Many families use payroll and tax service providers to handle household payroll when they hire someone to work in their homes like nannies, senior caregivers, and housekeepers. Using a service provider can help save time, remove the risks of getting nanny taxes wrong, and eliminate the hassles of trying to do it yourself.
But not all nanny payroll providers are equipped to handle the task – from setting you up as an employer the right way to understanding the nuances of household employment tax, wage, and labor laws to keeping your information safe and secure.
When looking for a nanny payroll provider, check for these eight qualities to get exceptional service and support.
1. Specializes in household payroll and taxes
You’ll want your payroll and taxes processed as a household employer and not as a small business, which some firms that focus on business payroll may try to do. There are nuances to household payroll that need to be understood or else you can find yourself in trouble with the IRS or a state tax agency. Find a firm with experience and expertise in household employment tax, payroll, insurance, and labor compliance including domestic worker protections and paid leave laws.
2. Offers workers’ compensation insurance
Workers’ compensation is required for household employers in many states. Not having proper coverage can lead to hefty fines and penalties as much as $5,000 for every 10 days of non-compliance. Many payroll firms don’t provide workers’ compensation and may fail to mention it as a requirement for household employers. You’ll want a company with licensed insurance brokers on staff that can provide quotes on workers’ compensation coverage, handle invoices, and manage audits.
3. Provides automatic payroll processing
A nanny payroll provider is supposed to save you time and eliminate hassles. So you should have the ability to set your employee’s standard hours and pay rate once and have payroll process automatically if there are no changes. That’s the easy way. You shouldn’t have to log into a website every week to approve payroll.
4. Handles employer paperwork and forms
When you hire someone to work in your home, you become an employer. And with that comes all sorts of paperwork including federal and state employer identification numbers, setting up tax accounts, and filing new hire reports. It’s a lot of paperwork and can be confusing if you’re doing it for the first time. Your nanny payroll provider should handle all of this for you so you can focus on hiring the best nanny for your family.
5. Makes it easy to get started
Your nanny payroll provider should offer a highly automated, online process to set up payroll and tax services with paperwork submitted securely online instead of by fax, scan or email.
6. Assures your information is safe and secure
A payroll firm should adhere to the highest data security standards like SOC 1, which is considered the industry standard for evaluating, testing, and reporting on a service organization’s key internal compliance and data security controls and shows a firm’s commitment to client information security. The company should also comply with state and federal cybersecurity regulations.
All staff should go through security training to help prevent unauthorized data access and maintain internal protections. Employees who will be managing your payroll should be certified payroll professionals (CPP) or hold a fundamental payroll certification (FPC) and a certified public accountant (CPA) should oversee the tax processing operations. These certifications require strict adherence to payroll and tax ethics.
7. Guarantees on-time tax payments
You should be able to verify that all tax payments have been made on your behalf. Tax agency correspondence should be sent to your address, according to IRS guidelines, so you are aware of any issues that may arise. Inform your payroll provider if you receive a notice from a tax agency.
The firm should provide an on-time, every time tax filing guarantee. If you receive a notice from the IRS, or any other tax agency, based on a filing that the payroll provider made, they should work on your behalf to resolve the issue and pay all associated penalties and fines if they’re found to be at fault.
8. Features a track record of success
What is the history and makeup of the firm? How long have they been in business? How much do they process in payroll each year? How many employees are paid through the firm? An established payroll provider, with years of industry experience, likely has the expertise to handle all of the rules, regulations, and nuances around household employment and keep you in compliance with nanny tax, wage, and labor laws.
GTM can help
We feel we provide the best service in the nanny payroll industry. We’d love to tell you more. Give us a call at (800) 929-9213 for a complimentary, no-obligation consultation with a household employment expert.
Doing nanny payroll yourself?
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