The economic forecast for 2013 remains cautious, to say the least. Economic growth (the increase in the amount of goods and services produced over time) is measured as the annual percentage rate change of gross domestic product, or commonly referred to as GDP. Real GDP growth appears to have slowed to around a one percent annualized rate during the final quarter of 2012 as businesses have put expansion and hiring plans on hold due to fiscal cliff negotiations. Growth is expected to get off to a slow start in 2013, as higher taxes hit households at all income levels. Federal government spending is also expected to shrink modestly. Growth is expected to begin rebounding by the middle of the year, as the economy moves further away from the fiscal cliff and homebuilding gains momentum.

Europe's economic and financial troubles will continue to weigh on global economic activity in 2013, but conditions are expected to slowly improve over the year. With much of the developed world stalled in recession or growing exceptionally slow, global economic growth will likely depend more on what happens in the developing world. Fortunately, growth should firm up a bit over the year.

For 2013, fiscal policy remains the main event. Even after the immediate questions surrounding the Bush-era tax cuts were resolved, long-run challenges still remain. Based upon the number of long-run budget challenges, it looks as if restoring soundness to the nation's finances will inflict significant costs on economic growth. When demographic changes and slower productivity growth are factored in, potential real GDP growth has and will continue to slow to a pace well below recent decades. This, unfortunately, will present a new set of challenges to households, businesses and policymakers.

Employing a nanny, maid or other household employee requires additional diligence on the part of the employer. As an employer, you will be responsible for paying an extra 10% of an employee's salary to cover taxes and other costs. These costs include Social Security/Medicare taxes and unemployment insurance through both state and federal governments.

Household employees often balk, too, because they don't want taxes withheld from their paychecks. They may demand higher wages to make up for money that an employer takes out, raising your costs even more. Perhaps the most challenging part of all of this, however, is how much effort and paperwork it takes to do the right thing.

The process of being a household employer and complying with the Internal Revenue Service is daunting. However, should you choose to be compliant as an employer, the following is a good starting guide to help you down that path:

1. Ensure your employee's immigration status and confirm he/she is eligible to work in the United States.

2. Obtain an employer identification number, which ensures your status as an employer.

3. If you, as an employer, pay $2,000 or more per year to a household employee, it is required that you withhold and pay Social Security and Medicare taxes. Additionally, you must pay federal unemployment taxes of another 1 percent of wages up to $7,000 per year.

4. You, as an employer, are responsible for paying state unemployment taxes. State of Connecticut unemployment taxes in 2012 were 4.2 percent of wages up to $15,000 per year.

5. Many states require you, as an employer, to have workers compensation insurance in case your employee is injured on the job.

6. You, as an employer, are required to file forms for quarterly filings and payments to your state for unemployment taxes, as well as quarterly filings and payments to the federal government.

The tax savings likely won't make up for the cost of following the many rules, regulations and processes required to ensure compliance. However, there is a satisfactory and secure feeling that is derived for being compliant and adhering to the laws, which confirm your status as a legitimate employer in the eyes of Uncle Sam.