What Are Your Legal Responsibilities as a Household Employer?

Have you been considering hiring a new household employee? Maybe a nanny to watch your children or a ranch manager to care for the new get-away property you just invested in? Once you have found the right fit (something we can help you with!) you become a household employer which brings a whole new set of complications and challenges. Luckily we have partnered with GTM which can help you navigate through all the complexities of payroll and compliance. Here are the key items to keep in mind while you consider hiring a new household employee.

You must pay your new employee on the books:

The days of the hand-shake agreement and paying cash under the table are gone. If you don’t pay your household employee legally, you are opening yourself up to some major liability and could be subject to large fines or fees for tax evasion or potential lawsuits from disgruntled/hurt employees. We get it, paying taxes can be frustrating and overwhelming. But it’s far better to do things the right way from the very beginning.

Get your paperwork in order.

As a household employer, you now have legal responsibilities you must meet, and filing specific paperwork is one of them. You will have to register for an employer identification number with the IRS. You will also need to have your new employee complete the appropriate paperwork to ensure that they are legally authorized to work in the United States. Once you start to pay them, you are responsible for withholding the proper taxes, including portions for Medicare and Social Security.

While this all seems overly complicated, our payroll partner, GTM, has years of experience and can make this process painless.

Your new hire is not an independent contractor.

There are specific criteria for someone to be considered an independent contractor and the majority of household employees don’t fall into that category. Independent contractors get to set their own hours and job duties, so if you expect someone to work a set schedule and perform a specific set of tasks each day, then that person is considered your employee and must be compensated as such.

Have questions? Get in touch with us today, we are happy to answer them for you. We can also put you in touch with the experts at GTM for any of your tax and compliance questions. The bottom line is it’s important to realize that you have specific legal responsibilities as a household employer. Your best bet is to set yourself up for success from the very beginning of your new employer/employee relationship.

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