Household employees should receive a stub as proof of how much you're paying household employees, and to make their taxes easier to manage.
Are you a nanny and not sure how to create a pay stub? Don’t worry, we have a guide for creating your own pay stubs as a self-employed worker.
Here’s what you need to know about pay stubs, nanny payroll, and what needs to be included in a pay stub for your nanny.
Paycheck Stubs for Nannies
Nannies offer a critical service for many parents, often doing a lot more than just making sure kids are safe and getting their afternoon snacks after school. Especially for parents in high-demand careers or who have to juggle a lot of different responsibilities, a nanny can be the difference between being able to manage your life smoothly and easily, and constantly feeling frazzled and overworked at home and in your career.
The thing is, a lot of nannies work independently, without an agency, and often with minimal paperwork. They might rely on a payroll service to set up a direct deposit and provide nanny pay stubs, but that isn't always the best option.
The problem is that pay stubs and other employment paperwork actually help protect you and your nanny, and it’s important to have some records of your relationship and any contracts between you and your nanny, including nanny payroll, so you have something to reference if there are ever any problems.
In fact, pay stubs are so important for independent workers like nannies that 39 states have legal requirements that employers provide independent workers with pay stubs.
In some cases, nannies might create their own nanny pay stubs for you to sign off on if they’re self-employed or just think it’s easier to create the documents themselves. But, you shouldn’t rely on your nanny to do this work, especially if they haven’t already done it. At the same time, a payroll service is an additional expense you don't necessarily need if you know how to do everything a payroll service would normally handle.
What Is A Pay Stub And Why Does It Matter?
For a lot of people, especially if you haven’t hired anyone personally before, you might have received your own pay stubs but not really thought about what they are, why they exist, or what they do for both the employee and the employer.
The truth is that pay stubs are a lot more important than we generally give them credit for and that having high-quality pay stubs can save everyone a lot of time and money if there are any problems down the line.
In the simplest terms, a pay stub is a breakdown of an employee’s earnings for a given pay period. Some pay stubs may also include some cumulative figures, like the employee’s cumulative take-home pay for the year to date, or how much has been paid in income tax for the year to date.
Pay stubs also include information like how much someone is being paid, how many hours they are being paid for, and how much income tax is being paid from their wages. If the employer offers benefits like 401k or health insurance, those figures may also appear on the pay stub.
Once everything is put together, a pay stub is a one stop shop for understanding income, and for making sure you’re getting paid what you should be. For instance, if an employee worked more hours than is recorded on their pay stub, they can take the stub to their employer, along with other records of the hours worked, and claim their remaining wages.
Pay stubs also protect employers because they provide a record of what the agreed pay rate is, how many hours are on record each pay period, how many tax deductions employees take, and other information about how they are paid and how much they should be paid. That way, if someone claims they should have been paid more than they were, you have evidence one way or another and can act accordingly.
If you want to learn more about pay stubs, or learn about the different kinds of pay stubs, we have a beginners guide to pay stubs that has all the information you need.
Put simply, net pay is the amount of money household employees take home, while gross pay is the total amount of pay they earn before tax withholding and other deductions.
How To Make Pay Stubs For Nanny: What Information To Include
Nannies deserve fair pay just like everyone else, so they need a lot of the same information that would be included in other kinds of job pay stubs. If you, as their employer, pay a portion of their income taxes directly, that information needs to be on their pay stubs, as an example.
Here is some of the basic information you need to include in pay stubs for nannies:
- · Employer’s name, address, and in some cases your Employer Identification Number or EIN
- · Employee’s name, address
- · Dates covered by the pay stub, (the most recent pay period)
- · Date the paycheck was issued
- · Rate of pay for regular and overtime hours
- · Number of hours worked, itemized into regular and overtime hours
- · Gross wages (the amount the nanny was paid before any deductions)
- · Itemized accounting of all deductions
- · Net pay (and how that pay was delivered, typically check or direct deposit)
- · Year-to-date accruals of pay, deductions, and any other accruing amount
Rare Nanny Pay Situations
In addition, in rare cases the employer may need to garnish wages and send an additional amount to the state or federal government to pay past debts. While this isn’t common, the garnish should also appear on pay stubs in the case that it’s required.
In some cases you may also be required to withhold pay to pay child support. While that’s a rare problem when it comes to nanny’s, it’s still important to understand employer responsibilities regarding child support.
