- The Alabama Department of Revenue issues business licenses. Even a person with a business license may not have the right to operate a business within a city or county. All local zoning and licensing laws must be met before a business can operate. Everyone in Alabama who engages in any kind of business must have a business license.
- A nanny is a child-care worker paid by an individual or an agency. If you are paid by an individual, you are generally considered to be an employee and are not operating your own business. You do not need a business license and are not considered to be self-employed. If you work for a nanny agency, you are employed by the agency and do not need a business license. If you hire nannies out to other people, you do need a business license.
- Even if you don’t have a business license, make sure you claim any income you earned as a nanny. All income earned during a tax year must be reported to the Internal Revenue Service, no matter the circumstances of your work. Failing to claim your income could lead to severe tax penalties. Your employer -- whether a parent or an agency -- should take your taxes out of your paycheck. He must pay half of your Social Security and Medicare taxes as well as all disability and unemployment taxes required by Alabama and the federal government.
- File your 1040 at the end of the year to meet your tax obligations. If you owe money, make sure to pay it by the deadline. Any money owed is your obligation, not your employer’s. Alabama will claim between two and five percent of your income in taxes, depending on how much you make. It also offers certain personal exemptions and deductions.
next post