Do I pay an NCS as a household employee like a nanny or as their own business like a plumber? Questions around pay and taxes are ones we commonly hear as an agency, and while we of course always recommend you discuss this with a domestic employment and payroll provider and your personal tax advisor, we can give you the general answers to these questions. While we wish this was just a straightforward answer, the reality is the answer is: it depends.
Most of the time, the reality is the NCS actually should be an employee of the household, just like a nanny is, but there are rare occasions, under very specific circumstances, where they can operate as a business and be paid as an employee of their own company. And there are sometimes circumstances that make it more appropriate for them to be an employee of the referring agency as well. According to domestic tax experts, based on governmental guidelines, the single biggest determinant of who is the employer is who is in control of the work being done. If you as the employer are setting the hours and the rate of pay and negotiating the terms of the contract, then the NCS should be your employee. If the NCS is setting all of these terms, (along with a few other stipulations), then their personal business is the employer and if the agency is setting these terms, then they are the employer.
Each of these particular circumstances has many variables that have pluses and minuses for the agency, for the NCS, and being sure that you are in compliance with local and Federal employment guidelines is very important to avoid possible tax and legal issues later.
At the end of the day, it is always wise to look at all the scenarios, discuss the specifics with your personal tax and legal advisors, look at what both you and the NCS candidates need and what we as the agency have shared with you. For many of you, having employees is not something you had planned on, but if you plan to have a nanny at any point in the future, getting set up as employer now saves you that work later. Our agency can provide you with both information and referrals to providers of domestic employment tax advice and services. Contact us today for more information.