How to Process Payroll in QuickBooks Online: Step-by-Step Guide

Processing payroll in QuickBooks Online (QBO) is straightforward: verify employee details, set pay schedules, enter salaries or hours, preview for accuracy, and then submit payroll for direct deposit or checks. QuickBooks also automates tax filings on eligible plans, reducing compliance risks. Accurate payroll builds trust, avoids penalties, and is especially vital for law firms and medical spas with complex pay structures. Partnering with experts like Irvine Bookkeeping further ensures accuracy, compliance, and valuable financial insights.

Why Payroll Accuracy Matters for Businesses

Payroll accuracy goes beyond timely payments—it builds employee trust and prevents costly penalties. Errors such as underpayment or overpayment can hurt morale, cause legal issues, and damage financial stability. For industries like law firms and medical spas, where confidentiality and complex pay structures are common, accuracy is even more critical.

Mistakes not only impact finances but also harm a company’s reputation, leading to employee dissatisfaction, lower productivity, and higher turnover. Correcting payroll errors consumes valuable resources that could be spent on core operations. Remote work adds further complexity, as businesses must ensure compliance with varying labor laws and tax regulations. Accurate payroll helps avoid penalties, maintain compliance, and create a positive workplace environment.

What is QuickBooks Online Payroll?

QuickBooks Online Payroll is a cloud-based payroll service integrated seamlessly with QuickBooks accounting software. It automates payroll calculations, tax filings, and direct deposits, helping businesses streamline payroll management. The service offers various plans tailored to different business sizes and needs, including features like automatic tax calculations, employee self-service portals, and compliance monitoring.

A major advantage of QuickBooks Online Payroll is its seamless integration with the QuickBooks ecosystem. Payroll data syncs in real time with accounting records, reducing manual errors and saving time.

Beyond automation, the platform offers expert support, tutorials, and automatic updates to stay compliant with changing tax laws—helping businesses avoid costly mistakes.

Employees also benefit from a self-service portal to access pay stubs, tax forms, and payroll documents anytime. With mobile access, remote teams can stay informed while HR focuses on more strategic work.

Read more: QuickBooks Online vs. Enterprise: What’s Best for Your Business?

Step-by-Step Guide to Processing Payroll in QuickBooks Online

Step 1: Confirm Employee Information & Pay Schedules

• Personal details: full name, address, and phone number.

• Tax information: Social Security Number (SSN) or Employer Identification Number (EIN), along with deductions or exemptions (per labor law requirements).

• Employment details: job title, role type (full-time, part-time, contractor), and pay rate.

• Banking information: needed for direct deposits.

• Benefits: health insurance, retirement contributions, or other perks.

Source: QuickBooks

Next, set up a pay schedule to streamline payroll runs:

1. Go to the Payroll tab in the left menu and select Employees.

2. Under Employment details, click Start or Edit.

3. From the Pay schedule dropdown, choose an existing schedule or click + Add pay schedule to create a new one.

4. Enter how often the employee is paid (weekly, biweekly, semimonthly, or monthly), then click Save.

Step 2: Review Salary, Hours & Memos

In QuickBooks Online, go to the “Payroll” tab and select the employee you need to review or update.

• For salaried employees, confirm that their annual salary is entered correctly.

• For hourly staff, double-check the hourly rate and record the total hours worked for the current pay period.

Source: QuickBooks

Tip: Use the memo or notes field to add context—such as bonuses, adjustments, or special pay considerations. This creates a clear audit trail and helps prevent confusion during reviews or future payroll runs.

Step 3: Preview Payroll

Once all adjustments are complete, review payroll details carefully before finalizing payments.

• Double-check employee hours, wages, taxes, benefits, and any special adjustments.

• Go to Run Payroll, select the employees you’re paying, and confirm the pay period and pay date.

• Enter hours worked for hourly staff and confirm salaries for salaried employees.

• Click Preview payroll to review totals before submission.

Source: QuickBooks

Tip: Take time at the preview stage—it helps catch errors, prevents incorrect tax filings, and ensures employees are paid accurately and on schedule.

Step 4: Submit Payroll

Submitting payroll in QuickBooks Online is the final step after reviewing wages, hours, deductions, and taxes.

• Simply click “Submit payroll” to process payments.

• For direct deposit, confirm bank details and submit at least two business days before payday to avoid delays.

• For paper checks, QuickBooks lets you print them directly within the platform.

