paychecks, separate W-2’s, separate insurance coverage, etc.

If you and another family have agreed to participate in a nanny share or thinking about one, download GTM Payroll’s Nanny Sharing Checklist to ensure you are fulfilling your legal obligations, as well as creating a successful business partnership that will benefit both you and the nanny.

If you have questions or require more information, please contact us at (518) 348-0400.