The minute you hire a nanny, you're running a small business. And with that business come costs and legal implications that go beyond the base salary, including some you may have already thought of (like health insurance) and others you may not have considered (like gas money). Keep in mind that the information in this article assumes that you're paying your nanny legally. Though this will cost you more day to day, it's a lot cheaper than the legal fees you'll face if the IRS finds out you've been paying someone under the table.
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