Recruiting a nanny for your home is a significant decision, requiring time and energy to find the right fit for your family. Once you have found a great nanny it’s important to discuss the terms to establish the arrangement that is agreed on by both parties. Paying someone to work in your home may come with liabilities so it’s important to talk to your accountant or call the ATO to understand the correct way to pay a nanny, based on your individual circumstances.
Paying your nanny properly, you unlock the benefits of employing a nanny without the risks that come with paying cash. This blog won’t break down the rates or costs for a nanny, instead it will outline the benefits of employing a nanny and removing the risks associated with paying your nanny cash or incorrectly.
In this guide, we explore the top five benefits of employing a nanny, providing a roadmap to a secure and fulfilling nanny arrangement where everybody wins.
Top 5 Benefits of Employing a Nanny Legally:
1. Tax Compliance: Employing a nanny means paying their tax to the ATO. This ensures your nanny meets their legal requirements to pay tax and reduces the risk of your nanny facing financial penalties if the ATO discovered they were recieving cash payments. Using nanny payroll to report your nanny’s wages at EOQ and EOFY ensures you are ATO compliant, ensuring your nanny can access their financial records to complete their tax return.
2. Superannuation Contributions: In most nanny arrangements, legal employment comes with the responsibility of contributing to your nanny’s superannuation. Making contributions isn’t just about meeting your employer obligations, it’s about empowering your nanny to contribute to their long-term financial security. Paying your nanny superannuation shows your genuine commitment to their future and sets the tone that this is a professional nanny arrangement.
3. Worker’s Compensation Insurance: In Australia, almost all employers are required to hold a Worker’s Compensation (work cover) policy. This insurance policy provides your family with essential protection in the event of accidents or injuries. As an employer, it’s your responsibility to provide a safe working environment and a work cover policy is added protection for you in unlikely event that the nanny is injured in your home. Work Cover is complex and legislation is different for each state and territory. The best place to start is contacting your state-based work cover Administrator to find out where you can take out a policy and what it will cover.
4. Professional Relationship: Formalising your nanny arrangement with proper employment sets the tone that the nanny is professional. The benefits of employing a nanny include a demonstration to them that you take their career seriously and value what they do – on a professional level, not only a personal one. Clear expectations, written agreements, and meeting national employment standards establishes your committment to a relationship built on great communication and mutual respect, laying the groundwork for a positive and productive working environment.
5. Minimise personal liability: Choosing legally employ your nanny using nanny payroll translates to peace of mind. When you pay properly and meet your employer obligations you remove the risks and liabilities that come with cash payments. While some nannies qualify to work under an ABN, most nannies need to be employed (especially if you are their only source of income). If anything was ever called into question by the ATO or Fair Work, the nanny may be deemed an employee by definition and you run the risk of potential back pay of wages or superanuation. To find out if your nanny is an employee or contractor by defninition, we recommend you call the ATO or talk with an accountant.
Paying your nanny on a payroll will provide you and your nanny with the benefits of employing a nanny properly. From financial compliance and long-term security, to a secure working environment and a positive professional relationship. Ensuring you create a strong partnership with your nanny that will last for years to come.
Ready to experience the benefits of employing a nanny properly on a regular payroll? Explore NannyPay‘s comprehensive payroll management solutions for a secure and hassle-free nanny payroll experience.
Still have questions? NannyPay offer free, no-obligation phone calls to help you understand the different payment options when you employ a nanny in your home. Contact the team today!
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