I think I figured it out!
We will end up investing in quick books, but I think it's the right way to go to make sure we track everything. I found a local book keeper who was very helpful on the phone and have her number written down in a very prominent place to call for help if I get stuck. She didn't seem to mind consulting to set things up, which is not what I found when calling around places near the office. I explained what I had done and she seemed a little surprised and told me I had about done everything I had to do.
So, we can pay our nanny, M. I'm sure she will be pleased with that. I know I am, the kids love her!
I hear the kids challenging her a lot more. I'm trying to stay out of it because she is very capable and the kids need to learn that they can trust her. I also don't want her to think I don't trust her abilities. Let's not forget that she doesn't need me interceding with everything.
At this point I will call it a learning process for all of us, especially me!