9 Easy Steps: How to Reconcile your Company’s Bank Account in QuickBooks Online

how to do bank reconciliation in quickbooks

Follow our social media accounts to get the latest news and opinions from our industry experts. After you reconcile, you can select Display to view the Reconciliation report or Print to print it. Here are a few things you can do to make your reconciliation easier. Before you start with reconciliation, make sure to back up your company file.

Understanding the Bank Reconciliation Statement

You should also compare the figures on your accounts to the figures on the original bank statement. For other types of accounts, QuickBooks opens the Make Payment window. This lets you write a check or enter a bill to pay to cover the outstanding balance. You’ll want to look at your statement, starting with the first transaction listed and find that same transaction in the Reconciliation window in QuickBooks. When you select a transaction’s checkbox, you mark it as cleared (tentatively reconciled). When you finish a reconciliation, the cleared transactions become reconciled.

how to do bank reconciliation in quickbooks

How Often Should You Reconcile Your Bank Account?

To ensure that your books are accurate, it’s important to reconcile your bank, credit card and petty cash accounts. Ideally, you should run a reconciliation each time you receive the statement from your bank. The bank may send you a bank statement at the end of each month, each week, or, if your business has a large number of transactions, they may even send one at the end of each day. To reconcile your bank statement with your cash book, you’ll need to ensure that the cash book is complete and make sure that the current month’s bank statement has also been obtained. At times, the balance as per the cash book and passbook may differ due to an error committed by either the bank or an error in the cash book of your company. There are times when your business will deposit a check or draw a bill of exchange discounted with the bank.

Not-Sufficient Funds Checks

The journal entry goes into a special expense account called Reconciliation Discrepancies. For example, if the payee is wrong, you can click on the transaction to expand the view and then select Edit. If you forgot to enter an opening balance in QuickBooks in the past, don’t worry. If you signed up to try a new way to reconcile in QuickBooks Labs, click here. You’re in the right place to learn about the current QuickBooks reconciliation.

To see all of your adjustments on the list, you can review a Previous Reconciliation report for the reconciliation you adjusted. This will show you cleared transactions and any changes made after the transaction that may not show in your discrepancies. Make sure you enter all transactions for the bank statement period you plan to reconcile.

To reconcile means to “make one view or belief compatible with another.” In accounting, that means making your account balances equal to one another. More specifically, a bank reconciliation means balancing your bank statements with your bookkeeping. When reconciling an account, the first bit of information you need is the opening balance. If you choose to connect your bank and credit cards to your online account, QuickBooks will automatically bring over transactions and also the opening balance for you. Just like balancing your checkbook, you need to review your accounts in QuickBooks to make sure they match your bank and credit card statements. You need to determine the underlying reasons responsible for any mismatch between balance as per cash book and passbook before you record such changes in your books of accounts.

  1. You should perform monthly bank reconciliations so you can better manage your cash flow and understand your true cash position.
  2. In order to prepare a bank reconciliation statement, you’ll need to obtain both the current and the previous month’s bank statements as well as the cash book.
  3. These charges won’t be recorded by your business until your bank provides you with the bank statement at the end of every month.
  4. When you finish a reconciliation, the cleared transactions become reconciled.
  5. You’ll need to adjust the closing balance of your bank statement in order to showcase the correct amount of withdrawals or any checks issued that have not yet been presented for payment.

This way, you can ensure your business is in solid standing and never be caught off-guard. This is a simple data entry error that occurs when two digits are accidentally reversed (transposed) when posting a transaction. For example, you wrote a check for $32, but you recorded it as $23 in your accounting software. Book transactions are transactions that have been recorded on your books but definition and example of step and fixed costs haven’t cleared the bank. As a small business, you may find yourself paying vendors and creditors by issuing check payments.