Reconcile.png

 

 

Account reconciliation is the process of matching transactions entered into QuickBooks Online against your bank or credit card statements. This review should be done on a regular basis, once a month at the very least when you receive your statements.

 

The process itself can be done fairly quickly if you connect your online bank accounts to QuickBooks Online and perform regular upkeep throughout the month. It's also important to learn how to use the Undeposited Funds account so transactions in QuickBooks match what's recorded on your bank and credit card statements. 


Why do I need to reconcile my bank accounts in QuickBooks Online? 

 

The balances in QuickBooks Online need to match your bank and credit card records so you have accurate financial data. Naturally, financial reports are only valuable if the base information is precise.

 

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Moreover, your records need to be accurate when its time to file your taxes. By compiling and maintaining your account data throughout the year, you'll be well ahead for your next filing. 

 

There are other underlying benefits as well. If you regularly reconcile your accounts, you'll know exactly how much money your business has in the bank and that you're always working with accurate data. Equipped with this knowledge, you can make smart, informed business decisions.

 

If you don’t already, build account reconciliations into your routine. Future you will thank you. 


Get started reconciling your accounts in QuickBooks Online

 

Select the Accounting Tab from the Nav Bar and then the Reconcile sub-tab. Start with your checking account and work your way through each connected bank and credit card account one at a time.

How to reconcile an account in QuickBooks Online 2.PNGEnter the Ending Balance and Ending Date as they appear on your bank statements. If the number you enter doesn't match the beginning balance recorded in QuickBooks, that's ok - we're about to figure out why. 

 

Tip - print out paper versions of your bank statements and collect them in the same, accessible place (a folder, a drawer, anywhere but the floor). Having printed copies makes a side-by-side comparison much easier. When you're done, file these papers away and clear the space for next month's documents. 

 

Go through your accounts in QuickBooks line-by-line, checking that individual item amounts and aggregate totals match what's on your bank statement. Do this until the difference between the QuickBooks account and your bank statement(s) is $0. 

 

 

 

Check out the reconciliation basics video above. The pro-tips at (0:52) and (1:12) will help you breeze through reconciliations and tackle any unforeseeable roadblocks.

 

Remember, the difference between what’s recorded on your bank or credit card statements and the relevant QuickBooks account should be... 

Reconcile 1.PNG

 

If you don't get to $0.00, don't worry. As the video notes, bank service charges, checks that are not cleared by your bank but are entered in QuickBooks, and transactions that posted to the bank but aren't recorded in QuickBooks are a few common causes for slight ending balance variations

 

Generally, these problems can be avoided if you only record transactions as they occur in real-time (or very soon after) and reconcile accounts frequently - it's far easier to recall month-old details compared to 6 months old.   

 

Track down these anomalies systematically. Take it slow and check these common problem areas first before calling your accountant. There's a solution for each of these scenarios.

 

Following a procedure (whatever works best for you) will surely lead to a resolution. To start, narrow down the scope of your search: if there's a big difference, there may be one or several skewed transactions; if the difference is marginal,  it's probably a fee or missing sales tax. 


What happens if there's a different opening balance in QuickBooks this month, even though you reconciled your accounts correctly last month? That means there's a discrepancy somewhere in the books. Reconciliation discrepancies can be caused by one of the following reasons:

  • Previously reconciled transactions have been modified, deleted, or added
  • Reconciliation adjustments (Journal entries, etc.)

 

If you have a discrepancy, follow the steps outlined in this troubleshooting guideFor a deeper dive into common reconciliation questions, check out these issue-specific articles: 


Any other tips I should keep in mind to be successful?

  • Make reconciliations habitual. Do them the same time every month, preferably soon after you receive your bank statements so you can make quick corrections. 

  • As we mentioned earlier, when done regularly, bank reconciliations will make filing your taxes much easier. If you don't have all of your accounts connected to QuickBooks, note that your end of year numbers won't reflect the breadth of your business. Adding accounts retroactively may be quite difficult since you won't have nearly as much time to review the numbers.

  • If you prefer a visual reconciliation guide, try this article from the QuickBooks Resource Center 

 


What’s Next?

 

Check your Progress

 

FTU Setting up for Success

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