The 7 Best Nanny Payroll Services of 2020

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Our Top Picks

It's wonderful to have a nanny who is great with your kids, helps out around the house, and makes it possible for you to juggle everything. But the one thing you totally hate? The chore of paying her wages and taxes.

While she certainly earns every penny, navigating the employee/employer relationship is tricky; your nanny might feel like family, but you’re still her boss. It’s your responsibility to pay her on time, and often with an employment or “nanny” tax to state and federal agencies. That’s where things get really complicated.    

By the time you factor in tax law, W-2s, employee benefits, insurance, and overtime, your head may be spinning (not to mention all the hours spent trying to figure it out). Thankfully, there are payroll services that make these transactions easy-peasy—for you and your nanny. Here are our top picks.

Our Top Picks

Best Overall: SurePayroll

SurePayroll

 SurePayroll

SurePayroll was actually the first company to ever bring payroll for small businesses to the internet back in 2000, and the company has continued providing an easy-to-use, flexible, and affordable service ever since. Its Nanny and Household plan allows you to pay your employee while making sure you’re meeting the various legal requirements related to taxes.

With all SurePayroll plans, you can pay only for what you use, run same- or next-day payroll, and receive customized guidance for staying compliant with tax laws for whatever type of business you’re running. SurePayroll only maintains a two-day debit period, which means it doesn't hold onto your money for quite as long as many other companies do before disbursing it. Plus, it offers flexible customer service along with the ability to ask its in-house tax experts all kinds of questions.

With the Nanny and Household option, you can take advantage of even more benefits, like running automated payroll from your smartphone or computer, calculating taxes using SurePayroll’s software, and even filing your taxes with the appropriate agencies right through the system. 

Costs are subject to change from business to business, but the flat rate for SurePayroll is about $30 per month for one employee, with a fee of another $5 per month for additional employees. (However, the one downside here is that pricing info is tough to find without asking for a personal quote.) There are also additional fees for the cost of filing your taxes through the system when the time comes—or you can choose a self-service option and save on your monthly plan.

Best Budget: Savvy Nanny Payroll Services

Savvy Nanny Payroll Services

 Savvy Nanny Payroll Services

If you employ more than one kind of childcare provider (think after-school nanny, full-time summer nanny, weekend babysitter), it can get costly adding these employees to your payroll when companies charge extra fees for each additional payee. That’s not the case with Savvy Nanny—you’re charged one flat rate for up to four employees, with only an extra $2 per person charge after that.

As far as features go, this company offers the usual selection: automated payroll, flexible customer service, direct deposit and emailed pay stubs to your nanny, and services in all 50 states. We also like that Savvy Nanny does “payroll impounding,” a fancy term for putting your withholdings into a separate account every pay period and then paying your year-end taxes from that account. It’s not necessary, but it does often lead to more accurate accounting and less headaches for employers.

The flat monthly rate for Savvy Nanny is about $40 (for four employees), and there are no setup fees or other hidden fees. At the end of the tax year, Savvy Nanny will file your tax return for you and charge you about $50 for the service. With simple pricing and low fees, Savvy Nanny is a budget-smart choice, whether you have one employee or a half dozen.

Best Flexibility: Payroll by Wave

Wave

 Wave

If you’re balking at the idea of paying a monthly fee for a payroll service when you only plan to use it for certain months of the year (let’s say only from September to June, when your kids are in school), Payroll by Wave is a flexible option that allows you to suspend payroll at no charge for as long as you need to—without closing down your account.

On the monthly payroll side, Wave offers direct deposit, a self-serve portal for tax documents, an easy-to-navigate interface, and both live chat and email support. Payroll by Wave will also file your taxes for you if you live in any of the following states: Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin. If you live in one of the other 36 states, you can use the tax data you’ve collected in the Wave portal to file easily on your own.

The monthly fee for Payroll by Wave in a tax-service state is about $35, plus $6 for each additional employee or independent contractor. For self-serve tax filing, the fee is roughly $20 per month.

