Have a nanny and a company?  If so, you may be tempted to pay your nanny through your business payroll.  Why not?...payroll is payroll, right?

Well, the IRS sees it differently.  All employees paid through companies must be "direct contributors to the success of the business" because businesses are entitled to tax deductions on payroll expense.  If you pay a personal employee through the company, the payroll expense will be inflated by someone who is not a "direct contributor" and, therefore, the company will be guilty of taking an illegal tax deduction.

Additionally, businesses (except for Sole Proprietorships and For-Profit Farms) are not allowed to report household employee payroll or remit household employee taxes as part of their employment tax process.  There is a separate process for household employment, with different forms and deadlines.