Setting up nanny payroll feels bigger than it is. It's really a one-time checklist — do these six things in order and you'll be running clean, legal payroll before your nanny's first payday.

Step 1 — Get an Employer Identification Number (EIN)

As a household employer you need a federal EIN — think of it as a Social Security number for your role as an employer. You can apply directly with the IRS for free, and you'll usually get the number immediately. You'll use it on your nanny's W-2 and your Schedule H.

Step 2 — Register with your state

Most states require household employers to register for state unemployment (SUTA) and, if your state has an income tax, for withholding. This is state-specific — check your state's labor and revenue departments — but it's typically a short online registration.

A handful of states have no income tax, which means no state income-tax withholding to set up. You'll still generally register for state unemployment insurance.

Step 3 — Collect your nanny's paperwork

Before the first paycheck, gather two forms from your nanny:

  • Form I-9 — verifies your nanny is authorized to work in the U.S. Complete it on or before their first day and keep it on file (you don't send it anywhere).
  • Form W-4 — tells you how much federal income tax to withhold. Your state may have its own version too.

Step 4 — Agree on gross pay, not net

This one trips families up. Always negotiate in gross wages — the amount before taxes — not the take-home figure. If you agree on net pay, you end up absorbing the employee's tax burden and the math gets messy. Settle on an hourly gross rate and remember that overtime applies after 40 hours in a week.

Put the rate, schedule, overtime handling, and paid time off in a simple written work agreement. It prevents misunderstandings and makes payroll unambiguous.

Step 5 — Run each pay period

Every pay period you'll do the same short routine: enter hours, calculate gross pay (including overtime), withhold the employee's FICA and any income tax, and hand over a pay stub showing the breakdown. Set aside your employer share of taxes as you go so nothing piles up.

This is exactly what House automates: enter hours, and it computes overtime, every withholding, and net pay — then prints the stub. Free.

Run a pay period

Step 6 — Handle year-end

When the year closes, give your nanny a Form W-2 (and file the W-3 transmittal with the Social Security Administration), then report the household employment taxes on Schedule H with your personal 1040. If you set money aside quarterly, this step is painless.

That's the whole thing

EIN, state registration, I-9 and W-4, gross-pay agreement, per-period payroll, and year-end forms. Six steps, mostly one-time. After setup, the recurring work is just entering hours and handing over a stub.