How to Reconcile Your Bank and Credit Card Statements in QuickBooks Online and QuickBooks Desktop

When it comes to running a small to medium-sized business effectively, accuracy of records is tantamount to pretty much anything else that is vital to your business operation.  It may seem like a hassle to keep and maintain all of your transaction records with zero mistakes, but it is absolutely imperative to do so.

If your records are sloppy, mistakes are bound to be made.  Funds can be lost in a sea of mismatched bank records and corporate accounts.  Taxes can be over- or under-paid, which can lead to an audit.  An audit, if you aren’t organized and accurate in your records, is a long, annoying, and often expensive process.

Another reason to maintain accurate records is in the case of any potential future sale, merger or acquisition of your business.  Loosely kept records not only slow the due diligence process to a halt:  It can also lower your sale price or prevent the sale entirely, as your buyer loses confidence in your ability to run a tight ship.

One of the best ways to ensure accurate records is through the use of a bank reconciliation.  A bank reconciliation is a form of internal audit that ensures that the records you have gathered in your company ledger about transactions and balances match the records kept by your bank, in the form of your bank statements, that you get at the end of each month.

Reconciliations can be somewhat tedious.  Checking hundreds or even thousands of records for accuracy of time, payer/payee, and amount can take a long time and can be exhausting.

Luckily, if you use QuickBooks, the process is made a bit quicker and easier.  Let’s walk through how to reconcile your bank and credit card statements in both QuickBooks Online and QuickBooks Desktop.

How to Reconcile Bank and Credit Card Statements in QuickBooks Online

Reconciling your bank statements with your company records in QuickBooks Online is fairly straightforward, and marks a substantial improvement over more traditional reconciliation methods.  In the past, business owners or accountants had to find the physical files containing the company’s transaction records and match them up with physical bank statements.  Nowadays, everything is electronic, which makes the process not only faster, but cheaper as well.

To get started reconciling your records in QBO, select the gear on the homepage, select “Tools”, and then select “Reconcile”.  Alternatively, you can go into the “Accounting” section on the left side panel and select “Reconcile” from there.  Either method takes you to the second part of the process.

Once you’ve selected “Reconcile”, you’ll need to choose which account to reconcile.  Make sure the account you select on QuickBooks matches the account that your bank statement belongs to.

You’re now ready to start reconciling the bank statement with the company records.  You’ll need to enter some specific information.  Namely, QuickBooks will ask you for the Ending Balance and the Ending Date of the bank Statement you’re attempting to reconcile.  You should also see a Beginning Balance, which is automatically generated using prior information.

After you enter this information and proceed with the process, you’ll be able to perform the actual reconciliation.

When you first start, you’ll see a number titled “Difference”.  This number indicates the difference between the total balance in your company records for that account and the balance that you just entered for that account according to your bank statement.  Next, you’ll just move down the company records and make sure that everything in the bank statement is recorded there.

As you continue down the company records and check off transactions that match up with your bank statement, you’ll see that number decrease.  Ideally, by the end of your reconciliation, that number should be zero.  If it isn’t, double check for minor mistakes or missed transactions on your part, and then call your accountant or banking representative if the problem persists.

Overall, QBO gives you a fairly quick and easy way to reconcile your bank records with your company ledger.  QuickBooks Desktop allows the same thing, but with some minor differences.  Let’s take a look at that now.

How to Reconcile Bank and Credit Card Statements in QuickBooks Desktop

To reconcile an account in QuickBooks Desktop, start by backing up your company file.  It’s always a good idea to do this before making any changes in case you need to revert back to an old version.

Then, go to the “Banking” menu and choose “Reconcile”.  The process from here is somewhat similar to the reconciliation process in QuickBooks Online:  Just select the account you want to reconcile, enter the starting balance, ensure that the date listed is correct for the statement you are comparing, and then begin combing through and matching up transactions until every transaction on the bank statement is accounted for in your company records.  Again, the difference between your bank statement’s ending balance and your company record’s ending balance should be zero.  Reconciling with QuickBooks is just that easy!

Here are a few general tips for your reconciliation journey:

• The beginning balance on your bank statement for a given month should match the ending balance for the previous month. If you see a discrepancy there, it means that one of your past records wasn’t reconciled properly.
• It can help to first reconcile deposits all at the same time, and then focus on payments, or vice versa. This keeps your head from spinning when trying to switch columns constantly.
• If you get frustrated or tired while reconciling, take a break. Nothing makes more mistakes than a frazzled brain.  You may also consider reconciling on a more frequent basis, like weekly or bi-weekly, to minimize the amount of time needed per reconciliation session.

Reconciling your records has never been easier, and ensuring that it’s done right is one of the best ways to make sure that your company records are accurate and up to date.  Remember, the longer you put off reconciliation, the bigger the problem becomes down the line.

For questions about reconciliation or any inquiries relating to your accounting needs, feel free to contact us or check out our services page.  We’re here to help!