Setting up a nanny or microschool teacher in Oregon

When COVID19 hit, our kids’ daycare closed. We decided to hire our son’s long-time teacher as a nanny. Since then, many friends have gone the same route and have asked me about the logistics of setting this up. I’m not an expert, but happy to provide this list in case it is helpful for others.

Hiring an in-home nanny is like setting up a new business.

• You become a household employer, obtain a payroll account, file payroll, issue a W2, etc.
• As the employer for the nanny, there are costs to you. Federal Social security & Medicare, along with Oregon payroll taxes. This typically adds about 8–9% to the cost.
• When you set the nanny up as your employee, it is very much like an employee relationship- your payroll processing system will withhold taxes and then you will match with the employer tax portion.
• Having a solid payroll processing company at front will make your life easier, since they handle all of the taxes and send all tax forms. There are a number of services that can handle this — I reviewed them all and went with SurePayroll. So far so good, though I am generally disappointed with how expensive all these services are.

Right away, get your EIN and BIN set up.

• EIN is fast — that’s your federal tax ID — here’s the link. It’s easiest if you register under the primary filer on your taxes.
• Then you use your EIN to register as a domestic employer for Oregon, which gives you a BIN. You’ll need the BIN before you can run your first payroll, and it can take up to 2 weeks, so that’s why you have to start early! Register for your BIN here.
• You may want to fill out this form in advance (even though you can submit through an online application), but I found it helpful to run our answers by our tax person in this format.
• What I learned from our tax lady is that you are not required to withhold tax for domestic workers, but you can if they request AND you accept. If they don’t withhold income taxes, then they pay in bulk at year-end or must make estimates. If you opt to withhold, then you hold the money in your account and deposit with your tax return (as all nanny payroll taxes are deposited annually w/your personal tax return). Either way is fine. We decided to withhold as we go.
• Once we got our EINs and BINs, setting everything up in our payroll was SUPER easy. It now just runs biweekly without me even having to think about it!

Make an agreement

Even though we had known our nanny for years, we still put all our thoughts and expectations into a google doc for discussion.

• Start date? Phase in?
• How many hours and days per week?
• How much will you pay? Will you track time and pay for exact hours worked, or will you pay a set amount each week even if there is variation?
• How often will you pay? Weekly? Every 2 weeks? Monthly?
• How long are you each hoping this arrangement will last and how will you give notice if plans change?
• Will you provide a spending budget?
• Will you pay for mileage?
• Expectations for sick days, vacation days, etc.
• Will you pay for health insurance?
• Outline a typical day — arrivals, departures, transitions, nap times, meal times?
• What spaces will the kids have in the house vs. parents working at home
• Use of a car? Expectations about traveling with the kids
• Learning philosophy — what materials are available for the kids? what to do if additional materials are needed? attitude toward screens and media? hopes and concerns about the kids development
• Who cleans? Who does laundry? Who does dishes? What are expectations for how “cleaned up” the house is at the end of the day?
• Who cooks/manages meals? Who pays for food and snacks? Any food allergies/preferences?
• How will you check in regularly for mutual feedback and improvement?
• How will you handle various COVID19 scenarios?
• What is your family’s COVID19 risk/exposure? What norms has your family adopted? What about people your family is in contact with? Be open and transparent about this and ready to adjust to make everyone comfortable.
• What is your nanny’s COVID19 risk/exposure? What norms have they adopted? What about people they are in contact with? Are they willing to adjust to make everyone comfortable either now or potentially in the future if things change?