Question: On your show on 9/6/08, two families got together to hire a child care provider. Do these families need to pay social security tax and what about health insurance for that employee? I would like to do something similar regarding caregivers for a disabled brother. Lawrence, City: Oriskany, NY.

Answer: You can listen to the story here.

In essence, you're a small employer if you find and hire a person to take care of your disabled brother. Like all employers, you need to make sure the caregiver isn't an illegal immigrant. You're responsible for paying Social Security and Medicare taxes (assuming your wages are more than $1,600 a year in 2008). In many cases, you'll pay federal unemployment tax (in 2008 that's required if you paid total cash wages of $1,000 or more in any calendar quarter to the caregiver.) There might be state employment taxes, as well as a requirement to meet workman's comp and short-term disability insurance.

However, just as a small business isn't required to offer its employees health insurance you don't need to provide that benefit. One reason many families turn to an agency for a caregiver is to avoid all the small employer paperwork and filing requirements. It can be overwhelming

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Follow Chris Farrell at @cfarrellecon