Hiring a professional nanny is one of the best decisions you can make for your child. It will allow your child to receive the devoted care and attention they wouldn’t enjoy in a daycare setting. It also allows you to work without feeling as guilty about being separated from your child.
However, hiring a nanny can be an extensive investment. It can also potentially qualify you as a household employer, technically qualifying you as a small business. This opens up other costs that you need to be aware of.
To help you make the best decision for your family, and calculate how much you’ll need to afford one, read about the following five costs associated with hiring a professional nanny.
1. Wages
The first most obvious expense you’ll have to pay for a professional nanny is their base wages. This figure can vary widely, and the final amount comes down to the individual nanny and what they’re willing to negotiate with you.
Working Mother reports that professional nannies typically charge anywhere from $10 to $17 per hour. Several factors that professional nannies take into account include:
Cost of Living
The amount in your area that is considered enough to live comfortably. Obviously, nannies who operate in higher cost of living areas will charge you more for their services.
Working Conditions
Many nannies adjust their rates based on whether they’ll be working in your home or on their own. Live-in nannies factor in costs like room and board and assigned household duties in their total. Live-out nannies tend to charge less because they operate out of their own home and don’t have to worry about room and board or chores.
Additionally, if you have multiple children or a special needs child, you can expect to pay a higher rate.
Experience and Qualifications
Top service demands a top premium, and the nanny industry is no different. Nannies with five or more years experience typically demand a higher fee than nannies with five or fewer years of experience.
In addition to experience, nannies who have a degree in child development, and qualifications like first aid and had some training at Nepean CPR may also demand a higher rate. Alternately, the nanny may require that you pay to have her recertified each year.
2. Taxes
If your nanny makes a certain amount in a year, it qualifies you as a household employer. This obligates you to pay taxes for hiring a nanny, the rates of which will depend on certain factors.
Social Security and Medicare
Once you have been classified as a household employer, you’ll be obligated to pay 7.65% of your nanny’s wages into Social Security and Medicare. You have some options on how you pay these taxes, but the cost remains unchanged.
Unemployment Taxes
As a household employer, you’re also obligated to pay federal unemployment taxes on your nanny. The rate you pay is 6% of your nanny’s wages. In addition, your state may also require that you pay a state unemployment tax, the rate of which depends on the state you live in.
Navigating the Process
One cost that has nothing to do with money when it comes to nanny taxes is measured in time and hassle. Registering as a household employer can be a complicated, drawn-out affair.
The IRS estimates it may take as many as 60 hours to complete the process successfully. Fortunately, there are some great online resources that you can use to make filing your nanny taxes easier.
3. Bonuses and Benefits
Like any employer, if you want to attract the best nanny possible, you’re going to have to offer some competitive benefits that make it worth her while to work for you. Common benefits you may need to consider providing include:
- Bonuses at a percentage of their yearly pay
- Raises at a predetermined rate over time (usually between 2 and 7%)
- Vacation and sick days. This may become an additional expense to bring in a babysitter or pay for daycare while your nanny is out, but Eikoh childcare in Sydney can offer a reliable and nurturing alternative.
- Healthcare or offering higher wages to afford a personal plan
4. Overtime
Under the law, as regulated by the U.S. Department of Labor, nannies are entitled to receive overtime pay if they work over 40 hours per week. The standard rate of overtime is 1.5 times their normal rate.
5. Associated Fees
None of these costs are mandatory when you hire a nanny, but they may be necessary investments that you want to make.
Background Checks
Before you allow a nanny into your home, you may prefer to conduct a background check on them. This will help you find any abnormalities in a nanny’s history, including criminal charges, issues with finances or credit, and employment history.
Many families opt to conduct a background check, and the cost will depend on how thorough it is. Cost Helper reports that a background check can cost anywhere between $10 and $150.
Working with a Placement Agency
Placement agencies will help match your family with a nanny that suits your needs. They often screen resumes, conduct background checks, and handle other aspects of the nanny search on your behalf. However, they charge a premium for their services, typically between $100 and $1,000 per placement.
