Leslie Forde's family hired a new nanny a few weeks ago, so she's very familiar with all the complexities that go into onboarding a caregiver.

There are employment agreements to sign, tax obligations to consider and workers' compensation insurance requirements to meet. "There's not just the tax side of it, there's a labor law component, and they intersect," says Forde, who lives in Boston and is founder of the parenting website momshierarchyofneeds.com. "My personal recommendation to people I know is: Don't try to do it yourself."

Forde, whose children are ages 8 and 4, draws on her previous experience working for Care.com, where she was trained to understand the caregiver industry, and works with a payroll company to help manage her employer responsibilities. During the nanny interview process, she had the payroll company provide a sample paycheck, so she could show candidates how their compensation, taxes and rate of pay would look.

If all of this sounds complicated, that's because it is. Hiring a nanny the right way – meaning you're not paying her under the table – requires planning and budgeting for myriad expenses outside of hourly pay. You will need to think about how you're going to handle taxes, what your state employment laws require, whether to get workers' compensation insurance, how to reimburse meals or grocery shopping expenses and how it will impact your own tax bill.

In short, you're going to be an employer, and that comes with obligations.

Read on for some financial tips for parents hiring nannies.

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Consider State and National Laws

"The first thing to kind of accept is that you're going to be legally an employer," says Tom Breedlove, senior director of Care.com HomePay. You're going to need to brush up on any state and national laws impacting the hiring of caregivers. Generally, a nanny is considered a household employee, meaning you control the work she does and how she does it, according to the IRS. There are exceptions to the tax rules for nanny services provided by your spouse, parent, your child under age 21 or a nanny under age 18.

Your state laws may add new complications. So make sure you understand what state unemployment tax you may owe, whether you're required to offer workers' compensation insurance and any other tax and labor laws specific to your state or city.

Some state (or municipal) laws to consider include:

Minimum wage standards.

Overtime laws.

Workers' compensation insurance requirements.

Paid sick leave laws.

Wage notice and employment agreement requirements.

Unemployment tax requirements.

Mileage and expense reimbursement rules.

Take the time to read up on what you'll be required to do as an employer, so you don't run afoul of the law.

Prepare for the Tax Consequences

First things first, you're going to need to apply for an employer identification number, or EIN, with the IRS. As an employer, you'll be responsible for understanding taxable wages, employment tax withholding and which tax returns to file . "Start out by asking your tax professional if they will do this for you," says Eva Rosenberg, a Los Angeles-based enrolled agent and founder of TaxMama.com. "And if they won't, they will recommend their favorite payroll service that they trust."

If you hire a nanny, you'll generally need to consider these taxes:

Social Security and Medicare taxes, commonly called FICA taxes.

Federal and state unemployment tax.

Federal income tax.

State income tax.

Generally, if you pay cash wages of at least $2,100 in 2019 to your nanny, you'll need to pay Social Security and Medicare taxes, commonly called FICA taxes, of 7.65%. Your employee will need to withhold an additional 7.65% from her paychecks (or if you choose, you can cover this from your own funds) for a total of 15.3% in FICA taxes. As an employer, you're responsible for sending both parts of this tax bill to the federal government.

Additionally, parents who pay a household employee more than $1,000 per quarter must generally pay federal unemployment tax of 6% on the first $7,000 in wages. You may also owe state unemployment tax.

You are not required but may also choose to withhold federal income tax from your caregiver's paychecks so she doesn't need to budget for those costs herself.

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In order to withhold the necessary taxes , you'll need to have your nanny fill out a W-4 form. Not only is filing this form a tax necessity, it's a chance to make sure your nanny has a valid Social Security number and address, Rosenberg says. Your nanny will also need to file an I-9 form to prove she's eligible to work in the United States.

As an employer, you'll need to complete a form W-2 and W-3 before Jan. 31 to record the previous year's earnings, Social Security wages and other information. You'll also want to attach a Schedule H to your individual income tax return, due on Tax Day, to report household employment taxes.

You'll need to decide how to pay these taxes. You can either increase your withholding at your own job, so it covers those taxes throughout the year, Rosenberg say. Or you can make quarterly estimated payments to the IRS through its direct pay portal. If you wait until the tax-filing deadline to pay the entire balance, you may have a large bill due and face penalties, so it's a good idea to pay regularly, Rosenberg says.

Finally, while paying for child care is expensive, there are tax breaks for families who qualify. Consider your eligibility for the child and dependent care credit, which provides up to $3,000 for one qualifying dependent or $6,000 for two or more qualifying dependents to offset child care expenses. You may also have access to a dependent care flexible spending account from your employer, which provides a tax-advantaged way to pay for qualified child care costs, Breedlove says.

Budget for Ancillary Costs

Hourly wages are just one aspect of your budget when hiring a nanny. Forde notes that she needs to account for the nanny eating breakfast and lunch at her home, potential costs for on-the-job travel and a year-end bonus , which can be a week's worth of salary. She lives in Massachusetts and is required to carry workers' compensation insurance, which she pays separately.

Even if you're not required by state law to get workers' compensation insurance, Breedlove suggests paying for it. If you don't buy a policy and your nanny is hurt on the job, you could owe substantial amounts in medical costs and lost wages.

You may need to factor the time and effort it takes to interview nannies and teach them how your household works. Plus, if you decide to work with a payroll service, accountant or another firm, you'll pay for those services. For example, Care.com HomePay, which handles payroll, employment tax filings and additional support costs $210 per quarter, plus a $100 one-time setup fee and $100 year-end fee, which can add up to nearly $1,000 in a year.

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Consider the Cost of Doing It Wrong

Now that you've read about the tax costs, insurance costs and payroll costs associated with employing a nanny, you may be tempted to simply pay in cash and avoid the whole rigmarole. Experts caution against this strategy.

"It pays to do it right," Breedlove says.

For example, while the IRS may not audit you – it's already stretched for staff and resources – your nanny may stop working for you, try to claim unemployment benefits and list you as a previous employer. If you haven't been paying into unemployment insurance, this could trigger an inquiry and cause you to owe back taxes, fees and penalties, Rosenberg says.

Plus, Rosenberg says, going through the steps to set up taxes and payroll is a chance to vet a future nanny and find a caregiver who values honesty. "Do you want someone who is raising your children who is a liar and a fraud?" she asks.

Forde sees following employer rules as a chance to give household workers, who are often women of color or immigrants and have their own families to support, the same benefits and protections other workers receive. "It's something I'm very passionate about," she says.

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