More Than a Mom: The Hidden Costs of Being a Professional Nanny


In the world of small business, costs are the enemy. Unlike large, public corporations, who have ample reserves of capital to offset dips in revenue, small businesses have to make do with their startup funds and whatever revenue they manage to generate. The battle to generate a steady stream of income that outpaces operating costs is usually the first major hurdle that small businesses have to overcome.

For small businesses that specialize in providing professional nanny services, this hurdle can be more difficult. Not only do they have to compete with other nannies for business, but they can only work with one family at a time. That limits the amount of revenue they can generate at one time. There are other factors to consider as well.

If you’re considering becoming a professional nanny, or want to become the employer of one, be aware you may face a very challenging road ahead.

To help you calculate the right amount of startup funding, read about the following hidden costs of professional nannies, and take steps to prepare now.

The Limits on Revenue

More Than a Mom The Hidden Costs of Being a Professional Nanny

First and foremost, professional nanny agencies are unique in that they have a limited number of clients they can service at a time. Unlike other product and service providers, who can usually produce more as needed, professional nannies can only service one family at a time.

Why This is an Issue

Because a nanny can only stay with one family at a time, you automatically cut your potential revenue stream every time one is assigned. The money you get from that family may be good, but that’s all the nanny assigned to that family is going to get.

To illustrate it in numbers, here’s an example. If you have 10 nannies in your agency, and you charge $1,500 per nanny per month, the maximum revenue you could generate in one month is $15,000 (10 nannies x $1,500 = $15,000). If your operating costs exceed $15,000 per month, you’re going to be in trouble.

What You Can Do Being a Professional Nanny

There’s really are only two options you have to overcome this dilemma – get more nannies or reduce costs in other areas.

The former option is the safest because you won’t have to reduce quality in any domain. However, it’s also the most difficult. Finding and retaining good employees is one of the most difficult jobs that any modern day business has. Compound that with the fact that great nannies often have qualifications in teaching, first aid, and child development, and you could be in for a long hunt.

The latter option is quicker but may hurt your core functions. You could consider choosing cheaper software to run your business, opting for less office space, or outsourcing some of your functions such as:

  • HR
  • Marketing
  • Accounting
  • Taxes

The risk you run when you outsource is that the vendor may not deliver the standard of quality you need.


Yes, even nannies get charged taxes. Did you expect anything different?

Once nannies are employed for so many hours or make so much in a year, the family who employees the nanny is obligated to pay taxes for as a household employer.

Why This is an Issue

Since many families don’t want to incur yet another round of taxes each year, this can dissuade them from working with nannies. Many families will seek cheaper, most cost-effective options for child care. This might include public daycare or leaving the child with a friend or family member.

When you’re trying to convince clients that hiring a nanny is in their best interests, overcoming the tax dilemma can be a major hurdle.

What You Can Do

The best thing you can do to persuade families is to point out how much they could potentially save in taxes versus how much they pay. You can also help to guide them through the process of becoming a registered employer to make it easier on them.

GTM Payroll Services put together a comprehensive guide to nanny taxes that you can direct your clients to so they can familiarize themselves with the process.

You also need to point out the benefits of having a dedicated nanny versus public daycare or part-time babysitters. Nanny Mag pointed out a few of the most beneficial aspects:

  • Being able to develop a trusted relationship with your child’s caretaker
  • Having an experienced helper who understands postpartum depression, sleep deprivation, and nursing
  • Better developmental perks, such as socialization, for the child

The Cost of Letting Go

In any type of business, your reputation carries a lot of weight. This is especially true for professional nannies, where your references will often be the determining factor of whether you get hired or not. When parents hire a nanny, they want a dedicated caregiver who will be 100% invested in their child and stay with the family for a year or longer. When it comes time to change families, the manner in which the nanny leaves will set the conditions for her next family.

Why This is an Issue

This issue is twofold because both the employing family and the nanny may have issues arise.

On the family’s part, if they have any reservations about the nanny’s abilities, you can count on never having their endorsement. Depending on who’s hiring next, this may be severe enough to ensure that nanny will never be invited into another family’s home.

On the nanny’s part, leaving the child they’ve grown to love can leave an emotional scar on the nanny’s psyche. It’s not like leaving one office for a new one; there’s often a sense of betrayal, abandonment, or neglect on the nanny’s part. This can be too much for some nannies, and they choose to leave the industry altogether.

What You Can Do

On the family’s part, you need to address any issues as they arise. Don’t try to hide anything negative – broach the subject yourself, if the parents don’t. Have an honest conversation about their reservations with the nanny’s performance. It may not completely eliminate their doubts, but it’s at least better than having everything erupt at the end of a nanny’s tenure.

On the nanny’s part, it’s key that certain boundaries are established early on. First and foremost, they need to understand that the child in their care is not their child. They have their own mother, who loves them dearly. Additionally, the nanny is there as an assistant, not as a replacement for parents. Their job is to care for and develop the child in a social and educational capacity. The nurturing of the child is primarily for the parents.

This is harder than it sounds, and won’t make the separation any less sorrowful, either for the nanny or the child. What it will do, however, is set the conditions for a smooth transition, and allow the nanny to get over her sorrow faster. She’ll then be in the right mental state to devote herself completely to her next child.

Author: Sarah Elizabeth Saker