If you’re on a Premium or Elite plan, QuickBooks can also handle tax form filings automatically—helping your business stay compliant and avoid penalties. Keep in mind that automation may vary for employees with variable hours or special pay arrangements.

Step 5: Fix Payroll Errors if Needed

1. Spot the issue: check for incorrect wages, hours, or deductions.

2. Locate the entry: open the specific payroll record that needs adjusting.

3. Edit or reverse – update the details or reverse the transaction if needed.

4. Verify, then resubmit – always double-check corrections before running payroll again.

Why it matters: Fixing mistakes quickly helps avoid tax filing issues, keeps payroll records accurate, and builds employee trust.

For example, if hours are entered incorrectly, you can create an adjustment and reprocess payroll. QuickBooks also provides support resources for complex issues. Clear communication with employees during corrections builds trust and shows they are valued.

Payroll Challenges for Law Firms & Medical Spas

Law firms and medical spas face unique payroll challenges that require specialized attention. Law firms often deal with partners, associates, and support staff who may have varying compensation models, including profit-sharing and bonuses. Tracking billable hours and integrating them into payroll can add complexity.

Medical spas, on the other hand, frequently employ a mix of licensed practitioners, administrative staff, and contractors. Compliance with healthcare regulations and proper classification of employees versus independent contractors is critical to avoid legal issues.

Both industries must also navigate fluctuating schedules, overtime rules, and benefits administration, making payroll management a multifaceted task. QuickBooks Online Payroll’s flexibility and automation features help address these challenges, but expert guidance is often necessary to optimize processes.

Benefits of Using QuickBooks Online Payroll with Expert Support

While QuickBooks Online Payroll offers powerful tools, combining it with expert bookkeeping and payroll support can elevate its effectiveness. Professionals can ensure that payroll is processed accurately, tax filings are timely, and compliance requirements are met consistently.

1. Spot the issue – check for incorrect wages, hours, or deductions.

2. Locate the entry – open the specific payroll record that needs adjusting.

3. Edit or reverse – update the details or reverse the transaction if needed.

4. Verify, then resubmit – always double-check corrections before running payroll again.

Why it matters: Fixing mistakes quickly helps avoid tax filing issues, keeps payroll records accurate, and builds employee trust.

Irvine Bookkeeping provides tailored payroll and bookkeeping services for professional firms and healthcare providers. Their team uses QuickBooks Online Payroll to ensure accurate, timely, and compliant processing.

Clients receive personalized support with employee data, payroll setup, tax filings, and year-end reporting—plus help correcting discrepancies. By partnering with Irvine Bookkeeping, law firms and medical spas can cut admin work, reduce errors, stay compliant, and gain financial insights from integrated payroll and accounting data.

How Irvine Bookkeeping Helps with QuickBooks Online Payroll

Managing payroll isn’t just about paying employees—it’s about accuracy, compliance, and efficiency. That’s where Irvine Bookkeeping comes in.

• Tailored payroll support: We specialize in law firms, medical spas, and professional service businesses, handling unique pay structures like bonuses, commissions, and contractor payments.

• Seamless QuickBooks setup: Our team configures QuickBooks Online Payroll to match your business needs, from employee data management to customized pay schedules.

• Compliance made simple:We monitor tax filings, year-end reports, and payroll regulations so you can avoid penalties and stay audit-ready.

• Error resolution: If discrepancies arise, we handle adjustments quickly while keeping records clean and transparent.

• Integrated financial insights: By connecting payroll with bookkeeping, we give you a clear view of labor costs and business performance.

Key Takeaways

• QuickBooks Online Payroll streamlines employee compensation, tax filings, and compliance.

• Payroll accuracy is critical for maintaining trust, avoiding penalties, and keeping operations smooth—especially in law firms and medical spas.

• A structured process (verify employee details → set pay schedules → review → fix errors) ensures efficient payroll management.

• Expert support, like Irvine Bookkeeping, boosts accuracy, compliance, and overall efficiency.

• Well-managed payroll drives employee satisfaction, regulatory adherence, and long-term business success.

About the Author

Irvine Bookkeeping Inc

Irvine Bookkeeping Inc is a U.S.-based accounting and bookkeeping firm with over 10 years of experience helping small and mid-sized businesses manage their finances with confidence.

Beyond software implementation, Irvine Bookkeeping provides full-service bookkeeping, payroll management, tax compliance, and financial reporting—ensuring that business owners can focus on growth while maintaining accurate and compliant books.