Payroll & Taxes
- Your Role As An Employer
What It Means
To Employ Staff
At Old State Staffing, we manage every step of the pre-employment process—from job descriptions, interview guides, candidate profiles, employment agreements, negotiating terms and more.
Once you’re ready to welcome staff into your home, you’ll also be stepping into the role of a household employer. While managing payroll and taxes for an employee might seem complicated, with the right guidance, it can be an affordable, automated, and stress-free process. We’ll help you lay a strong foundation from the start, and connect you with trusted partners who can pick up right where we leave off.
- What You Need To Know
Employer Responsibilities
Employing staff in your home brings many benefits, but it also comes with important responsibilities. Properly managing payroll, taxes, and/or benefits protects your family, supports your employee, and prevents potential legal issues down the road. Whether you are new to household employment, or refining existing practices, Old State Staffing is here to guide you at every stage.
Payroll
Paying staff “on the books” is the best way to maintain a professional, transparent relationship. Proper payroll practices enable employees to verify their income, qualify for housing and loans, and establish a clear financial record for both parties.
Many families choose a payroll service specifically designed for household employers, handling everything from direct deposits and overtime tracking to year-end W-2s. Even if you have been paying informally, transitioning to formal payroll is easier than most people expect, and we’re happy to recommend trusted providers to make things seamless.
Taxes
Household employers are responsible for key tax obligations, including:
- Withholding Social Security and Medicare (FICA)
- Paying federal and state unemployment taxes (FUTA/SUTA)
- Filing quarterly and year-end employment tax reports
- Issuing W-2 forms at year-end
While it’s possible to manage taxes independently, most families prefer to partner with a payroll service that simplifies the process through a secure, user-friendly portal.
Workers Compensation
Many states, including Washington D.C., Maryland, and Virginia (only if >3 employees), require household employers to carry workers’ compensation insurance. Workers’ comp provides coverage for job-related injuries, protecting both you and your employee from costly medical bills or lawsuits, and premiums are generally based on the percentage of the employee’s wages.
Generally, carriers quote a rate per $100 of payroll. For example, if the rate is $0.75 per $100, and you pay a worker $50,000/year, your premium would be $375 .
Benefits
Offering benefits is not required, but it can be a powerful tool to attract and retain top talent. Popular options include health insurance contributions and retirement savings plans (like SIMPLE IRAs or Simple 401(k)s). Providing benefits shows a commitment to your employee’s long-term well-being and can significantly improve retention, especially in today’s competitive private staffing market.
For a closer look at industry standard benefits, visit household positions and select a position you would like to learn more about.
- Let's Make It Easy
Payroll & Taxes Made Simple
Managing household payroll and taxes is important — but it should never feel overwhelming. That’s why Old State Staffing partners with GTM Payroll Services, the nation’s leading provider in household payroll, insurance, and benefits administration. With certified payroll professionals, licensed insurance brokers, tax specialists, human resource experts, and CPAs, all in a secure, easy-to-use platform, GTM is a one stop shop for household employers.
We’ll introduce you to our dedicated payroll specialist, where you’ll receive a complimentary consultation as well as free account setup. You’ll have access to curated resources covering everything from offering healthcare stipends to maximizing tax savings, so that you know that you employing others with total confidence.
- FAQ: Employers
Frequently Asked Questions
Are household staff considered 1099 independent contractors?
In most situations, household staff are not classified as 1099 independent contractors. The IRS has strict criteria for this designation. Independent contractors typically:
Control their work environment
Set their own schedule and fees
Provide their own tools or equipment
May delegate the work to others without approval
Are responsible for their own taxes
If you are setting a worker’s schedule, directing their duties, and providing the environment where work takes place, then they are likely a W-2 employee, not a contractor. Misclassification can result in penalties, so it’s important to get it right.
Can Old State Staffing handle payroll/taxes for my household employee?
We are a referral agency—our role is to source, vet, and present qualified candidates to you and offer guidance throughout the hiring process. We do not provide payroll or tax filing services directly, however, we have deep experience with household operations and can introduce you to our dedicated representative at GTM Payroll Services. GTM is the nation’s leading provider in household payroll, insurance and benefits administration.
We’ll introduce you to our dedicated payroll specialist, where you’ll receive a complimentary consultation as well as free account setup. You’ll have access to curated resources covering everything from offering healthcare stipends to maximizing tax savings, so that you know that you employing others with total confidence.
Are household workers considered exempt or non-exempt employees?
Most household staff are non-exempt, meaning they must be paid overtime for hours worked beyond 40 in a week. However, certain administrative or management-level roles may qualify as exempt under the Fair Labor Standards Act (FLSA), if they meet all of the following:
Paid at least $684/week
Primarily perform non-manual, administrative tasks related to managing the household
Use independent judgment and discretion in their duties
Examples might include: Executive Personal Assistants, Estate Managers, or House Managers whose primary work is supervisory or administrative—not hands-on housekeeping. Remember, job duties, not job titles, determine exemption status.
Is it possible to pay a non-exempt worker a salary?
Yes—as long as the compensation structure complies with FLSA overtime rules. Employers often want to simplify payroll and offer stability for both parties, and that’s possible by setting a guaranteed weekly wage based on expected hours.
For example: “$1,500/week gross, based on a $27.28 hourly rate and a 50-hour workweek. This includes 10 hours of overtime at $40.92/hour. Any hours over 50 in a week are paid additionally at that same overtime rate.”
This structure offers the appearance of a salary while staying compliant. We can help you tailor an agreement that meets both your goals and legal requirements.
Are household employers required to pay taxes?
Yes. If you’re employing someone in your home, you’re responsible for payroll taxes—just like any other employer. We can recommend cost-effective payroll services who will handle everything: withholdings, filings, and annual forms. Many providers also offer bundled services like insurance and benefits administration to simplify your role even further.
What benefits should I offer for my position?
Benefits can vary by position, hours, and your budget. We encourage you to visit our Positions page for guidance on industry-standard compensation and benefits for each role.
If you’d like help navigating healthcare, retirement savings, or other benefits for household employees, your placement specialist will walk you through these details during your consultation.
Are there any tax incentives for household employers?
Possibly. If your staff member provides childcare or senior-care, you may qualify for the Dependent Care Assistance Plan (DCAP) through your employer, allowing you to allocate up to $5,000/year tax-free for care expenses.
Alternatively, you may qualify for the Child and Dependent Care Tax Credit when you file your federal return. We can provide detailed information during our consultation to help you determine what’s best for your situation.
My employee will use their own car—what auto insurance limits should they carry?
Every situation is unique, so check with your auto insurance provider. In general, we recommend that employees using their own vehicle for work maintain liability limits of at least $250,000/$500,000. Additionally, ask your insurance provider:
Will my policy cover me in the event of a lawsuit or claim exceeding my employee’s limits?
Should I consider a personal umbrella policy for extra protection?
It’s a good idea to request written confirmation of coverage and keep it on file.
