Are you hiring a nanny? An hourly wage is something you definitely need to consider! After all, you will be a nanny’s legal employer. Don’t let that scare you! You are probably thinking, where do I begin? Or what is gross wages vs net wages? --We can help!
WHAT ARE GROSS WAGES VS. NET WAGES?
A gross hourly wage is the amount of money a nanny will make before any reductions, such as taxes and insurance.
A net wage is the take-home wage—the amount of money that actually goes into your nanny AKA your new employee’s bank account.
Which one is best for you? And what are the benefits for both parties?
When it comes to paying a Nanny, there are many benefits of paying a gross hourly wage instead of a net hourly wage.
THE BENEFITS FOR NANNIES
• Paying gross makes it easy for a nanny to compare his or her compensation to others’ compensation. If you work in an industry other than childcare, you likely know your gross compensation package, not your net compensation. So this should be the case in childcare, too!
• In addition, when your nanny applies for mortgages and/or loans, the banks ask for his or her gross salary—not net salary.
THE BENEFITS FOR FAMILIES
• Paying a nanny a gross hourly wage ensures you will know exactly what you will be paying your nanny monthly. By only considering a net compensation, you then need to add on taxes and insurance. Once you think about these things, it may be too much for you to pay. It’s much easier to think about the gross pay as this is what you should realistically expect to pay. No surprises for you or the nanny.
• In addition, if you accountant/tax preparer or employer asks how much you spend on childcare, you’ll need to provide your gross amount—not net.
CONFUSED ABOUT NANNY TAXES?
You’re not alone if you’re feeling overwhelmed trying to figure out nanny taxes. Luckily, there’s HomePay. This program handles payroll, tax filings, guidance and workers’ compensation all in one.
Pink Nannies™ has partnered with HomePay who specifically handle families and nannies. Their tax specialists are always there to answer any tax questions you may have. You can learn more about this at https://partners.myhomepay.com/pinknannies
READY TO CHAT WITH US?
At Pink Nannies®, we handle all of the responsibilities that come with hiring a nanny—such as contracts, payroll, employment agreements and practices, state labor laws, overtime, health insurance, benefits, performance reviews and, of course, pay. We’re always happy to talk with you about the many benefits of paying your nanny a gross compensation rather than a net compensation. We help educate families, and empower nannies.
Call us any time at 216-309-2322 or email us at email@example.com. We can’t wait to hear from you!