Place new potatoes and water in a microwave-safe bowl. Cover and heat on high in a microwave until soft enough to smash, about 8 minutes.
Preheat an outdoor skillet for high heat and lightly oil the grate. Place a cast-iron skillet on the grill to preheat.
Drain water from the potato bowl and add onion and olive oil; mix well. Carefully spread potato mixture into the skillet and smash each potato using the back of a spatula.
Grill until onions are browned and potatoes are crispy, about 5 minutes per side. Season with seasoned salt and paprika.