Payroll mistakes might seem small, but they can quickly add up and take a big chunk out of your bottom line. One of the most common (and costly) errors? Misclassifying employees. If you’ve got independent contractors listed as employees (or vice versa), you could face fines, back taxes, and penalties.

Then there’s the issue of overtime. Incorrectly calculating overtime pay—whether it’s underpaying or overpaying—doesn’t just cost money, it can damage your employees’ trust in the long run. Make sure you’re calculating it correctly based on your state’s laws, as rules vary widely.

Let’s not forget missed deadlines. Payroll tax deadlines can sneak up on you, and late payments often lead to penalties and interest charges. Setting up automatic reminders or using payroll software can make all the difference.

Lastly, human error in data entry is one of the most common sources of payroll mistakes. Double-checking numbers or using automated payroll systems can save you time, money, and stress.

Avoiding these mistakes isn’t just good practice; it’s a smart way to keep your business running smoothly and avoid unnecessary costs.