8. Pay the nanny either with direct deposit or by check.
9. Payroll needs to be set up and provisions made to pay Social Security, Medicare, FUTA and other payroll taxes. Keep track of tax deductions, medical benefits and other insurance. Mistakes can be costly: Failure to pay the IRS nanny taxes can result in back taxes, penalties, interest and fines up to $25,000.
10. Set up an easy payroll system and pay your nanny according to federal and state labor laws. Consider working with an online payroll provider like SurePayroll to manage the pay, tax and filing to ensure compliance.