Taxes And Understanding Each Pay Period Tax Rates
For tax deductions, you should include all relevant deductions on your nanny’s pay stub. For instance, you may withhold federal income tax for your nanny. Depending on where you live tax withholdings can include:
- · Federal income tax
- · State income tax
- · Local income tax
- · Other state taxes, like contributions to state disability insurance or other similar programs. Federal unemployment tax and other taxes are included in these taxes.
You also need to know the tax rate your nanny will pay, and how to calculate the right withholding for the total amount of tax due. A nanny payroll service can do this for you, but if you know the current tax rates and can calculate how much your nanny will how each year, figuring out nanny tax withholding isn't hard.
Lastly, if your nanny isn’t able to work all of the hours they normally would, you might need to prorate their salary for that pay period. This is different than paying for part time workers, and is only used in some situations.
Don’t worry, here’s a guide to prorated salaries, when you need them, and how to create a prorated salary in case you ever need to.
How Often Should You Create A Pay Stub?
Your nanny should get a pay stub for every pay period, whether it’s a paper stub or one they can access through an online portal.
Because nannies are all a little different, you should talk with your nanny about a good pay period. Many nannies work with standard two week pay periods, but you and your nanny should also consider if weekly or monthly pay periods might be a better option.
Regardless of how long a pay period is, they should get a pay stub at the end of every pay period, ideally around the same time each pay period, and they should get paid and roughly the same time each pay period. Creating one each pay period is also critical for meeting recordkeeping requirements as an employer.
You can't just pay your nanny, legally you must pay your nanny and keep all legally required records of their total hours, hourly rate, taxes withheld, and the payroll process.
Can You Use A Nanny Payroll Service Instead Of Making Your Own Pay Stubs?
Yes, you can. There are a lot of nanny payroll services out there that will work with you to make sure your nanny is paid and that they get a pay stub, which can be especially helpful if you have more than one nanny or more than one household employee.
However, nanny payroll services almost always charge a fee, which means that you end up spending more money to employ your nanny by giving someone else the work of generating a pay stub.
Plus, once you’ve got the hang of generating pay stubs, or using a pay stub generator, it doesn’t take a lot of time to create your own.
Advantages Of Doing Your Own Pay Instead Of Paying Nanny Payroll Services
Doing your nanny’s pay stubs yourself helps ensure that everything is done the right way right from the beginning, and can help avoid paperwork mishaps and the other problems that come with working with a larger employee pay management service. And you can use the same skills to manage all of your household payroll instead of using a payroll service.
Using a nanny payroll service is an option if you don’t have the time or patience to make your own stubs, but it isn't necessarily the better option for you, your nanny, or your family.
Why Making Pay Stubs And Keeping Good Records Helps You File Payroll Taxes And Income Tax
If you are directly employing a nanny, having pay stubs doesn’t just protect you and your nanny and give you both a good record of payments, it’s also critical for filling out your taxes each year.
You’ll need the pay records from your nanny and any other employees you have in order to fill out your Schedule H form on your own income taxes each year.
Having their pay stubs will make it easier to generate W2 forms for your employees and will also give you the records you need for your taxes to make sure you get the deductions you deserve and that everything is ready to go and will be approved quickly when you submit to the IRS.
Additionally, having household employee net pay and other information will help you file household employment taxes, and generally make managing taxes for household employees much easier.
Not Sure How To Make A Pay Stub?
The easiest way to make a pay stub is to use a pay stub generator that provides templates for you and lets you fill in the information in an easy and intuitive way. Creating pay stubs with a generator is usually just as easy as using a payroll service, and often faster.
Our Ultimate Guide To Pay Stubs can even help you figure out what additional information you might want to include, and can make it easier to choose between templates when you’re first getting started.
You can also read our guide to income verification if you need to know what information to include to make sure your nanny can verify their income, or meet any other requirements.
That should give you a lot of information to get started, but the basics are really just what we’ve already outlined. You need to include employer and employee information, including employer location and contact information, your nanny’s pay rate, how much they’ve made in this period and in the year to date, along will all deductions or taxes, benefits, or optional state programs your nanny enrolled in. Make sure all of this information is correct, and that the dates are for the correct pay period.
As long as you have that information, the exact template or formatting you use isn’t that important. It should be easy to read and easy to find specific information, but those are the only requirements.
Not sure what template or format to use? Here’s a guide to what a pay stub looks like that talks about different template options and what each one is best for.
As a payroll provider, it's important to make sure you're calculating net pay and other parts of your employee wages correctly. Assuming you're doing that, you should be in good shape.