What You Need To Know About Nanny Sharing
With the rising costs of raising a young family, we at NannyTax have been seeing an increased use of Nanny sharing. This popular caregiving arrangement lowers your child care expense and still provides the convenience of having a nanny, along with the much needed flexibility busy families seek. This blog will help you better understand how nanny shares work, advantages of a nanny share, and how to deal with the payroll.
What Is A Nanny Share?
A Nanny Share is exactly what you expect – two (sometimes more) families share a nanny and the corresponding payroll responsibilities. The nanny may take care of the children from both families at the same time, or care separately for children from the two families during different days/times of the week, or some combination of the two. The arrangement can change on a daily, weekly, or monthly basis – another benefit of nanny sharing! It is also possible that the pay rate will vary depending on the number and/or ages of the children that are under the care of the caregiver. For example, the nanny may get $18/hour for one child, and $20/hour for two children, etc.. Of course, the hourly rate paid to the nanny is probably going to be higher than if working for a single family (care is being provided to more children after all!), but you benefit in splitting the nanny’s time and costs with another family.
A simple example, if you employ a full time nanny, you may be paying her $650 per week. But in a nanny share, the employee may be paid $780 per week, with the cost being split so you are paying significantly less than if you employed the nanny alone, even if it is not an even 50-50. While the rate of pay can be higher for a nanny share, costs can still be lower both due to more scheduling flexibility and being able to share the cost with another family. Generally, because the cost is being shared, the nanny is getting paid more and the families are individually spending less so it is a win-win for all parties involved. Nanny sharing is an increasingly favoured choice among families who are seeking a more affordable and flexible option for child care in Canada.
In today’s world, with dual incomes and where Canadians face long commuting times each day, the need for childcare without the stress of being late or not being able to get somewhere on time is a top consideration along with affordability. With parents working busier schedules, a nanny share allows more scheduling flexibility than a traditional daycare. In this sense, nanny sharing is very helpful, since it provides flexible support at a lower cost than daycare or employing a caregiver alone.
Why a Nanny Share is Convenient
A topic we wrote about in a previous blog was the decision to put your child in daycare versus hiring a nanny. The cost is significantly lower for a nanny share than it is to enroll your child into a higher end daycare or employ a nanny alone, which can help families who are looking for a more concentrated childcare option, on a lower budget. What’s convenient about a nanny share, is that it can be operated on a more flexible time table, whereas a traditional daycare operates on a more fixed timeline. Who likes being late and having to pay high minute by minute late pickup fees? Nanny sharing flips that schedule over to you, where you can decide the hours that best fit your family’s needs. Of course, scheduling needs to be discussed and decided amongst the families involved.
The amount of attention your child receives is also different than what they would get at a traditional daycare. Instead of the staff’s attention being spread out amongst a large group of children, a nanny share ensures that more consistent support is being given to your child, since there are not as many kids present. Nanny shares can also allow more flexibility in activities and programming. Because of the small number of children, it’s easier for parents to request activities and things for the caregiver to do with the kids, both in and outside the home.
A nanny share can present a social benefit to the children as opposed to being the only employer. Because they are amongst other kids, they are able to build closer relationships and learn teamwork through interaction. Because this isn’t a one-on-one nanny to child scenario, the kids have to learn about behaviour around others and learning concepts like sharing and taking turns.
Things to Keep In Mind
Because a nanny share is operated out of one or more houses, it’s important for all parties involved to keep communication open. For a nanny share to be successful, it’s crucial that all parties involved sit down and discuss the logistics, the overall expectations, and how unforeseen schedule changes will be dealt with ahead of time. This ensures that there is no miscommunication on any side. Something to be aware of with a nanny share, is that you are making a commitment to not only the nanny, but to the other families involved as well, so always having open and honest conversations with the families and the nanny about rules and other technicalities is key.
A few details to keep in mind when discussing a nanny share include:
- What to do if one of the children is sick – are they still welcome in the nanny share where they can possibly spread germs?
- Do the families live close enough together that change of location can be made easily and last minute without it being too difficult for all parties involved?
- Are there dietary restrictions or food allergies in one or more of the families?
- Are both families in agreement with respect to whether and/or where day trips will take place?
- What type of disciplining do they expect from the nanny?
- Screen time! How much, and when, if any?
When hiring a nanny, it’s important that all families sit together to evaluate the best candidate to take care of your children. If the caregiver has special skills or certifications, that might be something to consider. If there’s a specific skill set you want the nanny to have, it’s best for the families to discuss it and examine whether it is a good fit for everyone. And make sure the kids from both families get to know each other and their nanny – it’s the basis for a sound and loving environment.
Where Payroll Comes In
As much as a nanny share can be helpful to your family, you also have to keep in mind the payroll aspect. You are a legal employer to your nanny, are required to complete payroll for them and provide them with pay statements, whether you have hired a nanny alone or have a nanny share. The two families can each have their own business number with the CRA which means separate pay statements and source deductions, separate T4s, and each family ensuring they are compliant with Employment Standards. When operating separately (or any time for that matter), it is important that the employee complete the TD1 form for both families. Without it, the employee may end up claiming the basic personal tax credit twice and then possibly owing thousands to the CRA when they complete their tax return. Claiming “0” tax credit with one employer may not even be sufficient to avoid this situation, so it is best to discuss options with a payroll expert.
The other option is to have a partnership between the two families. While this means one pay statement and set of source deductions, one T4, and less complication with respect to the personal tax credit, it does introduce a liability issue if one party becomes negligent in payment. Whichever method the families choose, remember that ignoring your payroll tax obligations can result in substantial fines from the CRA.
How NannyTax Can Help
As the first domestic payroll service in Canada, NannyTax has the most experience in helping Canadians set up payroll for their caregivers, and has been watching the rising trend of nanny share arrangements. NannyTax provides customized solutions and advice when it comes to nanny shares and takes care of all details, saving hours of our clients’ time each year. At NannyTax, we help you avoid the stress of crunching numbers and impending deadlines. Our experts in the industry walk you through all the best options for your payroll and take care of every detail, so you don’t have to worry about missing any costly steps. When you use NannyTax, you save money on potential miscalculations and penalties from the CRA and WCB. We aim to save on your household budget and give you the peace of mind you deserve. We’re just a phone call away, so don’t hesitate to get in touch with any questions!
Where You Can Reach Us
Call toll-free: 1.877.626.6982
Email us at any time: taxquestions@nannytax.ca
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