In Massachusetts, your cleaning crew members are almost always employees rather than independent contractors. The state’s ABC test presumes a worker is an employee unless you can prove they meet all three conditions for contractor status. Most cleaning workers fail this test because they perform services that are part of your regular business operations. That means you need to run proper payroll for them.

Running payroll involves calculating and withholding the right taxes from each paycheck. Federal income tax withholding is based on the employee’s W-4. Massachusetts state income tax gets withheld at the flat rate of 5%. You also withhold the employee’s share of Social Security and Medicare taxes, which together come to 7.65% of gross pay. As the employer, you pay a matching 7.65% on top of that.

Beyond withholding, you owe federal unemployment tax and Massachusetts unemployment insurance contributions. You also pay into Massachusetts Paid Family and Medical Leave and withhold a portion from employees. Each of these has its own rate, wage base, and filing schedule that you need to track.

Tracking hours accurately matters. Cleaning crews often work variable hours across multiple job sites, so you need a reliable system for recording when people start and stop. Massachusetts requires overtime pay at time and a half for any hours worked over 40 in a week. Getting overtime wrong exposes you to wage claims and back pay obligations. Starting in 2026, there is a new federal requirement to separately track and report qualified overtime wages on W-2s. This is another compliance item that payroll systems will need to handle going forward.

The filings happen quarterly and annually. Form 941 goes to the IRS every quarter to report wages paid and taxes withheld. Massachusetts has its own quarterly returns for withholding and unemployment. At year end, you issue W-2s to each employee and file them with the Social Security Administration and the state.

Tax deposits happen on a schedule determined by your total tax liability. Most small cleaning businesses deposit monthly, but higher payroll volumes require semi-weekly deposits. Miss a deposit deadline and penalties start accumulating immediately.

With full-service payroll, we run your payroll each pay period, calculate all the withholdings, make the tax deposits on time, file the quarterly returns, and prepare the W-2s at year end. You approve hours and we handle the rest. The deposits, the filings, and the compliance are taken care of so you are not chasing deadlines or worrying about whether you did it right.

If you are running a cleaning business and want to make sure payroll is handled correctly from the start, reach out to discuss your situation. Simona is a CPA and Enrolled Agent with years of payroll experience across service businesses in New England and nationwide.