Q. I am looking to hire a live-in housekeeper, but am not sure what to compensate them. What would be a reasonable rate of pay?
A. Depending on the requirements of the position and the size of the home, hours worked, etc.. a fair compensation vary significantly. Are you expecting your housekeeper to assist with any childcare? We would suggest giving us a call to help you determine a reasonable wage. For general housekeeping positions in an average sized home, a base salary would start at $500+ per week. Other forms of compensation to consider for a full-time employee would be 1-2 weeks paid vacation per year, plus full/partial health care contributions.
Q. What are my legal requirements as a household employer?
A. The process of hiring a household employee can often seem quite complicated. In California, if you pay your employee over $1,800 per year (for 2013), you are legally required to report your new hire to the government and submit taxes quarterly. You are responsible to withhold Medicare, Social Security and applicable taxes. While it is not required by law to withhold Federal and State income taxes from your employee's paycheck, it is highly recommended, as without such withholding, your employee may owe significant taxes at the end of the year and potentially face an underpayment penalty.
Note: It is a really good idea to clarify tax obligations in an Employment Agreement, to prevent any ill feelings or miscommunication between you and your employee.
Q. This all seems very complicated. Wouldn't it be much easier for me to provide my nanny with a 1099 at the end of the year instead?
A. A very common misconception is that nannies, or any other domestic help (such as housekeepers and personal assistants) are contractors, when indeed they are household employees. Instead, it is required by the government that you provide them with a W2 form at the end of each year. However, if the process of hiring a domestic employee seems too overwhelming, there are reputable companies that specifically work with household employers to make this process much easier on you. Please contact our us for more information.
Q. What happens if the person I hire through Neverland Domestics quits without notice?
A. Depending on which package you choose, Neverland Domestics offers a generous replacement period for permanent employees, as well as a 90 day replacement period for temporary employees hired for a maximum of ninety days of employment. You may refer to the Family/Agency Agreement for a more detailed explanation.
Q. Is okay for me to pay my domestic employee through our company payroll?
A. This answer is two fold: Yes, you can pay your employee through your company payroll; however, by law, the people you employ to primarily work for you out of your home are considered a benefit to your home and not to your company, which therefore cannot be deducted as a business expense.
Q. As a household employer, am I eligible for any tax breaks?
A. If you are employing a nanny, then yes, you will either be able to benefit from a Dependent Care Account, or a tax credit. For additional information on tax incentives, you may visit LegallyNanny.com, or visit breedlove-online.com.
Q. We are considering offering Health Insurance to our Employee but aren't sure we can afford it. Where can we find more information on this?
A. Offering health insurance (full or partial contributions) is a wonderful way to attract long term employees and also allows both you and your employee to use it as a tax deduction! Our agency works with some of the health industry's most well respected agents. Feel free to give us a call and we can guide you in the right direction.
Q. The reason I am hiring someone is because I don't have enough hours in the day to get everything I need done. Is there someone who can help me with my tax obligations?
A. Neverland Domestics works with some great companies such as Breedlove & Associates, who specifically focus on Household employer taxes. They can also help set up your tax accounts, submit your new hire to the government, as well as maintain the payroll for your domestic employee(s), if you wish to do so. We highly recommend giving them a call for a complimentary consultation, without any obligations to you. It certainly doesn't hurt to seek the advice of a professional!
Note: The IRS has estimated that the average amount of time it takes for a household employer to fulfill the compliance process is between 50-60 hours per year. Hiring a professional company to assist you can greatly reduce your invested hours.
Have additional questions? We are here to help (877) 626-6912.