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Special Requirements for Childcare with Home Business

March 2000

I work at home, and my husband and I are planning on advertising for someone to provide child care for my infant son. A friend of my sister told her that if I have that kind of arrangement, I will have to file for "S" corporation and must be responsible for the provider's workers comp and SSI since this person will be working in my place of employment (which is my home). Does anyone know anything about this? Has anyone gone through this situation? Whom should I consult, in terms of professional advice? Thanks! Patty


No you don't have to become an "S" corporation. You just register with the Feds and the state to get an employer ID. But legally you will have to pay employer's side social security and medicare, as well as some state payroll taxes (disability, and some others), and collect SS and Medicare from your care giver. (Some of the state taxes are employee-paid but you can elect to pay them yourself if you wish--they aren't very much.) You aren't obligated to withhold income taxes. Any accountant can give you the details. We've been doing this for over 6 years now. They keep making it easier for household employers: you pay all the federal taxes using Schedule H with your regular 1040, and there's something similar you can elect to do for the state taxes but you still have to report the worker's income quarterly.

Note: some of the things I said above in regards to streamlining the process only hold for wages up to a certain amount per year but the limit is fairly generous--something like $12,000.

Regarding worker's comp: many homeowners insurance policies include worker's comp for employees in your home. Getting your own worker's comp insurance certificate is a big pain and requires a large amount of money up front (which you would probably never owe in premiums in your case). Fran


I think that technically, your friend is correct. Call or go by Bananas to get this information. They should have information on all the regulations (and advice on how to search for and select an in-home care provider). Even if you are not employed at home, you are supposed to provide SSI, etc. However, in my search last year, I found almost no in-home care providers wanted to be employed in this manner, but prefer to be paid "under the table" so to speak. But since your employment is in your home it may be important to do it all above board. It is possible to find nannies who choose the other payment arrangement, but the pool is certainly more limited. Good luck!!!

Should I get a babysitter?

Personally I found it wonderful to be near the baby and able to continue nursing regularly. Unfortunately I also found it very difficult to work. The baby is just too attractive to me and I can't stay focused on my work for very long. It's also tempting to maybe put in a load of laundry, etc., which eats at the working time. I believe that it can be effectively done, but not by me. I don't have the personal discipline. A seperate room where you can close the door is very helpful.

I was able to find a couple of different sitters over the last year for our baby. Banana's has some referrals, but I found that most wanted more hours than they indicated initially. You might be able to find someone who is already working the other three days a week. You should check Banana's "split share" file. These are called in by parents who are trying to fill in the week for their sitter so that they don't lose them to full time work. The two people I hired were 10/hr. There are people out there who work for less as well as more. I wish you the best of luck. There are good people out there. Michelle


We had a student who came to our house and took care of our son while I worked at home. We advertised in the Daily Cal. We also considered placing an ad through the student employment office on campus but never did. If I were to do it again, I'd advertise in the Daily Planet. Warning: students aren't the most reliable but they're the least expensive and it may be easier to match their schedule to yours, especially if you live pretty near campus. Fran
I agree that it would be difficult to get any work done with your crawling little one (having attempted that myself!) You could hire a part time nanny/babysitter for those two days. There are lots of announcements on this post regarding nannies /babysitters. You can also check the Neighborhood Parents Network monthly newsletter listings (P.O. Box 8597, Berkeley, CA 94707, 510-527-6667, subscription is $35 per year, $20 for 6 mos.). Nannies have a range of prices. Ours was $9 per hour for one child, which is mid-range. It's great that relatives can pitch in for three days a week. If you have the option of cutting back to working three days instead of full-time I would give that a lot of thought. The infant and toddler years are wonderful and also very brief. I cannot imagine you'll ever regret having sacrificed a bit financially for those two days week if that is what you decide to do. On the otherhand, there are some wonderful nannies out there too, so if you go that route I suggest looking for someone you really feel great about. Good luck! Lisa
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