Family child care providers who hire someone to help them care for children must treat this person as their employee.
This means you must withhold Social Security/Medicare taxes, pay federal and state unemployment taxes, withhold federal and state income taxes and perhaps purchase workers’ compensation insurance.
The paperwork can be daunting to meet these requirements. To pay the Social Security/Medicare taxes you will have to file either IRS Form 941 or 944. To pay federal unemployment taxes you must file IRS Form 940.
Before a person can work for you they must fill out IRS Form W-4 and you must fill out the immigration form I-9. At the end of the year you must also file IRS Form W-2 and W-3. In addition, there are state unemployment tax forms to file. Some states may have additional payroll tax forms to file.
In addition, you will probably have to purchase workers’ compensation insurance.
If you hire your spouse or own children you will probably not owe federal or state unemployment taxes, but you may owe all other taxes (and may need to get workers’ compensation insurance).
For some providers the amount of payroll taxes that are due is sometimes less of a hassle than filling out all the required forms.
There are a variety of ways you can get help.
This is the beginning of an article I’ve posted on childcareinfo.com. In the rest of the article I identify the top three payroll service companies and other options to help you file your payroll taxes correctly.
Childcareinfo.com is a community for family child care providers and parents that offers a wide variety of resources including recipes, a blog, and a newsletter. It serves as a clearinghouse for many online resources (children’s activities, training opportunities, equipment, and more).
Childcareinfo.com was created by Minute Menu (now KidKare) to offer free assistance that will help the family child care community grow.
Tom Copeland – www.tomcopelandblog.com