Common Payroll Mistakes Small Businesses Make and How to Avoid Them

Written By Dawn McCann

Payroll can be tricky, and even seasoned business owners trip up sometimes. But don’t worry, I’ve seen it all and I’m here to help you avoid the headaches.

1. Misclassifying Employees

Treating an employee like a contractor or vice versa is a big no-no. It can cost you penalties and back taxes. Make sure you know the difference and classify correctly from day one.

2. Missing Deadlines

Payroll isn’t flexible. Taxes, remittances, and benefits all have deadlines. Miss one and you’ll hear about it fast. Use a schedule, reminders, or better yet, a bookkeeper who keeps you on track.

3. Calculating Deductions Wrong

CPP, EI, income tax… it adds up. Mistakes can lead to fines, unhappy employees, or both. Double-check numbers, or have a professional handle it for you.

4. Forgetting Overtime and Vacation Pay

Nothing makes employees crankier than missing overtime or vacation payouts. Make sure your system tracks hours correctly and calculates pay according to the law.

5. Skipping Record Keeping

Payroll records aren’t just busywork. They protect you in audits, disputes, or legal questions. Keep detailed, organized records for every pay period.

My Two Cents

Payroll mistakes can be expensive and stressful. Avoiding these common errors keeps your employees happy, your business compliant, and your sanity intact.

Think of payroll like a finely tuned machine. A little maintenance and attention keeps it running smoothly, but ignoring it can quickly turn into chaos.

Dawn McCann

At The Ledger, we help small and medium-sized businesses bring order and clarity to their people, processes, and payroll. From HR support and bookkeeping to creative solutions that strengthen your brand, we combine precision with purpose.

Our name reflects our approach: a ledger is more than numbers - it’s a record of trust, accountability, and growth. Every page tells a story, and we’re here to make sure yours is written with integrity.

Whether it’s one paycheck, one policy, or one project at a time, The Ledger is your partner in building something meaningful.

https://www.theledger.ca
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