Payroll is one of the most sensitive areas of business—and one of the easiest to get wrong. For small organizations, the risks range from employee dissatisfaction to serious legal penalties.

Here are five payroll mistakes we commonly see—and how to prevent them:

1. Misclassifying Employees and Contractors
   Treating an employee as an independent contractor (or vice versa) can result in fines and back taxes. Know the IRS guidelines and classify roles correctly.

2. Missing Payroll Tax Deadlines
   Late filings lead to penalties. Use a payroll service or calendar system to stay on top of local, state, and federal deadlines.

3. Incorrect Withholdings
   If deductions or exemptions are miscalculated, employees may be underpaid—or owe money at tax time. Review W-4s and set up automated calculations.

4. Lack of Documentation
   Every payroll run should be backed by time records, approval logs, and payment confirmations. This protects both the employer and the employee.

5. Skipping Updates to Pay Rates or Hours
   Changes in pay, bonuses, or hours often go unrecorded in small teams. Set up a consistent workflow for updating this info before each pay cycle.

Avoiding these pitfalls saves you time, builds trust, and keeps your organization legally sound. Greenhill Solutions offers full-service payroll support so you can run your team without the paperwork headaches.