Reconciling bank account for first time - account is 10 yrs old

Thank you for bringing this matter to the Community forum, @erin_interav. As a best practice, QuickBooks Online recommends performing bank reconciliations on a monthly basis to ensure that your financial records accurately reflect your bank statements and to help catch any discrepancies or errors early on.

Since the account has remained unreconciled for nearly 10 years, the reconciliation process will understandably be more complex and time-consuming. Rather than attempting to reconcile the entire period all at once, the most effective approach is to start with the most recent bank statements and transactions, then gradually work your way backward. This method allows you to focus on the most current data first, ensuring that your records for recent months are accurate, while progressively addressing and cleaning up older periods. Additionally, I recommend working with an accountant or financial professional during this process to provide guidance, help resolve discrepancies, and ensure that everything is handled correctly.

Please also take note that when reconciling, it is crucial to have all bank statements covering the entire 10-year period. Having these statements on hand will allow you to accurately match and verify every transaction, ensuring nothing is missed or incorrectly recorded throughout the reconciliation process.

To answer your question about whether you need to post all transactions, it depends entirely on the bank statements you have. You only need to post and reconcile the transactions that appear on your bank statements.

To reconcile this, you can follow these steps:

1. If this is your first time reconciling, click Get started.
2. From the Account dropdown, select the account you want to reconcile. Ensure it matches the one on your bank statement.
3. Important: If you see a message about a previous reconciliation issue, you must resolve it before continuing. Click We can help you fix it and follow the instructions provided.
4. Verify that the Beginning balance in QuickBooks matches the balance on your statement. If they don’t match, correct any errors before proceeding.
5. Enter the Ending balance and Ending date exactly as they appear on your bank statement. Note that some banks may label the ending balance as the "new balance" or "closing balance."
6. If your account isn’t connected to online banking, add any service charges or interest earned for the period manually.
7. If available, review the Last statement ending date, which shows when your previous reconciliation ended. Your current bank statement should begin the day after this date.
8. When you are ready, click Start reconciling.
9. One by one, compare each transaction on your bank statement with those recorded in QuickBooks.
10. When a transaction in QuickBooks matches your statement, mark it as cleared by checking it off. This indicates it has been reconciled.
11. If you find a match but notice small differences (such as an incorrect payee), open the transaction in QuickBooks, select Edit, and update the details to match your statement.
12. If there are transactions in QuickBooks that do not appear on your bank statement, leave them unchecked for now.
13. Once you’ve finished matching transactions, the difference between QuickBooks and the bank statement should be $0.00. If it is, click Finish now to complete the reconciliation.

You can also check this article for more detailed information: Reconcile an account in QuickBooks Online.

Thank you again for reaching out and sharing the details of your situation. We understand that reconciling an account with a long history of unreconciled transactions can be a challenging task, but by taking it step-by-step and focusing on the most recent transactions first, you can gradually restore accuracy to your records. Remember, patience and thoroughness will be your best allies throughout this process. Take care!

Thank you for responding.

I'm going to be honest and say that there is no way I'm going to reconcile 10 years worth of statements. It's just not a realistic option, at least not for me.

Is there a way to have our accountant make a general ledger adjustment or any other work-around?

We understand that reconciling 10 years of statements may not be feasible, @erin_interav. You’re correct, your accountant can make general ledger adjustments by creating journal entries to bring your accounts up to date. This can be a workable solution.

Before proceeding, let’s confirm if the 4,500 pending transactions include dates going back to 2015. If they do, we recommend posting these transactions and performing quarterly or yearly reconciliations starting from 2015 up to your most recent statement. Use the quarter’s end date (first, second, third, or fourth quarter of 2015) and ensure that each quarter or year aligns with your corresponding bank statement balance. If there’s only a small amount leftover, adjusting journal entries can be created to address the difference.

If the transactions only go back three years, your accountant will need to determine the latest statement’s beginning balance, which is the ending bank balance prior to your most recent statement’s balance. This discrepancy, amounting to nearly $800k, could explain why the ending balance is off and hasn’t been added yet. Using journal entries, your accountant can debit or credit the appropriate categories. Be sure the journal entry dates do not overlap with your most recent pending bank transactions. Once these entries are reconciled, your accountant can proceed with the most recent statement to ensure accuracy. This process will also help offset the $800k difference.

For a quick summary, the steps are as follows:

1. Match, categorize, and post the most recent bank statement transactions to determine your statement’s beginning balance.
2. Create and reconcile journal entries for the difference (nearly $800k), dated before your most recent transactions, to ensure balances align. Use the statement’s ending balance and date to verify your most recent transactions.

If you have any further questions, we’re here to help.

@erin_interav 

When you select all of the uncategorized (pending) bank transactions, how far off is the bank balance from the bank statement as of 8-31-25?  I assume $800K is before taking into account the pending transactions, yes?  Are the transactions clean- i.e., they're all legitimate business transactions?  How far back do you have access to bank statements? 

Depending on how you answer the above questions, you can likely reconcile through 12-31-24 in one fell swoop with an adjusting entry and then do monthly recs for 2025.

Yes, the 800K was before I posted the pending transactions. I have posted everything going back to 2020. At that point I started getting error messages say I need to choose a bank account for this transaction? I think maybe he either changed banks at some point or maybe changed accounts. The company was just a one man operation at that point so I don't think he was great about keeping records.

After posting about 5 years of transactions the closing balance discrepancy as of today is up to over 2 million dollars. 

As of 1/02/2025 the discrepancy in QBO was $1,451,398.33.

Should I make an adjustment myself or let the accountant handle it?

And what should I do with the pending transactions that can't be posted? There are over 4000 of them, mostly from 2015-2020

And yes, I think they are all legitimate. It looks to me like at some point the owner connected his bank feed to QBO so they were categorizing many of the transactions but he didn't post them.  I'm really not sure to be honest. I have access to statements going back to 2018.