So you’ve hired a nanny, housekeeper, or landscaper to perform regular services for your household. There’s no need to put them on a payroll because you don’t have a business, right?
Wrong. According to the IRS, if you pay someone at least $2,700 in 2024 and you have control over how and when they perform their work, that person is a household employee and should be on your payroll.
But if you’re a household employer, there’s no need to hire an entire payroll team to handle your payroll. Instead, you can use payroll software to make sure you pay the right amount of payroll tax and wages and file the correct payroll forms.
Nanny payroll services are a specific type of payroll service that caters to household employers, allowing you to manage payments easily and combat potential tax issues. Although the name implies differently, nanny payroll services can be used for any household employee, like babysitters, caretakers, or private duty nurses.
Our top recommendation for a nanny payroll service is SurePayroll because of its affordable price point and easy-to-use suite of features for household employers. I’ve also listed three budget-friendly alternatives to help you find the right solution in addition to helping you navigate whether a nanny payroll service is something you need.
Do I Really Need a Nanny Payroll Service?
If you have a household employee, consider using a nanny payroll service.
To qualify as a household employer, you must have a position of authority over household employees, like dictating the hours they work or how they do their job, and pay them at least the amount noted by the IRS. For 2024, that’s $2,700 for the year or $1,000 during any quarter.
So, if you get a babysitter once a month and pay them $100, you wouldn’t meet those requirements to be a household employer. But if you have a live-in nanny who you pay $1,000 to weekly, you’d be considered their employer.
Although you might be inclined to pay your household employee in cash, this is never the way to go. Legally, their services need to be on the books, as do your payments to them.
Yes, withholding and filing payroll taxes and running payroll takes extra time. But if you fail to do it, you can face serious penalties for not reporting or reporting payroll information incorrectly to the IRS. This can include financial penalties for the taxes you failed to pay, plus legal penalties for tax fraud.
Using a nanny payroll service can prevent you from dealing with all that by keeping you compliant with tax laws. Even if you don’t pay your household employee enough to meet the IRS threshold, it can still give you peace of mind knowing you’re doing everything correctly.
The Best Nanny Payroll Service
SurePayroll is an easy-to-use payroll service that’s designed to meet the needs of household employers and small business owners. Its 100% guarantee ensures that the tool makes the right calculations and payments, or it will help resolve any issues with the IRS and even pay related penalties if it was at fault for the errors.
Where SurePayroll really shines as a nanny payroll service is with its tax services. After entering your employee’s information, like rate of pay and hours worked, SurePayroll calculates their wages and automatically deducts the correct amount of federal and state taxes for you.
Although SurePayroll automates the tax process if you have the automation feature turned on, you’ll still have full control over the final paycheck and deductions. Review everything SurePayroll calculates before giving it the final stamp of approval to run payroll. If you notice something is wrong after finalizing payroll, you can cancel it to fix errors.
Direct deposit is available with SurePayroll, and you can even pay the same day or the next day after running payroll, which is a good way to keep your household employee happy.
If you ever need a payroll report for your or your employee’s records, you can find it on SurePayroll. The tool offers numerous reports you can download and print, like year-to-date employee wages, tax deduction reports for the current pay period, and custom payroll reports for a specific pay period.
Use either the website or the SurePayroll mobile app to manage and oversee your household employer payroll. The app puts everything at your fingertips, allowing you to download and view reports, edit pay rates, and run payroll from your mobile device. You can also give your employee access to view their payroll records and pay stubs.
Need help screening potential household employees before hiring them? SurePayroll can do that, too. Pre-employment screenings through SurePayroll include behavioral and skill assessments, background checks, and drug screenings—all crucial information to know before inviting someone into your home for work.
SurePayroll starts at $49.99 per month for one household employee, with each additional household employee priced at $9.99 per month. There are also extra costs for specific features if you need them, like an accounting software integration for $4.99 per month and local tax filing for $9.99 per month.
If you fill out the form to get a SurePayroll quote customized to your household employment needs, you’ll get six free months of SurePayroll service.
3 Budget-Friendly Nanny Payroll Services
While SurePayroll is my overall top pick for its nanny payroll services, I’m aware that it might not fit the needs of all household employers. Here are three budget-friendly alternatives that still pack in a lot of features.
Payroll4Free.com
Payroll4Free.com is, as the name suggests, free to use as long as you have 10 or fewer people on your payroll. So, if you have just one or two household employees, you won’t pay a dime for its free features.
And there are quite a few free features—really, anything you need to pay a household employee, in most cases, is free through this service. You’ll get tax calculations, end-of-year tax forms, time tracking, vacation tracking, detailed reporting, and direct deposit. You can also give your employee access to their pay details through a web-based portal.
If you want to connect other tools to your account, like accounting software or your online bank account, you can also do that for free.
Wave Payroll
Like Payroll4Free.com and SurePayroll, Wave Payroll isn’t solely used as a nanny payroll service, but it functions just fine as one.
Wave offers a basic plan for free plus an add-on for payroll starting at $40 per month. You’ll also get other perks that you may not ever need, like bookkeeping records and Wave invoicing, but they’re there if you do.
Wave Payroll works for both W-2 employees and contractors, so you can also use it to pay and provide 1099s to contractors you work with. Automatic payroll, direct deposit, and tax payments and filings are all included features.
Here’s the downside: Only people in select states can benefit from automated payroll tax filings. Currently, Wave Payroll supports these features in Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin.
Until the service expands into other states, you’ll need to pay and file taxes yourself if your state isn’t on the list. The good news is that if you’re in a self-serve state, your payroll only costs $20 per month plus $6 for each active household employee. Automated tax states pay $40 per month plus $6 per employee.
Wave Payroll gives a full 30-day free trial to test the service before committing.
Simple Nanny Payroll
Simple Nanny Payroll is designed specifically for people with household employees. It’s certainly not the most robust tool out there, but it does the job for people who have one or two household employees they need to cut checks and file taxes for.
To be clear, Simple Nanny Payroll is more of a calculator than a payroll service. You input your worker’s rate and hours worked, and the web-based calculator automatically calculates their gross pay, payroll taxes, and net pay.
You’ll need to file and pay any taxes yourself, but you’ll have all the calculations in front of you. Simple Nanny Payroll even gives you every piece of information you need to file W-2s for your employee.
For only $29 per year, you’ll get full access to the calculator and the reports you need, including pay period and end-of-year reporting. Just to make sure Simple Nanny Payroll meets your expectations, you can create an account to test it for free for 30 days before paying for the year.
Finding the Right Nanny Payroll Service
Paying someone correctly is a must, even if you pay them less than $3,000 a year. If they’re considered your household employee by IRS standards, you need to pay them as one.
A nanny payroll service can take the weight off your shoulders in terms of calculating the right wages and taxes. You’re not a technical business owner, so you shouldn’t have to worry about all that financial stuff that can quickly get complicated when taxes are involved.
When comparing nanny payroll services, be sure to consider how pricing per employee affects the total amount you’ll pay monthly or annually. If you only have one household employee to run payroll for, you don’t want to pay for five.
Our top recommendation is SurePayroll because it has all the features of a payroll service but is simple enough for the average person to use. Plus, at about $50 per month for one household employee, it’s an affordable way to stay compliant with IRS rules.