Best for Tech Support: HomePay

HomePay

 HomePay

Are you worried you’re not tech-savvy enough to manage online payroll? Do you suffer from frequent insomnia about accidentally falling out of compliance with tax laws and winding up with the IRS knocking on your door? If so, you might love Care.com’s HomePay service, which offers extensive customer support and expertise so you can ask as many questions as you need in order to feel comfortable with the whole idea of online payroll. 

HomePay calls this “concierge support,” and it means you get unlimited phone, chat, and email support, technical and onboarding help for your employee, and audit assistance, if necessary. It also makes your payroll life easier in a bunch of other ways, including filing your taxes, managing state tax notices, and the option of a full refund for the first six months of services if you end up being unhappy with HomePay.

The cost for HomePay is around $75 per month, plus, an additional $100 tax filing fee, which is noticeably higher than many of its competitors. The extra money you spend on this service is really for your peace of mind; the concierge support is a key feature, as is the reassurance that you don’t have to be on top of everything all the time because HomePay is looking out for you.

Best for Beginners: Poppins Payroll

Poppins Payroll

 Poppins Payroll

Poppins Payroll has, by far, the most pleasant-looking web interface of all the services we researched: it’s colorful, transparent about services and fees, and the cartoonish artwork makes us feel slightly more energized about the oh-so-exciting topic of employee payroll. The only downside? As of November 2020, Poppins Payroll is only available in 12 states.

Still, we’re including it on this list because if you live in one of those states, you should definitely consider signing up; and even if you don’t, Poppins Payroll is a fantastic resource for families hiring a nanny for the first time and wondering how best to pay their new employee. 

The company's FAQ section is full of common questions and clear answers about nanny tax laws, contracts, and overtime, and its nanny payroll guide is incredibly comprehensive, to say the least. You can also download a sample nanny contract for free from the site to use as a jumping-off point. 

If you’re lucky enough to reside in one of Poppins Payroll’s service states, you’ll benefit from a super-easy signup and onboarding process, zero hidden tax-filing fees, and PTO and overtime tracking. Best of all? The flat fee is about $39 per month.

Best for Benefits: GTM Payroll Services

GTM Payroll Services

 GTM Payroll Services

Although you’re not obligated to offer your nanny any kind of benefits package with employment, this is becoming industry-standard for full-time nannies—so you might find your hiring options limited if you’re offering nothing in the way of health insurance reimbursement, paid holidays and sick days, and workers compensation insurance.

Luckily, GTM Payroll Services makes it easy to set these benefits up right with your employee’s payroll, so you’re not left coordinating separate add-ons with separate companies (and trying to keep track of everything).

When it comes to payroll services, GTM offers a standard package complete with free direct deposit and tax-filing, but because they also are licensed insurance brokers in 29 states, it's able to coordinate your employee’s health, dental, and vision insurance, plus its workers’ compensation insurance, travel insurance, and tax-savings program.

GTM isn’t one of the cheapest options on this list; a nanny plan is about $65 per month with a six-month commitment, plus roughly a $95 setup fee and a $20 charge for each additional employee. But having all of your nanny-related expenditures housed in one place, handled by customer service experts from the same company, might be worth the extra cost for you.

Best Automated: NannyChex

NannyChex

 NannyChex

While you want to pay your nanny fairly, on time, and in compliance with tax laws, you may not want to be in charge of the legwork: making payments, filing your taxes, setting up an employer tax account, maintaining tax records, or corresponding with tax agencies.

If that’s you, you’re in luck—this is the exact service NannyChex provides and it's reflected in their motto: “We do everything, you do nothing.” Its full-service plan allows you to create an account and then sit back while NannyChex sets up your tax accounts, remits payroll and tax filings, and stays up-to-date on state tax laws. Basically, they handle it. You’ll even get a personal account representative, so you can always turn to the same person with questions or concerns about your account.

Rather than a monthly fee, NannyChex charges a quarterly fee of about $80, a $150 tax-filing fee once per year, and either $6 or $13 per paycheck for direct deposit of funds to your employee, depending on how frequently you want them to be paid. (This means your total costs will start at around $620 per year, which is more than the basic plans on this list but less than some of the other more comprehensive options.)

What Is a Nanny Payroll Service?

In order to make paying your nanny’s wages and taxes easier, many companies offer a payroll service designed to simplify the process. This may be software that you download or access from your computer, smartphone, or tablet, or a service remotely provided to you by the company’s employees. 

Most nanny payroll services will allow you to input and track your employee’s hours, overtime, and paid time off, process direct deposit payments to your employee, pay the appropriate taxes on your nanny’s wages, and file your state and federal taxes, among other things. You can choose a service that is self-serve, one that does all the work for you, or one that provides a little of both.

What Is a “Nanny Tax”?

When you hire a nanny, you become a household employer—this means you may be subject to paying an employment tax. (This is often referred to as a “nanny tax,” but that’s just a colloquial term that can apply broadly to housekeepers, elder carers, gardeners, etc.) 

It also means you need to withhold a certain amount of your nanny’s wages for things like Medicaid, unemployment taxes, and Social Security. The Internal Revenue Service (IRS) will expect these withholdings from you along with your personal taxes every year. Depending on your state, there may be additional income taxes to collect.

Do I Have To Pay a “Nanny Tax”?

Yes—if you pay your nanny $2,200 or more in wages every year or $1,000 or more in a calendar quarter, according to Publication 926 of the IRS. Nannies are considered household employees, not independent contractors, because they don’t control their own work; this tax applies whenever the payment threshold has been met.

If you don’t pay your nanny that much, you’re not subject to a federal employment tax (though you may be subject to a state tax). If your nanny is a family member, you likely won’t have to pay the nanny tax either, but that compensation will still need to be reported as income on your family member’s tax return.

Some people try to bypass the “nanny tax” by paying their nanny under the table, but this is illegal and risky. If you’re caught, you and your nanny could both end up in serious trouble, including being fined, charged with tax fraud, or audited. It might be tempting to keep your payments off the books so you and your nanny both have more money in your pockets, but it’s not a good idea.

What Is the Benefit of Paying Through a Payroll Service?

Using a nanny payroll service can greatly reduce the amount of time it takes you to pay your nanny, withhold your nanny’s taxes, file your own taxes, and stay up-to-date on state and federal changes to tax laws to ensure you’re always in compliance. You can certainly pay your nanny and calculate end-of-year taxes for both of you on your own, but unless you’re an accountant, doing this correctly is likely to be pretty challenging.

The other benefits of using a service fall into three main categories:

  • Record-keeping: You don’t need to keep a well-organized paper trail; all of your tax documents, employer account information, and tax and payroll records will be stored digitally in one easy-to-access place.
  • Convenience: Many payroll services offer automatic payroll, free direct deposit, payment reminders, correspondence with state and federal agencies, automatic tax filing, and other features that make your tax-paying life simpler.
  • Support: Most services offer quality customer service for both technical questions and tax advice. If you’re worried about staying in compliance with tax laws but don’t want to hire an accountant, you can usually get trustworthy tax advice from your payroll service.

How Much Can I Expect To Spend?

Pricing varies based on how much help or support you want to receive from your provider. Self-serve options, without tax filing or hands-on assistance, often cost about $20 per month. Middle-range options, which offer tax filing and customer support, hover at around $40 per month (with additional filing fees). More comprehensive services, like those that provide insurance benefits or handle all the tax work for you, may cost more than $60 per month.

How We Chose the Best Nanny Payroll Services

Finding a new or different payroll service provider involves a lot of comparing and contrasting. We assessed a variety of features including user-friendly software and interface, cost, flexibility of fees, ease of use, self-service and full-service options for taxes, customer care, and comprehensive service.

SurePayroll stood out as our top pick for its affordability and flexibility, while Savvy Nanny Payroll Services earned our budget spot for its flat rate and features like automated payroll and flexible customer service. GTM Payroll Services made it onto our list for its benefits package, while Poppins Payroll was appealing because of its intuitive interface.

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